Proposal would issue up to $500M in bonds for Arkansas’ aging water infrastructure

By ANTOINETTE GRAJEDA | Arkansas Advocate

Supporters of a ballot measure that would allow the state to issue up to $500 million in bonds for water and wastewater improvements say it’s needed to address Arkansas’ aging infrastructure, but opponents are concerned about borrowing money to finance the projects.

Issue 4 is one of four ballot measures being considered by voters, and it’s the only measure that wouldn’t require amending the Arkansas constitution.

The state’s majority-Republican Legislature referred all four proposals to voters. Issue 4 was created through legislation sponsored by Republicans Sen. Bart Hester and Rep. Howard Beaty and approved by the General Assembly in 2025. 

The ballot measure would authorize the Arkansas Natural Resources Commission to issue up to $500 million in general obligation bonds to finance or refinance water, waste disposal, water pollution control, abatement and prevention, drainage, irrigation, flood control, and wetlands and aquatic resources projects. 

No more than $165 million could be issued for the development of irrigation facilities. The state would also be prohibited from issuing more than $60 million in bonds during any two-year period without prior approval from the General Assembly. 

The proposal comes as communities have struggled to maintain water and wastewater systems, which has resulted in Arkansans losing access to water in places like Helena-West Helena.

Arkansas Rural Water Association CEO Chris Harris said work on an updated state water plan indicates it will cost more than $20 billion to address the needs of water and wastewater utilities. 

“A lot of them are at the end of their lifespan and it’s going to take a massive amount of money to even begin to start replacing some of this,” he said. 

Harris also serves as treasurer of The Committee for Water Infrastructure Now (WIN) for Arkansas, a ballot question committee that supports Issue 4. Since forming in March, the ballot question committee has spent nearly half of the $83,000 it’s raised on polling, according to finance reports.  

Issue 4 is also supported by Water Infrastructure for AR, another ballot question committee that formed this month. The committee hasn’t raised any money, according to a finance report. A representative for the group said they had no public comment for this story.

Harris said Issue 4 allows utilities to access loans from the state at a lower rate than they could through private banks. Utilities that receive a loan would pay a small fee to the state, and that money can be used to access additional federal funding, he said. 

The proposed ballot measure wouldn’t increase taxes, but ratepayers would cover the cost of paying the loans back to the state, Harris said.  

Issue 4 supports a program that’s been in place since 1980 and a tool that the state has used to help fund utilities, Harris said. Arkansans have considered similar proposals in the past, most recently in 2008 when voters approved up to $300 million in bonds to finance water projects.

Voters are being asked to approve up to $500 million now because of inflation and because more projects need financing, Harris said.  

While no formal group has formed in opposition to Issue 4, critics of the proposal have said its broad language raises questions about who could benefit from taxpayer-backed bonds, according to the Public Policy Center at the University of Arkansas Division of Agriculture. 

In recent years, discussion over water infrastructure has been tied to data centers, which require a lot of water to cool servers. Data center projects have faced pushback from communities across the state because of concerns over environmental effects and utility costs.

Harris said there’s no economic development intention behind Issue 4, but acknowledged that a utility could say it’s installing a water line to serve dozens of local residents, and then sell the land to a data center project. 

“You can’t stop a bad actor, but that’s not what this is designed to be used for,” he said. 

Opponents of Issue 4 have also pointed to the billions of dollars the state has accumulated in reserves, and noted that borrowing through bonds will mean paying interest at a time when rates are higher than they were several years ago, according to the Public Policy Center.

Harris said there’s not sufficient funding in the state’s reserves to address all of Arkansas’ water and wastewater infrastructure needs. 

The League of Women Voters of Arkansas, a nonpartisan voting rights organization, opposes the other three legislatively referred measures on noncitizen voting, gun rights and economic development. But the group took a neutral stance on Issue 4. While Issue 4 aligns with the national organization’s stance on water and water quality, Executive Director Kristin Foster said there were concerns about public input and accountability. 

“That’s why we decided not to take a position because those two pieces of it were in conflict with our national guidance on it,” Foster said. 

If approved by voters, Issue 4 would be effective July 1, the start of the new fiscal year. 

You can read the ballot measure in its entirety here.