Covering Government Incentives for Economic Development

John Cheves Lexington (Ky.) Herald-Leader jcheves@herald-leader.com

Economic Development REP. MIKE SUMMERS, standing at Roseanne’s

door: That’s why bringing in new business is my number one priority.

ROSEANNE: How? REP. MIKE SUMMERS: Through tax incentives.

See, we’re going to make it cheaper for out-of-state businesses to set up shop right here in Lanford.

ROSEANNE: So they get a tax break? REP. MIKE SUMMERS: Yeah, that’s why they come

here. ROSEANNE: Well, who’s going to pay the taxes that

they ain’t paying?

Economic Development REP. MIKE SUMMERS: Well … you will. But you’ll be working. Good, steady employment. ROSEANNE: Union wages? REP. MIKE SUMMERS: Well, now, part of the reason these companies are finding it so expensive to operate in other locations— ROSEANNE: So, they’re going to dump the unions, so they can come here and hire us at scab wages. And then, for that privilege, we get to pay their taxes. REP. MIKE SUMMERS: Um. Is your husband home?

Economic Development •  Who is responsible for it at the

local, regional and state level? •  When and where do they meet or

publicly report their actions? •  Understand these agencies –

their budgets, how their boards are chosen, their powers, their strategies, how they are funded and by whom, and who oversees them. Photo by flickr user MDGovpics

Economic Development

What are we giving?

•  Tax breaks; tax refunds; grants or loans; worker training; land, buildings

and roads

Photo by flick user Matt Seppings

Economic Development

What are we giving?

•  Use the Open Records

Act to get full terms of the deal (you may face exemptions on pending

land sales and other specifics) Photo by flickr user USDAgov

Economic Development

What are we getting?

•  Do they get incentives regardless, or are conditions attached, such as a number of jobs to be created at agreed-on wages?

•  Does anyone check to make certain we got what was promised? Does anyone check

five years later to see if it’s still there?

Economic Development

Does it add up? •  Check jobs claims by calling employers to ask

how many jobs exist and what role, if any, incentives played. How much did we pay per job?

•  Use economic data to track the big picture. Did your small town add 100 jobs while gradually losing 200 jobs? What kind of jobs? Is local income rising or falling over time?

Economic Development

“If you build it, he will come.”

Building industrial parks, factories

and retail spaces “on spec”

Photo by flickr user Rob Young

Economic Development

Follow the money Who gets the incentives?

•  If land is purchased, from whom? (And check the deeds for shady deals.)

•  If something is built or paved, by whom? •  Consultants and attorneys?

•  Relationships between recipients and public officials or economic development agencies?

Economic Development

What’s the plan? •  Luring distant factories? Aiding small businesses?

•  Creating a new local industry, like tourism? •  Is it realistic, given the education of the labor pool,

access to major transportation systems, quality of life and – frankly – common sense?

•  Can anyone show you specific goals and results?

Get out and look and talk.

Economic Development Experts to guide you through the spin:

-  U.S. Census Bureau http://www.census.gov -  U.S. Bureau of Labor Statistics

http://www.bls.gov -  U.S. Bureau of Economic Analysis, Federal

Reserve Bank studies

Economic Development Experts (continued):

-  Economists at State U., retired public officials, nonprofit economic development agencies, authors of published economic

studies of your community or state

-  Local residents and local leaders who can say from experience what has worked for

their community and what has not