While Manatee County taxpayers rejected the half-penny sales tax referendum last week, the second and less controversial measure – adding property tax abatements to Manatee's business incentive options – narrowly passed. Billed as a surefire way to create new jobs, the abatements have the potential to keep much needed revenues from the county's coffers. Taxpayers will have to closely monitor each time the board votes to grant such incentives, as the potential for abuse is considerable.
In truth, I don't think this initiative would have passed, had so much of the oxygen not been sucked out of the room by the proposed half-penny healthcare sales tax and all of the disinformation that was floated out with it. It's very easy to dress this sort of issue up – especially in a down economy – as nothing more than a long overdue job creator. The Bradenton Area Economic Development Corp. did just that and they spent a lot of money in getting out a very one-sided message, not unlike the interests that moved along the half-penny.
The big difference was that unlike the healthcare issue, the tax abatements had no organized opposition to speak of and most of the press simply went along echoing the hollow cheerleading that was being promoted as its justification. Had the tax abatements received the same scrutiny as the half-penny, voters would have likely seen much controversy surrounding their use. For example, the question of whether they are an effective way to lure economic development or just a waste of potential revenue that lack accountability to the people who pay for them, namely the other taxpayers whose share of the burden is increased anytime someone gets a pass, is a question that was not asked enough.
Pretty much the sole logic used in selling the abatements was that other counties had them, which put us at a disadvantage. That came as a surprise to those of us who are constantly inundated with reports of good news from the EDC – a public/private partnership that receives much of its funding from the county and its cities. Time and again we are told about all of the businesses that have been choosing Manatee County over these other locations, with nothing said of not having this suddenly indispensable tool in the box.
Now don't get me wrong, if I ran the EDC and was responsible for getting every business that showed even a glint of interest in coming to Manatee County to do so, I'd want every resource that my competitors had at their disposal and would be more than a little creased when I lost a prospect to someone with better swag to dole out. However, that doesn't mean it's in the taxpayers' collective interest that I would be able to do so any more than it would make sense to a bank's shareholders if branch managers wanted to give Iphones away to new account openers instead of toasters, just because the guys next door were.
The question would remain, are we ultimately getting more than we're giving away, and with tax abatements it has not been clear that such is the case. Part of the reason why we can't say they're good or bad with all that much certainty, is that there hasn't been much effort at all to track their effectiveness. What government wants to give away money and then tell taxpayers it had been a bad investment? Better to just announce all of the promised jobs and "projected economic development" and then move on to the next ribbon cutting.
Local governments are just the last stop on the gravy train. The federal tax code already provides corporations with endless loopholes and the bigger the company, the more they enjoy. There are also federal grants for just about everything under the sun. Every year, the state of Florida also gives out hundreds of millions of dollars in "incentives," so that whoever is sitting in the governor's seat can claim they're "growing the economy." Enterprise Florida has already been under scrutiny for losing money by the tens of millions and it bears mentioning that Governor Scott has proposed quadrupling the budget for such incentives.
As we speak, the state, who once claimed that it was going to get tough with online retailers like Amazon.com, who as a matter of policy sold merchandise to Floridians without collecting sales tax for the state, is negotiating a princely ransom to get the online giant to do exactly what it is going to do anyway – open operations in Florida. Amazon's increasing dependence on quick, cheap delivery requires local warehousing and fulfillment operations in large markets. They did $61 billion in sales last year and can well afford to do so in order to further grow their company and do well by their stockholders.
Still, Hillsborough County is being pressured to approve over $6.6 million in incentives, because hey, anyone who creates a well-paying, private-sector job in this economy deserves a little kick-back, right? Ironically, Amazon will end up getting exactly what it had before opening operations in the state closes the federal loophole on collecting sales taxes – an unfair advantage over existing Florida businesses trying to compete with them.
This is where we get into the heart of the problem. Taxpayer giveaways have become so commonplace and poorly policed that they're factored into any large venture regardless of whether they're justified or even needed. Billion dollar sports franchises with individual players earning $20 million a year would never dream of building a stadium without a "public-private partnership." They need the stadium to market their product. It's a cost of doing business, yet why should they have to pay for it? When a production company begins exploring a film project, using a location that provides lucrative tax abatements goes without saying. So once one state, county or city jumps the shark, every other argues that unless they too give away the farm, they have no hope in attracting that all-powerful "economic impact."
So, now every prospective business considering a move to or expansion in Manatee County will know that abatements are on the table, and the only thing standing between them and the EDC will be the Board of County Commissioners. Show me a politician that wants to vote against something that they are told will bring new jobs to their constituents and I'll show you a cat who can scratch poetry in its litter box. In tough economic times, it's simply too easy for businesses to hold states, counties and municipalities over a barrel, and too often, all they have to give them is a ribbon-cutting ceremony and a few big promises.
As I've said before, Manatee County already had a model program for which to grant economic incentives to new or expanding businesses, one that we would be better served to see emulated by other communities rather than vice versa. It included accountability and had served us well, likely because the fact that most benefits were paid in arrears after living-wage jobs had been created, had helped to keep politics out of the equation. Going forward, they will be front and center.
Taxpayers didn't trust the current board with the $23 million in sales tax revenue that the county said would have been created by the half-penny. I doubt that had there been a full debate on this issue, they would have trusted them in voting each time the EDC sought a tax abatement for some company that very well may have done exactly the same without it – just as so many already have.
County Administrator Ed Hunzeker (who championed both ballot initiatives) has already made it clear that he favors shifting the tax burden away from corporate interests, whether it be by trading out property tax for more sales taxes, granting abatements or making up revenue by indirectly taxing residents via franchise fees. The passage of this referendum is a step in that direction, though it should be obvious (especially since the county is spending reserves to maintain current services) that such a philosophy leaves only one class of taxpayer to pick up the revenue slack. It's a shell-game and as usual, it's the little guy who will be picking up the empty shell.