$87M leg up for Lockheed cruises to OK

Bills head to Hutchinson; legislators wrap up session

Rep. Joe Jett (left), D-Success, talks with Gov. Asa Hutchinson in the hallway of the state Capitol on Thursday as action at the special legislative session winds to a close.
Rep. Joe Jett (left), D-Success, talks with Gov. Asa Hutchinson in the hallway of the state Capitol on Thursday as action at the special legislative session winds to a close.

The Arkansas Senate and House of Representatives on Thursday shipped bills to Gov. Asa Hutchinson authorizing an $87.1 million bond issue to help Lockheed Martin win a federal contract and expand its workforce in south Arkansas.

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Arkansas Democrat-Gazette

House members vote Thursday on the bill authorizing state funds to help Lockheed Martin land a federal military-vehicle contract for East Camden.

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Arkansas Democrat-Gazette

Lawmakers depart the House chambers Thursday after wrapping up the special session.

The actions came on the third and final day of a special session called by the Republican governor for the Republican-dominated Arkansas Legislature to consider approving this economic incentive package and several other measures. The Senate adjourned several minutes after 3 p.m. Thursday, shortly after the House adjourned.

"This is an important next step in our attempt to help Lockheed Martin secure a federal Defense contract and create hundreds of new jobs in south Arkansas," Hutchinson said in a written statement.

"The state of Arkansas is doing its part by overwhelmingly passing the Amendment 82 legislation," he said, referring to the bond issue. "I've called this a golden opportunity for Arkansas, and it is -- not just for us to expand our economy but to contribute to our nation's defense."

Hutchinson is to sign the legislation this morning at a news conference in the governor's conference room at the Capitol, said Hutchinson spokesman J.R. Davis.

House Bill 1003 by Rep. Matthew Shepherd, R-El Dorado, sailed through the Senate Thursday in a 30-2 vote with only Republican Sens. Bart Hester of Cave Springs and Cecile Bledsoe of Rogers dissenting.

An identical measure -- Senate Bill 6 by Sen. Bobby Pierce, D-Sheridan -- cleared the Senate on Wednesday in a 31-3 vote and zipped through the House in a 90-0 vote Thursday afternoon.

Lockheed Martin wants to build joint light tactical vehicles near East Camden to replace the line of vehicles known as Humvees made by Indiana-based AM General LLC.

Companies based in Indiana and Wisconsin also are competing for the contract. State officials say the project would create nearly 600 jobs in Calhoun County and help retain more than 550 existing jobs.

Pierce said he believes that Lockheed Martin has better-than-even odds of winning the federal contract.

"They have been in business. It's not like it's a new company just starting up from zero," Pierce said after the Senate's vote.

Bledsoe said she voted against the legislation authorizing the bond issue because "I just have a philosophical difference with those kind of things. I think it's picking winners and losers.

"I think we need to invest in all businesses, especially small businesses and entrepreneurs," she said.

This is the second time that the Arkansas Legislature has considered authorizing a bond issue for a "superproject" under Amendment 82.

In 2013, the Legislature authorized a $125 million bond issue for the Big River steel mill near Osceola.

That mill is under construction.

Amendment 82, enacted in 2004, allows the state to fund projects as long as the funding does not exceed 5 percent of the state's general revenue from the previous fiscal year.

The governor's office said the $87.1 million bond issue 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 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.

The annual wage for the nearly 600 new jobs would average $58,830. The annual payroll would be about $35 million for the new positions.

Work on the project started under Hutchinson's predecessor, Democrat Mike Beebe.

Senate President Pro Tempore Jonathan Dismang, R-Searcy, said this week that he wants to thank Beebe "and his team that kick-started this project and really got the ball rolling."

A consultant hired by the Legislature said Tuesday that the state would recoup the money spent on the project, plus earn an additional $16.3 million in revenue over 25 years.

Phil Hopkins of the IHS Global Insight consulting firm said the state will lose money on the deal for about the first 20 years but will make up the difference by the 25th year.

Three defense contractors are competing for the project.

The Department of Defense is expected to award the contract in late July or early August, but the two companies not chosen will have a chance to comment during a protest period.

Now that the aid package has been approved, key lawmakers say they'll have to wait and see what happens.

"Our involvement in that particular process I think is probably concluded at this point," House Speaker Jeremy Gillam, R-Judsonia, said Thursday.

"Until they are actually awarded the contract, it's signed and for sure, there won't be any bonds sold or any action taken by the state of Arkansas."

Metro on 05/29/2015

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