Bill Clinton's presidential library foundation is eligible for a $3.5 million tax break meant for economic development, The Arkansas Supreme Court ruled Thursday, rejecting the state's argument that nonprofits shouldn't receive such aid.

The court said unanimously that any legitimate business, including nonprofits, was entitled to the aid.

The William J. Clinton Presidential Foundation (search) sought the tax break in 2002 as it built the $165 million museum complex on the south bank of the Arkansas River downtown. The state said it wasn' non-profit friendly, and that non-profits can be economic generators."

The Arkansas Department of Economic Development didn't dispute the economic benefits of the library -- development in downtown Little Rock has soared since Clinton said in the 1990s that he would build his library here -- but interpreted the tax-incentive law differently.

"All along this was a dispute about a tax incentive, not about the economic importance of the Clinton Presidential Library," said Mitch Chandler, a spokesman for the economic agency.

The Arkansas Enterprise Zone Act of 1993 (search) provided for refunds of sale and use taxes by "any legitimate business enterprise" that meets certain state guidelines, including whether the business serves as a corporate or regional headquarters, doesn't sell material to the general public and employs 25 or more people.

Legislators added the words "for profit" to the law in 2003, but the Supreme Court noted that at the time the foundation applied for the tax break, the statute did not prohibit nonprofits from receiving it.

The state Supreme Court members are elected in non-partisan races.