ST. PETERSBURG — Government officials are dangling a $1 million tax refund in hopes that a global conglomerate will move some of its information technology operations to St. Petersburg.
The state is promising to contribute $840,000 in sales, income and property tax breaks, with St. Petersburg and Pinellas County chipping in an additional $105,000 each.
To earn the credits, the yet-to-be identified company must create 150 jobs by the end of December 2014. The jobs must also pay an average of at least $78,588.
It's a well-worn formula to lure a major company in an age when tax breaks are synonymous with job creation. City Council members will vote on the incentives today. Pinellas County commissioners will vote on them Tuesday. Even if approved, however, the deal may be more fantasy than reality.
One major reason why is that the company is bartering with jurisdictions in Michigan, Minnesota and Nevada and will decide which site offers the most attractive options, said Mike Meidel, the director of Pinellas County Economic Development.
Dubbed Project B1102753079, the tax incentives are for a Fortune 500 company that is allowed by state law to negotiate with state and local officials for tax breaks in secret. Consequently, not much else is known about the deal.
City officials wouldn't go beyond describing the company as a "shared services entity for a global corporation."
" 'Shared services' is all I can say at this point," said David Goodwin, the city's director of planning and economic development.
Meidel said it's a company not currently operating in Pinellas that plans to lease now-vacant office space, bolstering real estate values. The anticipated annual economic impact would be $15 million, mostly from wages.
The city is keeping the faith in a state tax refund program with dubious returns. A recent St. Petersburg Times analysis found that since 1995, the state has agreed to provide about $1.7 billion in incentives to create 225,000 jobs. But the state's Department of Economic Opportunity shows just one-third of those promised jobs were created, and the state spent only about 43 percent of the promised incentives.
In St. Petersburg, the tax refund program has rarely worked. Since 1996, the tax incentive program has been offered to 24 companies, but only two, Danka and Ablest Service Corp., met their job targets and were paid the full amount of tax incentives offered to them. Of the total $2.9 million the city offered in incentives, it paid $411,230 — or just 14.4 percent, records show.
Meanwhile, the projects require heavy administrative oversight. Four of the projects were terminated. City officials had to recoup a total of $279,000 they paid to eight other projects that didn't meet requirements. Three other projects look all but dead, including two designed to entice Jabil Circuit to expand its headquarters and create 2,000 jobs. Despite record profits, Jabil has yet to expand. Hence, it hasn't been paid a penny of the $8.2 million it has been offered in state, county and city tax credits, Goodwin said.
With a success rate like that, do tax incentives really motivate companies to move or expand here?
"The companies want the incentives," Goodwin said. "Do they need them? I don't know. Other jurisdictions offer them, so it's a matter of us having to compete with those jurisdictions. We want to compete, so we offer them."
Michael Van Sickler can be reached at (727) 893-8037 or email@example.com