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Arkansas Approves $87 Million Subsidy For Lockheed Martin

With virtually no opposition, Arkansas lawmakers passed legislation Wednesday appropriating $87 billion to help Lockheed Martin win a Department of Defense contract.

Meeting in special session, the House voted 96-0 to approve the incentive package, while the Senate passed its own version by a 31-3 margin, according to Arkansas Online.

Once the General Assembly reconciles the two bills, it is widely expected that the final version will be signed by Republican Gov. Asa Hutchinson, who called the legislature into special session specifically to approve the Lockheed incentives.

Both bills authorize the issuance of just over $87 million in state bonds, of which $83 million is earmarked to help Lockheed offset the cost of expanding an existing production facility in East Camden, which many believe will help the company secure a contract to construct Joint Light Tactical Vehicles (JLTV’s), the U.S. military’s replacement for the Humvee. (RELATED: States May Have to Disclose Business Subsidy Costs)

In return for the subsidy, Lockheed promises to invest at least $125 million in the East Camden plant, retain its current 530-person workforce, and create nearly 600 new full-time positions, according to The City Wire. In addition, the company pledges that the new jobs will have a minimum average annual compensation, which for the first few years of the project is set at about $45,000.

If Lockheed fails to uphold those commitments, the agreement includes provisions allowing Arkansas to reclaim a portion of the grant money based on the extent of the shortcoming. Similarly, if the Defense Department decides not to award the JLTV contract to Lockheed, Arkansas will be entitled to terminate the deal.

Republican Rep. Matthew Shepherd, who sponsored the House bill, described the arrangement to colleagues as a “partnership with Lockheed Martin,” rather than an instance of “corporate welfare,” citing the job creation and compensation requirements.

“We’re talking about 1,000 jobs here,” he said, combining the figures for job creation and retention. “That’s obviously, in this climate, very significant.” (RELATED: Arkansas Lawmakers Ask Voters to Give Businesses More Money)

While lawmakers were nearly unanimous in supporting the grant, their efforts did face some resistance from outside interest groups: Most notably, the free-market advocacy organization Americans for Prosperity (AFP).

In a press release issued Tuesday, AFP’s Arkansas chapter argues that the state would benefit far more from improving its business climate with pro-growth tax and regulatory reforms than from subsidizing “one of the largest and most successful companies in the world.” (RELATED: These Billionaires Make Bank When Taxpayers Subsidize Business)

“Attracting jobs to our state is correctly a high priority for both the governor and state lawmakers,” the group acknowledges, but “rather than working to expand opportunities for all Arkansas families and businesses, lawmakers are poised to consider legislation that would put taxpayers on the hook for a multi-million dollar, debt-financed giveaway to a single corporation.”

According to AFP, “each job created by the Lockheed Martin project financed by the bill would cost taxpayers approximately $145,000— hardly a bargain for Arkansas families.”

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