- Associated Press - Wednesday, May 27, 2015

LITTLE ROCK, Ark. (AP) - An $87 million incentive package intended to bring a military vehicle assembly plant to south Arkansas easily won initial approval from lawmakers Wednesday, with a handful of Republicans opposing the move as the wrong way to attract business to the state.

The Arkansas House voted 96-0 in favor of the plan to issue bonds if Lockheed Martin wins a defense contract to assemble a new tactical vehicle that will replace the Humvee at its Camden facility. The Senate voted 31-3 in favor of an identical bill. Final votes on the bond proposal are expected Thursday.

State officials have said if Lockheed wins the contract, the project will create nearly 600 new jobs and keep more than 500 existing jobs at the facility.

“This bill will allow Arkansas to bring an automobile manufacturing facility to the state of Arkansas,” Republican Rep. Matthew Shepherd of El Dorado said. “Not a conventional one, but I would suggest that this is even better than the Volvos, the GMs or the Fords, or any other manufacturer you could talk about.”

Maryland-based Lockheed is competing with two other companies for the contract - Indiana-based AM General and Wisconsin-based Oshkosh Defense. The bonds won’t be issued unless Lockheed wins the contract, which is expected to be awarded later this summer.

The proposal has drawn little vocal opposition. Conservative interest group Americans for Prosperity criticized the proposal Tuesday as a “misguided corporate handout,” and a GOP lawmaker said the state should instead focus on policies that would help businesses grow.

“I think we’re much better suited as a state to spend our time and resources on creating a level playing field and environment for all businesses in Arkansas,” Republican Sen. Bart Hester, of Cave Springs, told lawmakers before the vote. He was among the three senators who voted against the measure and the only lawmaker to speak against it.

A consultant hired by the Legislature to review the project said it would provide a $16.3 million net benefit to the state over a 25-year period after the bonds and interest are paid off. But the report by Colorado-based IHS said the benefit would likely be higher, since its analysis wasn’t factoring in the possibility of suppliers moving to the state or Lockheed selling the vehicles to other countries.

If approved, the project would mark the second time Arkansas has issued bonds under a 2004 constitutional amendment aimed at helping the state land large economic projects. Lawmakers two years ago approved $125 million in financing for a steel mill under construction in eastern Arkansas.

Arkansas officials say they expect the state to pay off the bonds in 15 to 20 years. The state would pay between $109 million and $122 million for the repayment and interest, depending on how the bonds are structured.

The bond proposal was the top agenda item on a special session that began Tuesday. Republican Gov. Asa Hutchinson said he was pleased with the widespread support for the project.

“It’s the best of the Legislature in action. They acted quickly and strongly,” Hutchinson said. “I think it sends a good message to the federal government that the state of Arkansas is really a good partner with Lockheed Martin.”


Associated Press writer Claudia Lauer contributed to this report


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