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New strategy for providing incentives will attract big industry

A special sales tax that will go before voters on Nov. 8 could be a big boon to economic development in West Memphis. The proposed tax is a reaction to Arkansas legislation passed earlier this year that makes it easier for communities to invest in economic development projects.

Introduced by District 53 Rep. Keith Ingram, the law allows a city to apply up to a 1 percent sales tax to fund incentives for a prospective investment by a business. West Memphis is the first Arkansas municipality to take advantage of the legislation and propose the incentive strategy to voters, opting for only a .25 percent tax.

Based on current estimates, the proposed tax could raise $4 million in three to four years. According to the law’s sunset clause, once the $4 million cap is reached, the tax is removed until it is needed to fund another project incentive.

Any three of a list of thresholds has to apply to the project:

  • If the project includes a $10 million private investment
  • The project creates at least 50 new jobs
  • Wages are at least 110 percent of the average state or county wage
  • Project must be a targeted industry for the local, regional or state economic development plan
  • The project must have a benefit ratio of at least twice the cost of the incentive
  • The project is supported by at least 75 percent of the city council
  • The prospect signs an incentive agreement with the Arkansas Economic Development Commision

    Economic Development Director Ward Wimbish says the new law gives communities like West Memphis the ability to provide the incentives crucial to landing major projects without needing to push through an undefined tax increase for potential development.

    “Under this proposal, no taxes would be levied until the project locates in West Memphis,” Wimbish said. “And when the funds have been raised to cover the incentives, the tax is removed.”

    Wimbish and other proponents of the tax plan say that other municipalities are already seeing benefits from similar incentive strategies – including Mississippi County, where 1,600 new industrial jobs were created in the first three years of a voter-approved tax.

    “More Arkansas cities and counties are creating economic development incentives to give them a leg up on other regions,” Wimbish said. “This state law gives us a unique opportunity to attract more Memphis-affiliated industries, as well as compete with other counties in Arkansas, Tennessee and Mississippi competing for the same projects.”

    Potential incentives provided for under the law include road, drainage and water improvements as well as land acquisition and workforce training. An additional benefit of the new law is that it allows partner organizations to put up the initial funds to close the deal, with the city then able to levy the tax over time to repay the investment.

    Ward Wimbish
    Director, Economic Development
    wimbish@westmemphis.com
    870-732-7500





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