We’ve been reviewing the exhaustive AEDC annual report to the legislature, which has discussed in-depth the state’s track record and efforts over the last 18 months. AEDC Director Maria Haley has offered a fairly candid examination of the state’s strengths and weaknesses, and the information that has been disclosed will give lawmakers and the public insight as to where the state needs to focus its resources.

Although an arsenal of economic development incentives were passed in the last legislative session, AEDC is already studying a variety of potential initiatives for the 2009 General Assembly. What’s on the agenda? We’ll explore.

Looking to the Future

There are 22 strategies and recommendations that AEDC is evaluating in anticipation of the 87^th General Assembly. Here are some of the major considerations:

1. Expatriate incentive. To recruit Arkansans who have left the state, AEDC is studying the possibility of giving a capital gains tax or income tax exemptions as possible inducements to relocating back in the state.
2. Supplier recruitment incentive. This would provide income tax credits to Arkansas companies that help recruit their suppliers to the state.
3. Constitutional amendment to remove restrictions for equity investments. Arkansas’ constitution prohibits the state from taking an ownership position in any private company. AEDC is studying the feasibility of changing that restriction so that the state could take a “modest equity interest” in companies that receive state funding.
4. Motion picture incentive. On June 30^th, all state incentives targeting the film industry sunset. An interim study has been initiated to look at replacing these credits.
5. Post-doctoral incentive. Should companies that hire individuals with certain PhD’s be given tax breaks? That’s the focus of one possible strategy.
6. Non-profit incentive. An expansion of the non-profit incentive act is being studied in an attempt to lure more headquarters such Heifer International to Arkansas.
7. Headquarters incentives. AEDC is reviewing a measure that would give out-of-state companies meeting certain thresholds additional incentives if they move their headquarters in state.
8. Biorefinery incentives. AEDC suggests that an additional biorefinery tax break should be considered in a special session if called. The bill would mirror the incentives the state passed to lure LM Glasfiber, the windmill blade manufacturer, to Arkansas.

Also on the table for consideration, recommendations from the Fluor study, which examined what other states do to lure companies within their borders. Some of those possibilities include:

• Removing the sales tax on water used in manufacturing
• Enhancing job credits for superprojects
• A rapidly growing business credit for small businesses with more than 20% annual growth
• A federal income tax deduction prior to calculating state corporate income taxes
• Accelerated depreciation on industrial equipment

There’s more in the AEDC annual report, which you can read in its entirety by clicking here.