Friday, June 5, 2015

What Exactly Did Arkansas Get For $87 Million?

by Caleb Taylor, The Arkansas Project: As you probably heard last week, both Democratic and Republican legislators found something they could all agree on: giving Lockheed Martin $87 million in state taxpayer funding.

As we noted previously, state officials claim this “economic development” project would bring 600 new jobs to the Camden area. If you divide the project cost of $87 million by the estimated 600 new jobs, that gives us a price tag of $145,000 in taxpayer dollars per new job from the project.

According to Talk Business, besides Lockheed Martin, publicly-traded Oshkosh Corp. in Wisconsin and privately held AM General LLC in South Bend, Ind., are the other two finalists to build the next-generation tactical, armored vehicle in a contract worth more than $30 billion through 2040.

So, as you might expect, this crony capitalism from Arkansas has been the subject of media reports in other states.

From the Milwaukee Journal Sentinel:

Lockheed has established a truck assembly line in Camden to validate its JLTV manufacturing system, spokesman John Kent said Monday.

The defense contractor planned to build the trucks in Camden whether or not it received the $87 million, according to Kent.

'The bond package passed by the state of Arkansas Legislature adds to our competitive posture … If Lockheed Martin is selected for the JLTV contract, we will use the funds to augment our Camden factory for full-rate production, and implement training programs, he said.

. . . The $87 million won’t influence the Army’s decision in choosing a JLTV manufacturer, but it won’t hurt in keeping Lockheed committed to the Camden site, analysts say.
So, according to a Lockheed Martin spokesperson, that $87 million in taxpayer funding was irrelevant to its decision about whether to operate in Arkansas. The taxpayer subsidies are also apparently irrelevant to the Army in awarding the $30 billion contract.

So, I have to ask once again: why exactly did legislators vote to give $87 million in state funds to Lockheed Martin?

For example, here’s State Sen. Bobby Pierce explaining his vote in favor of state taxpayer assistance to Lockheed Martin:

There’s been little opposition during this week’s special session to a plan that uses taxpayer money to fund tens of millions of dollars in improvements to the Highland Industrial Park in Camden.

“It’s bringing some well needed jobs to south Arkansas,” said bill sponsor Bobby Pierce, D-Sheridan, said Wednesday on the senate floor.

The deal is designed to help Lockheed Martin win a contract with the Defense Department to produce military vehicles.

State officials say it will save or create more than 1,000 jobs and spur billions in economic impact over 25 years.

“It’s a good bill,” Pierce said.
Unfortunately, Lockheed’s own spokesman contradicts Pierce: Lockheed’s rep told the Journal Sentinel that the Joint Light Tactical Vehicle (JLTV) project would be carried out in Camden, regardless of whether the legislature approved the $87 million taxpayer assistance to Lockheed.

So to wrap things up: if Lockheed Martin gets the defense contract, state taxpayers will be paying $87 million to Lockheed for a project that would’ve been built in Arkansas regardless.

Supporters of giving these taxpayer funds to Lockheed would probably argue that this state funding makes it more likely Arkansas will get the project from the federal government, but I’m skeptical that $87 million in state funds will make much of a difference either way on a contract that’s worth $30 billion.

I guess the bottom line on what we got for $87 million is this: legislators and “economic development” bureaucrats get to brag about how skillful they are at using your taxpayer dollars to subsidize private corporations.

Tags: Arkansas Economic Development Commission, crony capitalism, government spending, joint light tactical vehicle, Lockheed Martin, The Arkansas Project, Caleb Taylor To share or post to your site, click on "Post Link". This site is an Outreach of the ARRA News Service.

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