Arkansas voters face new economic district amendment

Arkansas voters will decide on November 3 whether to amend the state constitution to allow local economic development districts. The measure, labeled Issue 3, would authorize the Legislature to create programs, loans, and grants using public funds for economic development. It would also permit local governments to establish specific districts where tax rebates and other incentives can be negotiated to attract new businesses.

The proposal was referred to the ballot by the Legislature through a resolution sponsored by former state Sen. Jonathan Dismang and state Rep. Howard Beaty. Dismang resigned from the Senate in September to take a position at Arkansas Electric Cooperatives. He had previously filed a bill in late 2025 outlining the structure of such a program, but the measure was not voted on during that session.

Randy Zook, president and CEO of the Arkansas State Chamber of Commerce and the Associated Industries of Arkansas, chairs the ballot question committee, Arkansans For Strong Communities. The group has raised more than $2.2 million, with the majority spent on advertising according to an October finance report. The largest donors are Jim Walton and his sons, Tom and Stueart, each of whom contributed $125,000.

Zook stated that the amendment is necessary to compete with other states that already offer similar incentives. He emphasized that while state-level incentives have successfully attracted industrial projects, Issue 3 would provide tools for cities and counties to attract retail developments such as shopping centers and grocery stores. Zook noted that communities in the eastern third of the state have experienced population and retail losses, making the tool particularly relevant there. He clarified that the tax status of existing businesses in a district would remain unchanged, and incentives would apply only to newly generated taxes from new investments.

Opponents argue the amendment expands government size and grants vague powers without clear safeguards. Brenda Vassaur Taylor, cofounder of the Conduit for Action and Conduit for Commerce, is also treasurer for Truth in Politics Against Issue 3. Taylor said the measure allows the government to select which businesses receive advantages and transfers public funds to private entities. She described the provision as a vast and vague power grab that reduces individual freedoms. Vassaur Taylor added that economic development should support existing businesses rather than subsidize their competitors with tax dollars.

Kristin Foster, executive director of the League of Women of Arkansas, said the organization opposes the proposal due to its broad new taxing and bonding authority. Foster stated that the opposition is not about economic development itself but about granting extensive constitutional authority without clear protections for public revenue. The League is a nonpartisan group focused on voting rights.

The amendment would become effective on January 1, 2027, and would supersede conflicting constitutional provisions. It allows the issuance of bonds to fund projects, with developers rather than local governments responsible for the debt. The measure comes as the Legislature set aside up to $300 million from the state surplus for incentives to attract a manufacturing facility to West Memphis. Several communities have also clashed with economic development officials over the growth of data centers.

Arkansas voters have previously approved tools to attract business, including Amendment 78 in 2000, which allowed for Tax Increment Financing districts. A 2007 state Supreme Court ruling limited the tax revenue available to these districts, causing their popularity to decline. State Senate President Bart Hester and state Sen. Clarke Tucker expressed bipartisan support for Issue 3 in a video released this week. Zook urged voters to approve the measure, calling it local choice and control without new taxes.