Arkansas Gov. Asa Hutchinson said Thursday that he is seeking the Arkansas Legislature's approval next week for an $87.1 million bond issue to help Lockheed Martin compete for a federal defense contract in Camden.
At a state Capitol news conference, he also explained his decision to ask lawmakers to move the state's primary elections from May to March, saying the earlier date would give Arkansans a greater voice in picking presidential candidates.
The governor said the proposed bond issue would be the state's only commitment to Lockheed Martin and there are no additional financial incentives to assist the Maryland-based corporation.
The company would build the Joint Light Tactical Vehicle for the Army and Marine Corps and replace the line of vehicles known as Humvees made by Indiana-based AM General LLC.
If the contract is approved, it will help save 550 existing jobs and ultimately lead to an expansion doubling the company's workforce in Camden, the governor said.
"It is a competitive marketplace as to which company is going to get to produce the 55,000 vehicles for the Department of Defense and we want to do the state's part to make sure that Lockheed Martin and south Arkansas is in a position to win this," Hutchinson said.
The governor's office said the $87.1 million bond issue that Hutchison wants the Republican-dominated Legislature to authorize would include an $83 million cash grant to the company for qualifying building and infrastructure improvements, equipment and other eligible expenses incidental to the project.
The bond issue also would include $2.5 million for the payment of the state's bond-issuance costs, debt-service reserves and other financing costs incurred or paid by the state, and a $1,645,000 training grant to be used for constructing and equipping training facilities at Southern Arkansas University Tech, Hutchinson's office said.
Lockheed Martin would enter into a 25-year commitment with the state if it's awarded the contract. And if the project falls through or if the firm is not awarded the project, "the deal is dead and Arkansas is off the hook for the money," the governor's office said in a written statement.
"We expect [the proposed bond issue] to be well received by the Legislature," Hutchinson told reporters. "We are excited about the opportunity."
State lawmakers will receive a consultant's report analyzing the proposal today.
"I can tell you the present value benefit is positive for Arkansas, and it's moderately significant, which is a little better than we heard [about the proposed] Big River" steel mill. ... So it looks good," Richard Wilson, assistant director of research for the Bureau of Legislative Research, told the House and Senate City, County and Local Affairs committees in Little Rock.
In 2013, the Legislature authorized a $125 million bond issue for the Big River steel-mill project, which is being built in Mississippi County near Osceola.
The Lockheed Martin deal looks solid, Wilson said.
"The cost-benefit analysis appears to hold its own for 19 years, and after that it's all positive for Arkansas. Six hundred jobs," said Wilson.
But David Ray, the state director for Americans for Prosperity, raised doubts about the deal.
"Although not all the details of this proposal have been released, Arkansas would be better served by reducing taxes and regulation in order to create a better environment for all businesses rather than spending tens of millions of dollars in taxpayer money on 'incentives' to lure particular projects or corporations to the state," he said in a written statement. "Taxpayer money should be used to benefit all business across the state, rather than giving a handout to one corporation."
Randy Zook, president of the Arkansas State Chamber of Commerce and Associated Industries of Arkansas, said the the two groups are backing the proposed bond issue because it's a "unique opportunity to get Arkansas into the vehicle [manufacturing] sector at a cost we can manage."
The project "will have major impact on per capita income in south-central Arkansas" and "will result in supplier companies bringing even more jobs [and] investment to cluster around the assembly plant. These can be attracted for little marginal cost to [the] state," he said.
During the news conference, Hutchinson also discussed his sole reason for wanting to move the presidential and other primary elections from May to March 1 in 2016, suggesting the presidential primary race will be over by the time Arkansans vote if the date isn't changed.
"The people of Arkansas want to have a meaningful vote in deciding the next president of the United States both from the Democrat and Republican side. May ... is not a meaningful vote as compared to March 1."
The legislation would allow Arkansas to join some other Southern states in a regional presidential primary called the SEC primary by some of its supporters. The SEC is the Southeastern Conference, a college athletic conference that covers much of the South.
Hutchinson, who has endorsed Mike Huckabee for president in 2016, said he's never discussed moving the primary elections with the former Arkansas governor, a Republican who ran for president in 2008.
Huckabee spokesman Alice Stewart said Thursday night that "we are encouraged by the fact that Southern states, like Arkansas, have a more significant role in the primary process."
"Gov. Huckabee is expected to do well in the SEC primaries because he stands for the views and values of those in the South," Stewart said.
A spokesman for former Arkansas first lady Hillary Rodham Clinton didn't respond to written questions about her stance about moving the primary elections more than two months earlier in 2016.
State Rep. Nate Bell, R-Mena, who is chairman of the House State Agencies and Governmental Affairs Committee, said that "the fact that we are so hellbent on [changing the primary elections dates in 2016] doesn't make any sense to me."
"We are making some substantial changes" that will lead candidates in full-fledged campaigns for federal, state and local offices during the Thanksgiving and Christmas holidays, Bell said.
On other matters, Hutchinson said he is not aware of any legal impediment for former Rep. Denny Altes, R-Fort Smith, to simultaneously serve on the Sebastian County Quorum Court and as the state's drug director, a post that the governor appointed Altes to earlier this month.
But he said Attorney General Leslie Rutledge "will make a determination on that and we will look at that very carefully obviously."
Altes "served in the Legislature for many years and I think he will do a fine job as drug director," said Hutchinson.
Altes started work as drug director on May 11 and his salary is a $73,124 a year, according to the Office of Personnel Management.
The governor said he's also asked Rutledge to review a state Department of Human Services contract with CH Mack regarding "whether there is any potential claim against the company, whether there is any possibility of recovery on the behalf of the state of Arkansas."
Hutchinson said the department's $4.8 million contract with CH Mack was brought to his attention earlier this year after he was elected governor and the contract ended last year under Democratic Gov. Mike Beebe's administration.
The state "did not receive any significant benefit" under the contract, he said.
"It was poor contractor performance," Hutchinson said.
"Quite frankly I don't believe it had the oversight that was needed from the government side and the result was that the taxpayers lost money," he said.
Hutchinson's comments came three days after lawmakers criticized the department for its handling of the contract and allowing delays and millions of dollars of cost overruns on a software system that was supposed to improve care for roughly 12,000 Arkansans with disabilities.
CH Mack was supposed to provide an electronic tool to evaluate developmental disability clients for $2.14 million by 2012. DHS originally contracted with the company in 2011.
The department extended the contract and asked for additional services. By 2014, CH Mack has been paid $4.8 million but had not developed a suitable tool. CH Mack has since changed its name to AssureCare.
The cost of special sessions to the state varies based on their length, but legislative leaders are hoping to complete legislative business in three days next week.
The House spent $49,233 on the three-day special session in October 2013, which included per diems, mileage and pay for staff members as the chamber met at the Old State House on Markham Street in Little Rock, a spokesman for the House said. Ann Cornwell, the director of the Senate, said the Senate spent $19,000 spent on October 2013 three-day session and the chamber met in the state Capitol.
Information for this article was contributed by Brian Fanney of the Arkansas Democrat-Gazette.
Metro on 05/22/2015