As Issue 3 looms on the November 2026 ballot, Arkansas voters might find themselves wondering whether the idea of dedicating tax revenue to local economic development has been tried before, and what the results have been.
And in fact this idea has been tried – right here in Mississippi County.
After its population peak of ~82,000 in the 1950’s (1), Mississippi County has seen decade after decade of out-migration. This population decrease was initially due to the mechanization of cotton farming. While the decline slowed in the 70’s and 80’s after the establishment of Eaker Air Force Base, when that base closed in 1992 it triggered another steep population drop of 10% from 1990 to 2000.
County leaders responded in 2002 by launching the “Cotton to Steel (2)” initiative, with voters approving a permanent ½-cent sales tax (which everyone pays) to fund the Great River Economic Development Foundation. The goal here was to replace declining agricultural employment with high-wage manufacturing, primarily steel.
So, what have been the effects of Cotton to Steel? If one looks at the steel industry in isolation, the initiative appears successful: Mississippi County has become the #2 steel-producing county in the United States (ranked #1 in some years). Over the past two decades, the county has attracted roughly $8 billion in capital investment and added thousands of manufacturing jobs. Steel has become the dominant industry, and average weekly wages (3) in the county rank among the highest in Arkansas (4). Additionally, there’s been a notable climb in tax receipts, which is of course the metric that governments care most about. About 4,000 of Mississippi County’s 16,000 jobs are in manufacturing, primarily steel (5).
But when we look at broader measures of success – population trends, housing conditions, and median household income – a bifurcation emerges.
The population trend has never reversed. In fact, the population decline has accelerated each decade since the implementation of the government’s economic development– Cotton to Steel – 10.6% in the 2000’s, 12.5% in the 2010’s, with the county on track to lose 14% of its population in the current decade (1).
The population change from ~52,000 in 2000 to ~38,000 today is a loss of ~27% – more than a quarter of the population in a little over two decades, since government sponsored economic development came to Mississippi County.
Counterintuitively, even though Mississippi County has lost 27% of its population since implementation of its economic development plan, the county is now facing a housing crisis (6). You would think that losing so many people would mean there are plenty of cheap houses available; but in reality, that’s not how it’s worked. This is due to the fact that half of Mississippi County’s steel industry jobs are held by non-residents (7).
Most taxpayers assume that when they approve a dedicated local sales tax to attract industry, the resulting jobs will primarily go to locals. However, federal constitutional interpretations – particularly under the Dormant Commerce Clause (8) – generally prohibit strict “locals-only” hiring requirements on companies receiving public incentives, which means that subsidized companies are free to hire workers from anywhere in the country.
The result in Mississippi County has been that roughly half of the steel industry jobs are filled by workers who live outside the county – including many from other states. Some commute daily to work, but others (around 9%) live so far away that they stay in temporary housing (RVs, hotels, or short-term apartments) and return home on days off (9).
So, while the consistent out-migration from Mississippi County is leaving an abundance of vacant housing inventory, the half of the steel work-force which has moved in generally doesn’t want older, rundown homes; and those who are commuting want small, cheap rentals – the very homes that have traditionally catered to the county’s poorest residents. The locals now find themselves in competition for housing with migrant workers who are earning $99k per year or more (10).
You might ask why poor residents aren’t buying the older vacant and abandoned homes. The answer? When older houses sit empty long enough, they end up being taken over by the city or county government. Sometimes the government tries to sell them at auction for as little as $1. But even then, buyers usually inherit decades of back taxes, big repair bills, and strict code requirements. These additional financial burdens mean that even a $1 auction property is often out of reach for the 21% of Mississippi County that lives below the poverty line (1.3 times the overall poverty rate of the entire state).
An obvious path for the government in this situation might be: waive any back taxes on derelict properties, and offer poor residents the chance to fix them up in exchange for ownership (a kind of homesteading agreement). Instead, Mississippi County is offering yet more tax money specifically to steel industry workers – $50,000 in incentives to buy or build new houses.
So, the locals are taxed to attract the steel industry; their rents go up because of the new workers; and then the county gives more tax money to those same outside workers to buy nice new homes — while leaving the original residents stuck in an ever-worsening housing squeeze.
Rather than reconsidering its approach, local government has doubled down on the “economic development” strategy as population decline has persisted. In 2015, voters were asked to increase the dedicated economic development sales tax from ½ cent to a full 1 cent. More recently, the county has used tax dollars to hire multiple high-priced lobbying and public relations firms – including Washington, D.C.-based Tiber Creek Group and Little Rock-based Mullenix & Associates – to try to persuade people to move to Mississippi County (11). Apparently they think their problem is merely one of messaging.
Mississippi County’s strategy has increasingly become one of demographic replacement funded by local taxpayers. The county continues to collect a dedicated sales tax from its existing (and shrinking) population, not primarily to create jobs for current residents, but to subsidize large steel companies so they can attract skilled workers from elsewhere. Because the local workforce often lacks the specialized technical skills required, and the companies have been unwilling to provide large-scale training, the approach relies on importing new residents, rather than elevating those who already live there.
While some may style the growth of the steel industry as exemplifying successful government-driven economic development, it is doubtful that the above scenario is what Arkansas voters are promised or desire for their own communities – diverting resources from their neighbors and themselves into supporting a new kind of migrant worker.
Issue 3 would expand this kind of government strategy to every county and local government in Arkansas.
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