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JACOB BUNDRICK: Better use of fund

Address our tradesmen shortage by Jacob Bundrick Special to the Democrat-Gazette | December 21, 2015 at 4:11 a.m.

Job creation is an Arkansas priority. Government officials constantly work to bring in new jobs by recruiting businesses to the state. Too often the main component of economic development is giving state tax breaks and subsidies which go to special interests.

Is this the best use of tax dollars? Could the public's money be better spent?

All resources, including money lost through tax breaks or given away through subsidies, have opportunity costs. Opportunity costs are the other ways that resources could have been used. When public money is spent on tax breaks and subsidies for just a handful of firms, the state forgoes many other, possibly more productive, uses of its money. These tax dollars could have been left in taxpayers' pockets, used to address the shortage of K-12 teachers, or used for a variety of other measures.

November's Northwest Arkansas Workforce Summit highlighted another opportunity cost of corporate welfare--Arkansas' shortage of skilled tradesmen.

The state government estimates that by 2020, Arkansas will have a shortage of almost 100,000 career and technical education certificate holders. Yet, rather than promote skills training to fill these positions, the state chooses to provide financial incentives for select firms, such as subsidies through the Governor's Quick Action Closing Fund.

Proponents of the $156.25 million Quick Action Closing Fund argue that it is vital for economic growth. But fund accounting reveals that seven of its 10 largest beneficiaries have failed to live up to job-creation promises.

Imagine, instead, that the Quick Action Closing Fund was used for skills training. How many Arkansans could have received the technical education that Arkansas' work force so desperately needs?

Program costs from Springdale's Northwest Technical Institute indicate that the fund could have paid for about 27,867 certificates in diesel and truck technology, 37,309 in industrial maintenance technology, 45,356 in machine tools technology, or 27,902 in welding technology. These numbers dwarf the projected job creation from the Quick Action Closing Fund, and in any combination would have gone a long way in combating the state's shortage of skilled tradesmen.

Arkansas has a particular need for skilled diesel mechanics. The prominence of the state's logistics and agriculture industries, combined with the continued retirement of baby boomers, creates a compelling demand. With such need for diesel mechanics, perhaps a better use of the Quick Action Closing Fund would have been to expand the state's diesel technology programs. A $2.5 million investment at Northwest Technical Institute, for example, would increase the program's enrollment capacity from 32 students to 50.

How many more diesel mechanics could Arkansas produce each year if similar investments were made around the state?

Putting Arkansans to work is a primary goal of economic development. Rather than fishing for outside opportunities with a failed slush fund for corporate welfare, we could do so much more right here at home.

One hundred and fifty-six million dollars is a lot of money. Money that could reduce taxes, increase education, or fight the technical skills gap. Providing skills training to thousands of Arkansans would put residents on track for numerous well-paying, high-demand careers.

Not to mention, it would make Arkansas more attractive to outside firms.


Jacob Bundrick is a research associate with the Arkansas Center for Research in Economics (ACRE) at the University of Central Arkansas.

Editorial on 12/21/2015

Print Headline: Better use of fund


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