The One-Two Punch.

I love it when I can detect a certain love ... errr... affinity shared between our two leading North Carolina think tanks -- the Common Sense Foundation and the John Locke Foundation. The topic on which they seem to most often agree is the practice of government giving incentives (tax breaks, cold cash) to corporations in exchange for what is often a meager or nonexistent return on the investment. In the last week, both groups have issued rousing attacks on the practice, from a couple different angles.

Common Sense attacks the growing lobby for legislation authorizing TIFs (tax-increment financing), which supporters have cleverly (if misleadingly) renamed "self-financing bonds." TIFs have worked well in many places, and in others -- in my own experience, in certain parts of Chicago -- they've been a disaster. Ultimately, the taxpayer is on the hook for the debt, praying that the beneficiary of the TIF isn't a total incompetent. Not a good position to be in, I must say: "Self-Financing Bonds or Self-Serving Giveaways?"

And then Richard Wagner, editor of the Carolina Journal (a Locke publication), scores a twofer, highlighting two of my pet peeves: inadequate open records law, and profligate giveaways to corporations: "Broken Records: Shine More Light on Economic Incentives"

We can all get along! Kidding aside, it's encouraging to see that good government is a value that crosses borders.

The Triangle Sportsplex is a perfect local example of a disaster financed with a lot of public money. Bottom line -- the county has poured millions of dollars into the facility, originally with the promise that the county would eventually own the place, but mismanagement and a foreclosure sale has dashed any hope of that. I wrote some of the Herald's stories about it (these archives are available to Herald subscribers only):

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And while we're talking about unwise incentive programs, how can we forget the William Lee Act? Passed in 1996 to provide tax incentives to companies providing jobs in the most distressed parts of the state, it's cost NC taxpayers $208 million. A study recently concluded that only 4% of the jobs claimed under the Lee Act were induced by Lee tax credits, that most incentives and private investment were steered toward the least distressed areas of the state (like the Triangle), and the program's reporting procedures were so inadequate that it was hard to tell the hell was happening in the program.

I've just talked to an industrial site scout who confirmed something I'd already heard -- that the Lee Act's incentives are practically worthless anyway,even if they were properly directed, because for the period covered by the Lee Act most new factories report no taxable income anyway.

The end result is that the counties in most distress, who have the least to give away, have had to step up and give away literally decades of property tax in order to be competitive for new factories and industrial operations. They've also begun to do everything but build the factories for the companies they're courting -- now, in addition to running water and sewer out to potential industrial sites, they're paying to rig electricity, to grade the site, and to have all the environmental impact work done _before_ there's even a potential tenant.

Just to show how deep is our love, the Common Sense Foundation has also opined recently (http://www.common-sense.org/?fnoc=/consider_this/consider_this_040205 ) about the importance of sunshine in state government, and is one of organizations cooperating to set up the new coalition (http://www.newstopic.net/articles/2003/07/30/editorials/41protectrights.txt ) pushing for open government in NC (as is JLF). The tragedy is that such a group is even needed.

Meanwhile, my colleague Roy Cordato took a couple of swipes (http://www.johnlocke.org/spotlights/2003061077.html ) last year at the aforementioned TIFs, now misleadingly labeled "self-financing bonds" by supportive politicians for the purposes of jive talkin' the voters of the state. I did, too (http://www.carolinajournal.com/exclusives/display_exclusive.html?id=799 ). If the constitutional amendment authorizing TIFs is stayin' alive by November, it'll be a heartbreaker.

BTW, that's six -- count 'em, six -- Bee Gees references in one posting. This is where I came in.

 

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