Arkansas voters will weigh in on a proposed constitutional amendment this November that could reshape how local governments engage in economic development. The measure, identified as Issue 3, would permit legislators to create programs, loans, and grants using public funds to attract businesses through economic development districts.
Under the proposal, cities, counties, or designated regions could negotiate incentives, such as tax rebates, to attract businesses. Supporters argue this is essential for Arkansas to remain competitive with other states that already offer similar incentives, especially for smaller or rural communities that have struggled economically. "We have a lot of communities that really, really need that kind of tool, especially in the eastern third of the state where we’ve been losing population and retail providers," said Randy Zook, chair of the pro-Issue 3 group Arkansans for Strong Communities and president of the Arkansas State Chamber of Commerce.
Opponents, however, have raised concerns about what they view as government overreach and potential financial risks. Brenda Vassaur Taylor, co-founder of conservative advocacy groups Conduit for Action and Conduit for Commerce, criticized the amendment for what she described as vague language and government favoritism. "Economic development should be encouraged by supporting the businesses already in our state, not by taking their tax dollars to subsidize their competition," Taylor said.
Issue 3 was referred to the ballot by the Arkansas Legislature through a resolution sponsored by Sen. Jonathan Dismang and Rep. Howard Beaty, both Republicans. The measure would allow new businesses within designated districts to receive tax incentives, but Zook emphasized it would not change the tax obligations of existing businesses within those areas. Developers, not local governments, would bear the responsibility for bond-related debt under the proposal.
Financial backing for the pro-Issue 3 campaign has been substantial, with figures such as Walmart heirs Jim, Tom, and Steuart Walton each contributing $125,000. The campaign reported raising $2.2 million as of October, much of which has been allocated for advertising.
The amendment would take effect on January 1, 2027, and would supersede conflicting state constitutional provisions. Similar efforts, such as Tax Increment Financing (TIF) districts, have been attempted in the state before. Voters approved Amendment 78 in 2000 to create TIF districts, but their usage declined after a 2007 Arkansas Supreme Court ruling limited their revenue sources.
Concerns about Issue 3 span beyond political ideologies. The League of Women Voters of Arkansas expressed reservations, highlighting the amendment’s “broad new taxing and bonding authority” as a potential issue. "Our opposition really is not about the economic development itself, but about granting this breadth of constitutional authority without some clear safeguards and protections for public revenue," said Kristin Foster, the league’s executive director.
Supporters like Zook argue that small communities need this tool to reverse economic stagnation and to remain competitive. "In our view, it’s local choice, local control and no new taxes," Zook said. He cited the state’s recent allocation of up to $300 million in surplus funds to attract a manufacturing facility to West Memphis as an example of how incentives can drive economic growth.
Critics warn, however, that the government’s ability to favor certain businesses or industries creates inequities and risks transferring public funds to private enterprises. Dismang had introduced legislation in 2025 to outline the specifics of the program, but it was not brought to a vote.
Issue 3 is one of four constitutional amendments on the November ballot.