By STEVE BRAWNER
Texarkana, Texas, is booming. Texarkana, Arkansas – not as much. Supporters of Issue 3 say that’s because Texas, along with 47 other states, has tools Arkansas lacks, and they want voters to change that.
Opponents of Issue 3 say it’s the wrong tool.
Issue 3 is one of three constitutional amendments on this year’s ballot – the others pertaining to noncitizen voting and gun rights. It would let cities and counties create economic development districts that provide developers incentives to improve them.
Under Arkansas’ Constitution, local governments can incentivize industrial and corporate headquarters but not housing, retail and other developments. Only Arkansas and Arizona cannot do what other states can do.
Cliff McKinney, a board member with Arkansans for Strong Communities, the group promoting Issue 3, said the state has steel plant jobs in northeast Arkansas and defense plant jobs in south Arkansas but not the needed housing in either place. Employees are driving long distances, including from other states, to work.
The amendment would let cities and counties use three new development tools. One is tax increment financing, or TIFs. The economic development district would issue bonds to pay for a development. Future property tax revenues would repay the bonds. Another tool, sales tax and revenue (STAR) bonds, would be repaid through future sales tax revenues.
A third tool would be Texas 380 agreements, which have existed in that state since 1989. In those, a developer spends money on the front end in exchange for a negotiated tax rebate. Instead of a community building the infrastructure to attract the developer, the community provides a tax rebate and the developer builds the infrastructure.
McKinney, an attorney, said Texas 380s are simpler than TIFs and STAR bonds. They don’t require a bond issue and can involve very small projects, such as new retail operations or restaurants.
He said his first Texas 380 program involved an Arkansas company developing a Texas shopping center in the early 2000s. In exchange for a tax rebate, the developer agreed to go above and beyond its planned infrastructure improvements. Those improvements made future development by others more likely.
“Our goal is to have the same toolbox that Texas has,” he said.
Arkansas State Chamber of Commerce President and CEO Randy Zook, who chairs Arkansans for Strong Communities, said Issue 3 could foster development in downtown Pine Bluff or help fill a vacant lot in downtown Magnolia.
“We do a great job of recruiting big business, big national businesses, manufacturing plants, data centers, all those types of big deals,” Zook said. “This is for the grocery store in Gould, Arkansas.”
The newly formed economic development districts would be governed by the city or county or by a board those entities create. The developer would continue owing the same amount of property taxes already charged to the area within the district. But future increased property taxes resulting from growth could be abated for a certain amount of time to subsidize the development. The district’s charter would spell out how much and how long.
The constitutional amendment would need enabling legislation spelling out the details. Legislators filed a 31-page bill in 2025, a version of which would need to pass next year.
Who’s opposed? Conduit, a conservative advocacy organization in Arkansas that doesn’t always agree with Republicans, says Issue 3 gives too much authority and independence to appointed boards and gives the Legislature a blank check in crafting the details.
Jack Thorlin, a University of Arkansas School of Law assistant professor, said it lets cities and counties cede taxing power to the economic development districts, which could benefit politically connected businesses that would represent themselves on the district boards. He said the proposed amendment doesn’t adequately explain how the districts would be governed. Legislatures don’t do well when given too much discretion; they need the Constitution to hold them accountable. The amendment would supersede any conflicting parts of the Constitution.
“All we know is that we approve it in November, we get to find out later if they end up putting in safeguards,” he said. “And that’s not usually how you want things to be structured.”
This is a complicated issue that can’t be fully explained in 800-ish words by a columnist who doesn’t perfectly understand it.
I think it comes down to this: The supporters are right that Issue 3 would give communities a useful tool for economic development projects that almost all other states have. On the other hand, the opponents are right that it would create another avenue for sweetheart deals benefitting politically connected developers.
Do you believe mayors and county judges will try to do the right thing for their communities most of the time, and that the public can keep an eye on them to make sure they do? Vote yes. If not, vote no.
That’s the best I’ve got. I’m going to write about something easier next time.
Steve Brawner’s column is syndicated to 24 news outlets in Arkansas. Email him at brawnersteve@mac.com.
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