Beebe's economic development plans include $50 million incentive

BYLINE: By JON GAMBRELL, Associated Press Writer

DATELINE: LITTLE ROCK

After Arkansas was hit by a series of manufacturing job losses last year, Gov. Mike Beebe says economic development will be a major focus for the new year.

In a speech Wednesday to legislators, he laid out his proposals, including a proposed $50 million fund to attract new businesses, a focus on biofuels, and reductions in utility taxes.

But Beebe likely will face a challenge in bringing and keep businesses in a state described by former Gov. Mike Huckabee as a "great date, but a terrible marriage" with industry.

Beebe said his proposed $50 million "quick-action closing fund" would be used to woo new businesses and keep those already operating in the state.

"If we're going to be able to compete with our sister states and with foreign nations we must have the ability to effectively and aggressively negotiate in real time and in good faith," Beebe said. "We've got to be armed with the same weapons our sister states are armed with if we are going to compete for those jobs now."

But the proposed $50 million for all industries is far less than the $300 million in incentives approved by Louisiana's Legislature in its attempt to draw German manufacturer ThyssenKrupp Steel AG to the state. Alabama, Arkansas and Louisiana are vying for the $3 billion steel plant.

Beebe's proposal also called for phasing out the sales tax on utilities for manufacturers, with the first step being a one-sixth reduction.

Mitch Chandler, a spokesman for the Arkansas Department of Economic Development, said earlier estimates of eliminating the tax would cost the state about $55 million a year. Some industries, like steel manufacturing, are exempt or grandfathered out of the utility tax, he said.

"Timber and other industries have very high energy costs," Chandler said. "It effectively takes away that tax from them."

Beebe's proposals come as the state has suffered a series of manufacturing jobs losses over the last year. From television manufacturing plants to plywood mills, estimates show Arkansas' manufacturing industry lost 4,600 manufacturing jobs from October a year ago.

But Arkansas has gained some manufacturers in the same time. Hino Motors Ltd. began production in October at its $235 million plant in Marion. The Toyota Motor Corp. subsidiary's plant started work with 220 employees, and is expected to swell up to 450 people as the factory gets up to speed. Toyota may be considering Marion, as well as Tennessee and North Carolina, to build a new plant to assemble its Highlander sport utility vehicle.