Roby Brock: Welcome to this edition of the Northwest Arkansas Business Journal Report. I'm your host, Roby Brock. Randy Zook has been at the helm of the Arkansas State Chamber of Commerce and the Associated Industries of Arkansas for nearly two decades. He's seen Arkansas go through many a growth stage, but he says the best is yet to come. I catch up with Randy Zook on today's Northwest Arkansas Business Journal Report.
Brock: Talk about the special session on tax cuts just ended. It was a modest 0.2%. Everything's good, but it still was a small one, on the corporate level and on the personal income, in the right direction. But we've come from 7% to 3.7% on the personal level, to 4.1% on the corporate level. Do we keep moving in that direction? Or is there a point where we don't want to move anymore? Are you part of the "we should get to zero" camp?
Randy Zook: Put me in the camp that says we need to be competitive. Period.
Brock: So you want to look in the context of what it is that we need to be. So that might mean going to zero.
Zook: It could ultimately. But I think incremental steps like we're taking, and not locked in like we're considering, is the wise path. I think the legislature needs flexibility. Things change, needs change. And you don't want to be locked into anything.
Brock: You are here today to talk about a new report that's coming out. Before we dive into it, I did want to get your take on the tax cuts there. But also the national economy right now is in a bit of a flux. We've had a good jobs report. We still have some pretty good strength when you look at some economic numbers. But then you look at the rising gas prices and you look at some of the turmoil internationally, that's going to have some sort of impact at a point in time. What are you hearing from business leaders right now in terms of, are they extra cautious, or are they like, "Look, we're just going to have to grab the situation and go with what we've got"?
Zook: They're not ultra cautious, but they're prudent. I think they're sitting on a few decisions. But generally speaking, they feel like they've got a healthy environment and the economy is expanding. The economy is growing. We're working more people in Arkansas than ever before. Our unemployment insurance trust fund, incidentally, just cleared $1 billion.
Brock: Wow.
Zook: At one point, we owed our water about $360 million.
Brock: I think you were new to the state chamber when that little problem presented itself.
Zook: The first gift that I got. Exactly right. But we've made remarkable progress. We've got more people working than ever before. Our personal income is growing faster than the national numbers. So we're closing the gap between where we are and the national average. That's all very positive.
Brock: I'm going to throw a curveball question at you. You're from McGehee, Arkansas, so you certainly understand agriculture and how important it is to the Arkansas economy. It's still the number one industry in Arkansas. The agriculture economy is in shambles right now, just nationally, not, we've got a lot of hurting farmers here in Arkansas, yet we are still seeing some good economic strength in Arkansas with those numbers, the non-farm jobs you mentioned, the strength of the economy. Are we going through a transformation in Arkansas? Do you think that the state is moving from an agri-economy to a different type of economy in the larger picture?
Zook: I think we're moving to a more diversified and hence stronger and more resilient economy. Absolutely. Without question. You go around the state and you can add up $30, $40 billion worth of capital projects that are underway right now that have nothing to do with agriculture except for timber. I would say that big Weyerhaeuser plant in Monticello, that's going to be a shot in the arm for that part of the state.
Brock: And don't forget about that sawmill in Glenwood, too. I got a newspaper down the sawmill in Glenwood.
Zook: Now we need housing starts to use up some of this timber and lumber that we've got available. But the Arkansas economy is healthy. Look, we're a well-run, managed state in terms of government and costs. We're not driving off in a ditch like Louisiana did at one point, and Kansas did at one point. We're taking things step by step and the world is discovering us. Our population is growing way over our normal expectation. We've added Fayetteville since the 2020 census. Think about that. The equivalent we have. It's just it's amazing.
Brock: Let's talk about this report that you guys have out now. It's the 2035 report. It's really looking at what has been happening, what needs to happen as Arkansas moves forward over the next 10 years. We've kind of touched on some of the growth already that we've seen. So let's focus on what needs to happen going forward. One of the big things is Issue 3 that you guys are supporting. Explain to people what Issue 3 does.
Zook: Issue 3 will give us a competitive tool. We are one of two states that do not have the tools that Issue 3 will make possible, namely economic development districts at a local level, controlled at a local level, not statewide, not controlled by Little Rock, but Monticello would be able to decide, "Hey, we need to support a retail project of some kind, or we need to support affordable housing in some way." All those types of local development projects would be facilitated and would be possible to underwrite those without any tax increase, without diverting any present taxes, like from schools or whatever. It'll be like a tax break going forward. It's a diversion of the tax generated by the project for a negotiated period of time, limited period of time. It's the tools that are used to develop Texas. They use these by the thousands. Every surrounding state has these tools in their toolkit. We need to do it to be competitive. We and Arizona are the only two states of the 50 that do not have these tools. We need to change that.
Brock: You talked about other things to make us, I think competitive is going to be a word that comes back frequently in the rest of this, what this report is advocating that we do in Arkansas. Give me two or three other highlights that you feel like are imperative. Workforce has to be one of them. Energy has got to be one of them, too. That's right below the one in one a and one b.
Zook: Those two, those are neck and neck.
Brock: They're an entry to those a little bit for people who don't understand what kind of goes on behind the scenes and why those two areas are as important as they are.
Zook: Well, workforce is to prepare. We need to invest in the capability to prepare people for the jobs in today's economy and tomorrow's economy. AI, artificial intelligence, is coming at us. It's here. It's not coming. It's here. And it's driving all these data centers across the country. Those are the things, the infrastructure of the 21st century looks like data centers. We're, fortunately, landing them at a measured pace. And we're prepared to participate in that. But we've got to have people trained with the skills necessary to take advantage of those and to enjoy the productivity increase that those are going to drive all across the economy.
Randy Zook is president and CEO of the Arkansas State Chamber of Commerce and the Associated Industries of Arkansas. You can catch the full interview at nwabusinessjournal.com.
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