Senator spotlights state's corporate welfare payments (Koch money)
Arkansas Business' Sarah Campbell-Miller reported on a meeting at the Capitol yesterday worth a broader audience — a debate on the value of taxpayer-financed economic development incentives, or corporate welfare.
The hearing was arranged by Sen. Bryan King, a lame duck Republican who doesn't enjoy broad support in the legislature. He has questions, as some conservatives do, about handing out taxpayer money to anyone — poor folks for medical care or rich folks to subsidize private investment. (UPDATE: King said Thursday he's running for re-election after all. He'll face Republican Rep. Bullet Bob Ballinger in the primary.)
Mike Preston, the governor's first-class-flying economic development commissioner, naturally defended the handouts. Friends of the governor in the Senate, his nephew Jim Hendren and Dave Wallace, also defended the handouts. They credit them for good jobs in their districts. They, of course, mistake correlation and causation. Most studies show that, while corporations happily take any handouts on offer, the incentives are rarely the core reason for industrial location. Cheap labor, land, transportation, cheap energy and other factors are more important.
That was the case made by UCA economist Jacob Bundrick.
Bundrick said the money could be better spent on steps that have been proven to enhance competitiveness, like reforming taxes, licensure requirements and infrastructure.
Preston argued that Bundrick's team is funded by special interests slanted against incentives and, even if the funds were used for other things that improve competitiveness, it wouldn't be enough. Incentives are the first thing companies ask about when they meet with him, Preston said.
"Even if everything was perfect — we had no state income tax, no corporate income tax — we still have competitive disadvantages we have to overcome," Preston said. "This is a drop in the bucket for us to still be competitive.”
Read more: https://www.arktimes.com/ArkansasBlog/archives/2018/02/21/senator-spotlights-states-corporate-welfare-payments