Amid growing legislative scrutiny of corporate tax-incentives, a new non-partisan report gives Florida props for capping how much taxpayer money it uses to entice companies to keep or expand jobs here.
The Washington, D.C.-based Pew Center on the States report, called "Avoiding Blank Checks," looked at business-incentives passed in 16 states since 2007 to determine whether they had adequate cost-controls or were open-ended piggybanks for companies.
All but four -- Arizona, California, Florida and Pennsylvania -- had created new tax-breaks for tourism, the film industry, life-science research, small business, and other targeted niches without including accurate cost estimates or caps on what they could cost in future years.
The Pew report, released Thursday, is a follow-up to a study last year that found no states were doing an adequate job evaluating whether their business tax-breaks were generating a greater return-on-investment than states would see if the dollars were spent elsewhere.
"While no state has put all the pieces together, some states are making tremendous strides providing examples for other states to follow," said Pew research director Robert Zahradnik.
"A number of states were struggling with tax incentive costs that were growing quickly and unexpectedly without an explicit choice by lawmakers to expand them."
Hawaii, for example, had a renewable energy tax-credit program that cost taxpayers $34 million in 2010 -- but is expected to swell to $260 million next year. New Mexico had created a "high wage jobs" incentive that went from $9.3 million to $48 million in one year.
And Louisiana created a natural-gas drilling tax-credit that is expected to climb from $285,000 in 2007 to $200 million next year.
Florida passed a bill in 2010 capping its entertainment industry financial incentive program to $242 million over five years. The Legislature also put a two-year $43 million cap on a new Manufacturing and Spaceport Investment Incentive Program it created that year.
Florida is budgeted to award $125 million in incentives this year, roughly the same as last year -- and a significant decline since the boom years of the mid-2000s. But for the last year, economic-development agencies have been battling bad publicity and a string of corporate busts that have convinced top lawmakers to give the state's incentive strategy a closer review.
The Pew report said Thursday that Florida's efforts were better than most.
Under pressure from Senate President Don Gaetz, R-Niceville, Enterprise Florida and the Department of Economic Opportunity began putting provisions in incentive contracts this year to allow them to recoup taxpayer investment if promised jobs don't materialize.
At lawmakers' insistence, DEO has created a Web site for incentive projects, though it has posted fewer than one-third of the total 1,700 awards.
Gray Swoope, Enterprise Florida's chief executive, said the state was making strides to improve the transparency of its economic-development spending. But he cautioned that trying to evaluate only the economic-stimulus effect of programs ignores the reality that other states are using incentives, too.
"In a perfect world where states could compete on resources alone, Florida would win on education and cost of doing business," Swoope said. "But the reality is states and countries use incentives, and if we're going to be competitive, we have to play in that world."
But that doesn't mean they actually provide a bigger economic boom than spending those dollars elsewhere -- like on roads -- might produce.
"No state really connects evaluations of their incentives to their policymaking process," Zahradnik said. "Policymakers need better evidence on what works and what doesn't and what delivers the strongest return."
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