Jabil Circuit's announcement that it will build a new headquarters in St. Petersburg is good news for the city and the entire area. It's important to keep a Fortune 500 company, particularly in a period of rising unemployment. Yet the positive result does not excuse the secrecy around more than $34-million in government incentives or answer broader questions about this approach to economic development.
The high-tech firm will spend $54-million to build a new headquarters on Gandy Boulevard along with manufacturing, research and development facilities. In exchange for the public incentives, it must create 858 jobs with an average annual salary of $42,685 and build $49-million in facilities. That's good, but is it a good deal for taxpayers?
That cannot be independently answered because of the secrecy. Jabil officials claim they were offered more money by Michigan to move, but that cannot be verified. The state's requirement for confidentiality is too broad, and the law forbids economic development officials from identifying the company during the application and approval process. Legislators need to narrow the confidentiality requirements so that the public can see enough to let their elected officials know their thoughts before it is too late.
In St. Petersburg, secrecy was taken to an extreme. The Jabil deal was a late addition to a consent agenda and approved on a voice vote with no public discussion. Council members had been briefed individually by Mayor Rick Baker's development staff — a nice way to circumvent the intent of the Sunshine Law — but weren't told the name of the company even then. Baker says unavoidable timing issues, not a desire for secrecy, account for the way the deal unfolded. He said he is open to a more public discussion, and the council will discuss the issue this week. The goal should be as much openness as possible, and that at least means listing such incentives as separate agenda items and providing all the details allowed in advance.
Baker argues the Jabil deal is a good one financially for St. Petersburg. The city already was going to spend $11-million of its $12.7-million share of the incentives on improving Gandy — and now the state will kick in another $2-million for the road project. From his view, the agreement costs the city another $1.7-million over 15 years in return for $12.5-million in new tax revenue.
But these public tax breaks for private companies should be viewed in a broader context.
First, the state's track record is poor. It once awarded a $4.5-million incentive to Motorola for the creation of 1,000 new jobs in one city as the company was laying off 1,000 workers in another. Jabil announced last week it would stay and take the incentives — the day after it laid off 120 workers. It once employed 3,000 people in St. Petersburg but now has less than 1,900. So taxpayers will invest millions to keep Jabil here although it probably won't have as many jobs as it once had even if it meets all of the targets.
Jabil is a big fish, and no one wants to see it leave. But it is reasonable to ask whether it is fair to other large employers in the Tampa Bay area who have put down roots but don't have the benefit of any special incentives from state and local governments. Should they seek feelers from other states, then demand similar help from taxpayers?
A smarter state economic development strategy would be to invest in better public schools, universities and a work force that would benefit all employers and be attractive to companies outside Florida. But that would take more creativity and consensus in Tallahassee than cutting secret deals with unnamed companies just to get them to stay here at taxpayer expense.