Saturday, December 16, 2017
Business

In relentless war to attract jobs, are we a nation and state of incentives gone wild?

Do we suffer from incentive fever? Are we getting to the point where no business will expand or relocate without an obligatory and often inflated handout of taxpayer money?

A close look at incentives granted to businesses nationwide finds that states, counties and cities give up more than $80 billion each year to companies. Of that huge sum, nearly $4 billion in incentives flow annually from Florida to companies to encourage expansions, relocations and jobs — hopefully jobs that pay better than the state average. That ranks Florida No. 6 among states in total incentive outlays, according to a recent investigative series by the New York Times.

Criticism of taxpayer incentives for business is hardly new. In 2005, a report by Good Jobs First, a Washington research firm, chastised states like Florida for throwing millions in incentives at companies like Wal-Mart for creating low-paying jobs. The message: If states must use incentives at all, at least focus those funds on higher-quality jobs — those that pay more than the state average.

Other critics went further, arguing that states spending billions to shuttle jobs from one state to another are playing little more than a wasteful, zero-sum game.

Florida Gov. Rick Scott, who built his campaign on a promise to create hundreds of thousands of jobs in a high-unemployment state, is clamoring for more incentive money. In November, he said the pool of money available in the state's Quick Response Training Program, which supports business expansion efforts, should be increased to about $12 million.

"My goal is to double the funding," Scott said.

Tampa Bay's experience is no exception. Incentive packages involving state, county and city incentives seem to be multiplying here, driven by an improving economy. But there are more controversial drivers behind the froth of incentive money.

Economic development groups and political leaders are anxious to rack up positive track records of companies promising to expand here, even if the actual jobs they say they will create are years in the future and not always realized.

On the flip side, bigger companies commonly tap site-selection experts to "shop" their expansion promises to many geographic areas (and even countries). That heightens the sense of competition among metro areas and states and drives up the value of incentive packages. In the process, the recent New York Times series found, many states are outmaneuvered by high-priced legal and consulting teams representing corporate clients.

"A portrait arises of mayors and governors who are desperate to create jobs, outmatched by multinational corporations and short on tools to fact-check what companies tell them," the New York Times series concluded. "Many of the officials said they feared that companies would move jobs overseas if they did not get subsidies in the United States."

Florida does not help itself with its poor recent track record of monitoring its own incentive packages and failing to hold some companies accountable for receiving taxpayer money but not creating promised jobs.

Incentive packages are not free. They rely on state and local taxpayer funds that could be used for schools and infrastructure if they were not diverted to the coffers of distant corporations pitching local expansion plans.

Lately, the Tampa Bay area is swimming in possible deals, all driven by incentive packages. Among them:

• Bass Pro Shops is close to opening a Brandon store after $8 million in taxpayer funds was proposed to help propel the deal. Local blowback, however, prompted the Hillsborough County commissioners to vote 6-1 to postpone the matter until Feb. 6.

• New York City-based Depository Trust & Clearing Corp. plans to create 255 new jobs either in Tampa (where it already has a large operation) or Jersey City, N.J. Local county and city governments would toss in close to $1 million to win a DTCC expansion.

• A Florida company that analyzes mortgage risk, Digital Risk of Maitland, wants to add 600 jobs in Tampa in return for close to $1 million from Hillsborough County and Tampa. An unexpected turn came last week when Digital Risk said it would be acquired by a company in India that is a subsidiary of Hewlett-Packard.

• Gov. Scott was in Hernando County late last month to salute plans to expand a business that designs airplane parts. California's Airdyne Aerospace, which employs about a dozen people in Brooksville, got $119,000 in incentives with the promise of creating 17 new jobs in Hernando.

Is the $4 billion Florida spends on incentives a lot given the size of the Sunshine State? That's not easily answered. Florida spends about as much as New York, which has a similar population. But it also spends nearly as much in incentives as far-bigger California.

Per Florida resident, the state spends $212 in incentives, while smaller states like West Virginia or Michigan spend $845 and $672 per person, respectively. Yet other states like Nevada or Missouri spend only $12 and $16, respectively, per person in incentives.

Texas, on the other hand, is obsessed with business incentives. For all its claims as a free-market economic powerhouse, the Lone Star State spends more than $19 billion annually, according to the New York Times. That's nearly a quarter of the $80 billion spent in one year by all 50 states combined.

How good would the Texas economy look without such an astonishing amount of taxpayer funds subsidizing its growth?

Such a disproportionate reliance on incentives also raises the question: Is Texas using taxpayer money just to steal jobs from other states?

In 2011, one of Tampa Bay's larger private employers, medical supply company CCS Medical in Clearwater, grabbed a Texas tax-incentive package and relocated its headquarters and hundreds of jobs to suburban Dallas. This fall CCS said it would lay off 82 more workers at its dwindling Clearwater operation.

What good does it do the country to pay to move jobs from one state to another? Is that really job "creation"?

The New York Times series concluded: "Even where officials do track incentives, they acknowledge that it is impossible to know whether the jobs would have been created without the aid."

Sure, Florida wants to be competitive. But incentive wars fought with tax dollars sound a lot like an arms race. They can escalate way too easily to no one's advantage.

Robert Trigaux can be reached at [email protected]

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