Community members react to failure of quarter-cent economic development sales tax in Hempstead County

Reaction around Hempstead County to the failure of the quarter-cent Economic Development sales tax ranged across the spectrum from relief to exasperation to seeing a new opportunity.

The proceeds from the quarter-cent tax, had it passed, would have been used to recruit new industry or keep industry in the county. It was projected to raise $800,000 a year to finance infrastructure adjustments or other incentives needed to attract prospects to locate their factories or headquarters in the county, allowing it to compete with other counties in making its case.

But since the tax has failed, some members of the Hempstead Economic Development Corporation are examining the campaign and what its results could portend for the near future.

Hempstead Economic Development Corporation President Steve Harris said, “My theory on the election is that everybody voted against everything.”  He explained that the quarter-cent tax may have been placed at a disadvantage, being on the same ballot as four constitutional issues that each went down in defeat as well.  He also cited the influence of inflation and the apparently widespread sentiment that “people already had enough taxes.”

Though the vote was non-binding, Spring Hill’s voting against its school millage was also a signal to Harris of what the overall attitude of the county’s voters in this cycle. Nonetheless, Harris continued the work of the HCEDC. This past Friday morning, he was part of a Zoom meeting with other members of the South Arkansas Development Association and then drove two officials from the Arkansas Economic Development Commission on a tour through the Industrial Park north of Hope, showing them the land available for industrial use as well as the sites of industries currently located in the area.

The HCEDC’s Chairman, Lester Sitzes, III, sent a statement outlining the history of the establishment of an economic development corporation in Hope.  He said it had been started because of the need for an organization dedicated to recruiting industries that could offer incentives competitive with those offered by other counties.

The way the HCEDC was set up, Sitzes said, took into account a need for it to be independent of the county’s chamber of commerce and “to creating something that was fair, honest and open.” The corporation was successful in relieving the Hope-Hempstead Chamber of duties to recruit employers it had previously shouldered, just in time for it to be more in demand as tourism interest in Hope peaked with Bill Clinton’s campaign and presidency.

The trend of EDCs in the region offering more and more incentives, Sitzes said. “These include providing the land to build on and infrastructure work such as roads, sewer, water, natural gas and electricity at low or no cost to the prospective company. In return, we get the industry here with good paying jobs, and they agree to negotiated goals on their employment numbers and other criteria.”

The quarter-cent did not pass, however, Sitzes said, because “Too many folks just don’t want anything better for themselves and their families if they have to contribute anything to make it happen.” He said Head of the Steering Committee for the tax, the HCEDC’s Quorum Court member Steve Atchley “did a great job running the campaign with his committee. I truly do not believe there was anything else Steve could have done to garner more support for the EDC Tax in Hempstead County.”

Asked what supporters of the HCEDC’s work could do now that the tax had not passed, Sitzes said, “Pray.”

Atchley himself said, when asked for his analysis of the defeat of the quarter-cent tax, “It’s going to hurt our community. It’s not going to progress like it should do. We will continue at Economic Development to do what we have in the past and to progress as we can.” He said he did not know whether there would be another attempt to raise an Economic Development tax in two years, but said “that’s going to be up to the economic development board to bring that before the people.”

Steve Montgomery, Hope City Director, past mayor and current member of the HCEDC said in a statement that he found the results “disappointing, but the purpose was to give the citizens a voice in it.”  The result, Montgomery said, “puts us at a dire disadvantage with not only neighboring counties but regionally as well in the ability to attract new industries and assist current industries.”

Asked what factors drove the results, Montgomery said he believed national economic trends did so, especially inflation.  He also said, “I’m not sure we got the message out well enough.”

The HCEDC, Montgomery said, would continue to perform its recruitment and retention duties, but would rely on the assistance of the Arkansas Economic Development commission, Hope Water and Light, city governments and the county government.  The governments would be limited in what they could offer since they must be mindful of citizens’ tax dollars and would not be likely to go into debt or curtail current services to offer incentives to potential or current employers.

In the future, Montgomery said, the HCEDC still has an essential task to carry out for the county. “There are current industries looking [at locating here], and the EDC and its staff is gathering information requested. As to the ability to keep those industries interested, [it] remains to be seen.”

An opposing voice regarding the sales tax increase is that of Sylvia Brown, Strategic Operations Director for the Education Fund and Co-chairman of the Ad Hoc Committee on Fulton Water Operations.  It is not to the raising of funds, she objects, she said, but to the way they were going to be used.  “I was not supportive of the EDC’s sole focus on using the generated revenue for a big manufacturer, one of nine project types in section (1) [of the description of the measure that appeared on the ballot.} Providing incentives or abatements for big business is a fading approach to economic development.”

Instead, Brown said she favored the use of funds by the HEDC to fulfil another purpose available in the measure, “for community economic development.”  She named some examples of the kind of funds use she’d favor: “Several of the county’s municipalities are hurting and setting up a program they could leverage for infrastructure projects, including water, wastewater, road improvements, would have yielded longer term gains and had community buy-in.”

There are other ways to interest businesses in locating here, Brown said. “What attracts businesses–large, medium or small–is a diverse customer base, quality education from pre-k to post-secondary options, and social infrastructure that bolsters inclusive quality of life needs.” She said the HCEDC now has “a chance to dig deeper and engage with neighbors, everyday citizens, on an intentional plan that’s clearly mapped out, time-bound, with clear measures of success while centering ‘community’ in our economic development approach.”

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