Talk Business and Politics reports:
Arkansas Gov. Asa Hutchinson commemorated the 100th anniversary of the Rotary Club of Fort Smith on Wednesday (June 1) by laying out a strategy for the future of Arkansas economic development.
In the address held at Hardscrabble Country Club, he touted 51,000 new jobs that have been created since he took office in 2014 along with an unemployment rate dip to 3.9%, which is “the lowest unemployment rate in the history of the state of Arkansas,” he pointed out to a round of applause.
“I’ve studied a little economics, and when you get to 4%, that is equivalent to full employment across this country, and we’re below that,” Hutchinson said, adding that the change has come because of both national conditions and the fact “we’ve got an expanding economy.”
Arkansas’ success, according to Hutchinson, can be attributed to “several key factors,” such as a more business-friendly philosophy, lower taxes, strong local leadership, and a skilled workforce.
BUSINESS PHILOSOPHY AND TAXES
For the Governor, the “right philosophy” for Arkansas is to grow the private sector at a faster rate than the government sector.
“We are doing that,” he said. “We want to have lower taxes, fewer regulations so we can expand the private sector of our economy, and have a business friendly environment.”
Here, Hutchinson championed the reduction of income tax rates from 7% to 6% for top-bracket earners and 6% to 5% for those earning between $20,000 and $75,000 annually.
“That tax cut means the average family will have $500 more in their pocket every year that they don’t have to pay in taxes,” Hutchinson said. “What do they do with $500? They might buy a new set of tires from a local merchant. They might take a vacation at an Arkansas state park. They might be able to buy more groceries. They’ll spend that money with local merchants that drive the local economy.”
Hutchinson also believes further tax reductions will be necessary to send a pro-business message as Arkansas continues to recruit companies from around the world. This is a priority he plans to tackle during the new legislative session in January 2017.
“I expect and will plan for another round of tax cuts here in the state of Arkansas. That will help us,” he said. “I will work with the legislature to define what that tax cut is, how much it is that we can absorb. But we have to continue to be competitive with our income tax rates in this state.”
To highlight this point, Hutchinson noted that in a recent conversation he had with an unnamed CEO, the still-too-high rates were a deterrent when stacked up against surrounding states, such as Oklahoma as well as 0% states like Tennessee, Florida and Texas.
“It is a challenge being competitive, and we have to show other advantages that we have to compete,” he said.
Still, that hasn’t stopped advancement, Hutchinson said, praising a $1.36 billion investment from Shan Dong Sun Paper to build a mill in the vicinity of Arkadelphia that was announced in April 2016.
LOCAL LEADERSHIP, WORKFORCE
Hutchinson believes local area and government leadership need to be involved, and he credited the Fort Smith area for doing its part.
“What you have accomplished – with the Arkansas College of Osteopathic Medicine that is onboard and moving forward to a 2017 class; the University of Arkansas at Fort Smith where my daughter graduated; model job training programs – is the result of local leadership partnering with our state and having great success in what we’re doing.”
Specific accomplishments for the Fort Smith region included ArcBest’s announcement to add 1,000 new jobs and to build a new headquarters; the Furniture Factory Outlet relocation of headquarters; and the arrival of Pennsylvania-based Glatfelter, which acquired the Mitsubishi plant at Chaffee Crossing in March with the goal of adding 83 new jobs by late 2017.
On workforce, Hutchinson’s administration spearheaded an effort to boost computer science in Arkansas schools with close to 4,000 students taking elective coding classes throughout the state – a figure that has earned recognition from national organizations and media outlets like CNBC, Code.org, Microsoft, and Yahoo, Hutchinson said.
“Four thousand students are taking computer science education for the first time, and we hope to expand that number,” he said. “We want to be able to continue to support our teachers, who are retraining themselves and learning this new skill that’s important for our students.”
Hutchinson emphasized that a skilled workforce can also help reduce reliance on social programs, which aside from those with “permanent situations” like severe disabilities and impairments, should be used only as “a safety net and a temporary fix for a difficulty in life.”
He continued: “If you’re able-bodied, let’s get you through a tough time. Let’s get you through to economic growth. Let’s get you back to working. Our social programs should be an incentive for people to work and not a disincentive for people to work.”
Recently, the Hutchinson administration instituted a work requirement for SNAP participants. Under the terms of the plan, one must be working or in training for a job. If neither is available, “then you have to volunteer 20 hours per week for a charitable organization or a nonprofit in your community,” Hutchinson explained. “Is that too burdensome?”
Ultimately, Hutchinson believes people “want to have that opportunity to work and to better themselves and to contribute, so we’re giving them that opportunity.”