Asa Hutchinson
Gov. Asa Hutchinson said Tuesday the keys to “sustained economic growth and vitality” are letting the private sector lead the way, investing in post-secondary education, making Arkansas a technology hub and selling the state as a place to do business.
Hutchinson spoke at the Rotary Club of Little Rock’s weekly meeting. The governor had just returned from trips to Cleveland, where he spoke at last week’s Republican National Convention, and Europe, where he opened an Arkansas office in Berlin.
The governor cited recent economic successes. He said 54,000 jobs with wages of $19 or more per hour have been created since he’s been in office, and that the state’s unemployment rate — 3.8 percent — is the lowest in its history and below the national average of 4.7 percent. He said Arkansas is also ahead of the nation in per capita income growth.
He also noted the $1.3 billion pulp mill plant Sun Paper of China plans to build in Clark County. The plant that will employ 250 people directly is expected to result in 2,000 construction jobs over a two-and-a-half year construction period and lead to about 1,000 indirect jobs.
That kind of direct, private sector investment is prized among economic developers. But Hutchinson pointed to another example of the private sector helping the state’s economy: the recently announced sale of the Arkansas Department of Health’s in-home health care operations to publicly traded Kindred Healthcare of Louisville, Kentucky for $39 million.
Hutchinson said those services were losing money, and that the state was now “going to let the private sector do the work.”
The deal, set to close next week, had raised concerns of some lawmakers, who questioned whether a private sector firm would maintain quality services in rural parts of the state. Kindred has said it is committed to serving the underinsured, and has agreed to keep 280 state employees and 1,000 contract workers for up to a year.
The governor also talked about his goals to improve higher education in Arkansas. One plan starts with the funding formula for the state’s colleges and universities. Hutchinson said a new 100 percent outcome-based funding formula will be presented to the Arkansas Higher Education Coordinating Board at its meeting on Friday.
A working group of state education leaders have spent months formulating the plan, which hasn’t yet been released. The plan would replace the state’s long-time higher education formula, which is based on enrollment, with a plan based on performance.
Hutchinson said the current funding model rewards enrollment growth not excellence. He said the new plan would emphasize accountability, student access and degree completion. It would also promote efficiency in operations, on-time completion of degrees and efficient use of resources.
If approved, Arkansas would become the fifth state to employ such a formula, the governor said, adding that it’s “the right direction for Arkansas.” The Legislature must also approve the plan.
The formula is among the governor’s post-secondary education goals, outlined in his “Closing the Gap 2020” education master plan (PDF).
The plans aims to move from 43 percent of high school graduates going on to either college or vocational courses to 60 percent obtaining degrees or certificates, the governor said.
On technology, Hutchinson said Arkansas is leading the nation by instituting coding classes in public schools and pushing toward 100 percent access to broadband internet for K-12 campuses.
The governor also said the state must increase the number of and expand accelerator programs. Hutchinson is scheduled to speak at the demo day next week for the VC FinTech Accelerator, the 12-week summer startup program hosted at the Venture Center in Little Rock and backed by FIS of Jacksonville, Florida, a global banking technology services provider.
Finally, Hutchinson talked about his economic development trip to Europe. He said the state’s new Berlin office will market Arkansas to European companies and build the relationship required to be competitive for job creators.
During a question-and-answer session, the governor was asked how the recent Brexit vote — the United Kingdom’s vote to leave the European Union — would affect Arkansas.
Hutchinson said he had heard business would continue to flow. He also said the vote means the U.K. will have to negotiate its own trade agreements, and that it puts the European Union, which had placed restrictions on Arkansas agricultural imports, in a weakened negotiating position. Hutchinson described the Brexit vote as an opportunity for the state.
Another person asked about future tax cuts. Hutchinson said he would like to get the state income tax go down to 5 percent to increase Arkansas’ competitiveness, but said he didn’t know whether that would happen while he’s in office.
He said he would examine options for the upcoming legislative session but would not “over promise.”
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