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A Times Editorial

Secrecy, unfairness taint big tax rebate

It's bad enough that state and local governments offer big tax rebates to unnamed companies with few strings attached and even less public scrutiny as long as they promise to create jobs. Now Florida and Pinellas officials are poised to provide tax refunds for a company that isn't functioning yet for jobs that won't be new. Is this the fair way to hand out public tax dollars during an economic recession where countless businesses are struggling and cutting jobs?

There has been considerable debate about Florida's Qualified Target Industry program, which refunds taxes to companies in exchange for the creation of new jobs under an unnecessary cloak of secrecy. Economic development officials are forbidden to reveal the names of the companies to the public or to the elected officials who must vote on the tax refunds, so they are unable to research the reputation and track records of the companies before voting.

Now there's a new twist. An unnamed high-tech company that is Swiss-owned is closing a division with 117 employees in St. Petersburg. Some of the division managers and employees want to start a new company from the dust of the old division. They have promised to save 68 of the 117 jobs, and they want $340,000 in tax refunds. The St. Petersburg Times determined that Oerlikon USA, a Swiss-owned company, has operated a high-tech manufacturing division in St. Petersburg and is likely closing it.

On Tuesday, Pinellas County commissioners voted unanimously, with no discussion, to pledge $34,000 in tax rebates to the unnamed, not-yet-operating company. Today, the St. Petersburg City Council is scheduled to vote on a $34,000 tax rebate from the city. If both entities approve the refunds, the state will agree to return an additional $272,000 in taxes to the group, for a total package of $340,000 in refunds. That's $5,000 for each job up to 68 the new company salvages.

It is not a good thing when QTI incentives are offered to companies without the public knowing their names. Now the incentives are being provided to companies with no name and no history. And this isn't to add new jobs but to keep some particular ones from disappearing in an economic recession affecting everyone.

What makes this would-be company superior to other existing Florida companies forced to shed jobs during tough times? How is it fair to help save these 68 jobs but not others? Florida's QTI program was designed to encourage job growth, not job maintenance. The decision to grant incentives in this case could edge the QTI program in a new direction, making it less an economic development tool than a bailout.

Are state and local governments going to choose which businesses to help with public tax money while everyone else fends for themselves? Why wouldn't an existing company with a successful track record that wants to move or expand here be entitled to more consideration from the QTI program than a startup, which could be here today, gone tomorrow?

The Oerlikon case also demonstrates, again, that the Florida Legislature needs to change the confidentiality requirements in the QTI program. To satisfy companies' desire to hide their identity from competitors, officials are voting on millions in tax refunds without having access to full information about the applicants. These are public tax dollars, and decisions about them should be made with full public disclosure.

Secrecy, unfairness taint big tax rebate 01/07/09 [Last modified: Sunday, January 11, 2009 7:10pm]
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