State Line Road is the boundary that separates the Texas and Arkansas sides of Texarkana, the border town that illustrates so many contrasts between the Lone Star and Natural states.
When it comes to job growth, Texas remains ahead of its regional competition for now. But policymakers there should remember it takes more than low taxes to keep the economy healthy. There’s also the matter of reforming the educational system.
The last time we visited State Line Road — in May of 2007 — the story was that “employment growth in Texas has been significantly higher than in Arkansas during periods of economic expansion,” in part owing to the fact that Texas imposes taxes on neither income nor capital gains. Eight years later, the fiscal picture has changed little.
True, freshman Arkansas governor Asa Hutchinson has emphasized the need to reduce income-tax rates, and succeeded in cutting the top rates for middle-class Arkansans. However, Arkansans with a net taxable income greater than $75,000 did not see their taxes cut, despite a $192 million surplus in the fiscal year that ended last month.
Arkansas cannot compete with Texas when it doesn’t use surpluses to further reduce rates. In the current expansion, which began in June 2009, Texas has created new jobs at a rate more than triple Arkansas: 14.6 percent to 4.2 percent. This is an even bigger gap than there was before.
But there is one important area where Texas trails Arkansas. Arkansas Republicans in 2015 enacted school choice, a policy their Texas counterparts considered but did not approve.
Arkansas Republicans in 2015 enacted school choice, a policy their Texas counterparts considered but did not approve.
Hutchinson did not campaign on private-school choice in 2014, but the issue emerged in this year’s session with grassroots support for helping students with disabilities. Opposition to choice wilted without a real fight.
School choice is important because a skilled work force is a factor of economic development, alongside tax rates, infrastructure, property rights, the rule of law, and a non-arbitrary regulatory climate. Arkansas’s adoption of private-school choice acknowledges there are problems in the K–12 public-school system, a delivery network to the work force.
Three states that border Texas have school-choice programs. These are Arkansas, Louisiana, and Oklahoma. Six other states west of the Mississippi have passed the reform, including Arizona, a leader in this area that provides six separate school-choice programs to students. (These range from individual and corporate tax credits to empowerment scholarship accounts.) Nationwide, 28 states have school choice.
There is also a human dimension to the latest State Line Road story. A student with a disability enrolled in a public school for at least one year on the Arkansas side of State Line Road will have the choice to receive a voucher to attend a private school in 2016. A similar student on the Texas side will not have that opportunity.
Dependents of active-duty military personnel on the Arkansas side will enjoy the same choice. Their Texas counterparts will not unless school choice advances.
Texas, for the time being, is likely to continue outpacing Arkansas in terms of job creation. But Arkansas — and Louisiana and Oklahoma — have leapfrogged ahead in educational policy, which will have ramifications down the road.