In addition to deciding whether or not to impose an extra half-cent healthcare sales tax, Manatee County voters will also decide on whether to create tax abatement incentives when they go to the polls for a two-referendum special election on June 18. Proponents argue that it's a necessary tool to lure jobs to Manatee; but too often, it's been unclear whether such programs actually return more than they give away.
First, let's clear up a misconception. Manatee County does offer lucrative financial incentives to relocate, start or expand targeted businesses within its borders. What we haven't done up to this point is offer blanket and arbitrary property tax abatements just for setting up shop. Rather, the current economic development incentives are paid after a business follows through on creating true living wage jobs that pay at least $40,997.95 per year. That might not be quite as alluring to businesses as a free ride up front, but it's a much better deal for the county at large.
Tax abatements have been a highly controversial tool, because not unlike most public spending, it's a deal made by one entity, but paid for by another. Politicians love to cut ribbons and hold press conferences to announce promised jobs and estimated financial impact, but too often, it's the taxpayer who is left holding the bag when the promises don't come through and the associated giveaways shift the cost of services back on to those who haven't scored a deal.
Republican County Commissioner Robin DiSabatino, who has championed small businesses in Manatee County since being elected in 2010, has been a vocal critic of the proposal since it was first introduced to the board.
“What we have now is working,” said DiSabatino. “Businesses are paid in arrears when they hit their targets, and if there's a bump in the road, we even have the opportunity to extend their deadline. Right now there's accountability, but I don't see enough of that in this proposal.”
DiSabatino said that the county is already very business friendly and explained that in addition to financial incentives, there are tools like the CRA districts and Port Encouragement Zone where the county offers fast-tracked permitting and other resources to draw targeted industries and develop blighted commercial areas. She worries that such a broad policy will shift costs and put current businesses at a disadvantage.
“I'm all about bringing businesses to Manatee County and I support the EDC's mission, but I'm more concerned about the businesses that are already here,” said the commissioner. “I don't want to see them put at a disadvantage every time a competitor comes into our county and is given up to 10 years with lower operating costs.”
Steve Vernon, President of Tea Party Manatee, echoed DiSabatino's concerns.
“I want to see businesses in Manatee County stand or fall based on their performance,” said Vernon. “This is just another example of the government picking winners and losers in the marketplace – singling out some businesses for help that others won't get. How is it fair to someone who's been running a business here in the county for 20 years, providing jobs and putting money into our economy, if some other company comes here tomorrow and doesn't have to pay property taxes?”
Sharon Hillstrom is President and CEO of the Bradenton Area Economic Development Corp. Hillstrom argues that surrounding counties are at an advantage because they all offer abatements, which she says is the first question companies ask when considering a location. “There's no telling how many businesses we've lost because we don't offer this incentive,” Hillstrom told the board. “This is just another tool in our toolbox … to me, it's a no brainer.”
But as opponents point out, there's also no telling how much of their tax bases governments give away for a venture that would have been built anyway. Once such incentives become an option, every business will insist it's a deal breaker and one can easily imagine the EDC in front of the board telling them to vote for an abatement or see jobs go elsewhere.
But existing, performance-based incentives seem to be quite effective. In 2012, Manatee County was successful in luring Feld Entertainment and a promised “235 new high skill, high wage jobs in Manatee County over the next five years,” despite the fact that Sarasota County had more tools in its box. They also scored a consolidation/expansion with DENTSPLY Raintree Essix Glenroe and an expansion in Palmetto with aircraft equipment company Hobart Ground Power that were scheduled to add 90 more positions to name just a few.
Now, might there have been even more, had the county offered property tax abatements? Perhaps, but just because some other county is giving away its tax base to get them, doesn't mean it's good business for us to do the same. Keep in mind that had we had abatements last year, most of those businesses already mentioned would have also qualified for one, meaning less money in the coffers with the same financial impact. And not every story has been one of success. Even after receiving $325,000 in incentives from the county and millions more from the state, Pierce Manufacturing announced layoffs for 129 of its employees earlier this year.
Another factor to consider is that the county is also proposing a huge cost shift within its 26-13 Plan, which would greatly reduce large commercial property tax revenues, replacing the funding with higher sales taxes and a utility franchise fee for the rest of us. With all of that in mind, I'd feel a lot better knowing that if we still have to give away money for companies to come to Manatee County, it's done after they do their part in creating well-paying jobs.