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Rod Thomson: Building the economy - a way of life
A business-friendly atmosphere needs to be a way of life to maintain a strong economy.
Economic development corporations and their Gulf Coast kin originally were started as a way to snag a big company with lots of jobs and tout that success, often simply for the benefit of political leaders. Think Arthur Andersen in Sarasota.
Then they morphed into attracting specific industries, usually chasing clean, high-paying, high-tech companies - the kind everyone naturally wants. They also began thinking about trying to retain existing businesses. Finally, they are now looking, at least in some small part, to create or protect a business- and jobs-friendly environment from which economic development will naturally grow. But they have not foregone their politically driven roots.
When they become a friend to business - particularly small businesses - by working to keep taxes, regulation and costly rules to a minimum, then they can be of great value, far greater than attempting to cherry-pick favored industries.
But part of the problem with them is intrinsic to who they are: They were set up to steal, lure and otherwise attract companies from other locales, which also have EDCs set up to do the same thing.
This is reminiscent of the lose-lose proposition with professional sports stadiums, where, say, Arizona taxpayers are pitted against Florida taxpayers in a bidding war to attract sporting franchises. These franchise owners would build their own stadiums and arenas if cities had not cleverly found a way to spend hundreds of millions in tax dollars to do it instead.
Local EDCs, supported by governments or now completely absorbed by local governments, bid against each other for companies by offering tax breaks and other incentives - breaks on the same things that hamper the local business community.
So Manatee County taxpayers underwrite attracting profitable companies from Lee County taxpayers, who underwrite attracting profitable companies from Hillsborough County taxpayers, who underwrite attracting companies from Pittsburgh taxpayers, and so on.
This is a sort of irresponsibility with public funds that drives rational people to cynicism.
If this taxpayer versus taxpayer game had never begun, these companies would simply have gravitated to the best business locales, just as sports franchise owners would have built their own venues.
But that will never happen because this current system allows politicians to puff up their chests about how they brought Arthur Andersen to town or some such nonsense. Pols are always bragging about what they have done with other people's money. Remember that the next time one stands in front of a mike to take credit for getting some big company to town - they are furthering their political career on your financial back.
However, the glimmer of good news is that some EDCs are finally seeing the light, to some degree, on the importance of a good business climate for strong economic development. It's a "well, duh" moment for many of us, but better late to the party than never arriving.
To encourage that line of thinking, here are a few examples of what EDCs could tackle to make the region more conducive to business and strengthen the economy.
• Impact fees. While Sarasota leaders continue to look for ways to provide affordable-attainable-workforce housing, or whatever this week's catch-phrase is, they seek to impose another $7,000 in impact fees on a new home, raising the total to $17,000. (Could our government officials be more tone deaf?)
• Protect property rights. This is broad, but certainly includes limiting tax levels and curtailing the ongoing effort of the government to limit and define more strictly what each property can be used for. Also, keeping a hawk-eye out for the abuse of eminent domain by local goverments would add to the protective atmosphere.
• Transportation. A functioning transportation system is critical to a strong economy, as many companies rely on the timely distribution and receipt of goods. Clogged roads add to those costs and diminish the quality of life, both of which undermine a strong economy. Good roads must be a spending priority, because trying to close the door on growth will not work, but will be enormously destructive to our economic well-being.
In this vein, Gov. Charlie Crist's proposed budget includes an 8% decrease in transportation spending. While his budget-cutting is laudable, this is perhaps the single area where cuts should not be made; roads are a singular function of government and a support for the economy.
• Affordable housing taxes. Collier County is considering yet another tax on new housing and on new commercial developments, to raise money for . . . you guessed it, workforce housing. The tax would have been about equal to county impact fees - about $30,000 per house, some of the highest in the state. They came to their senses - barely, on a 3-2 vote - and decided not to pursue the tax at this point.
But they are a proven lot of taxers, so diligence is in order.
There are many, many other government-driven initiatives to raise more money and add more regulations, all working against a strong economy. The EDCs could be invaluable in this arena.
Alas, there is a ceiling to their effectiveness. The EDCs' structural problem with heartily pursuing such an agenda is that most of them get a substantial amount of their budget from local government taxes, while others are now part of government. That arrangement makes it difficult to for them to criticize honestly what local government is doing.
And that may always limit their effectiveness.
Free market chambers?
Close, much older cousins of economic development corporations are local chambers of commerce. Traditionally, these have been started by groups of business executives as not-for-profits intended to represent the interests of the businesses.
However, they have grown so large that the free market has kicked in and entrepreneurs are now starting for-profits chambers - a move that has the not-for-profits in full turf-protection mode. (See story page 4.)
Make no mistake. The not-for-profit chambers are playing hardball to protect their territory.
They have banned for-profits from the Florida Association of Chamber Professionals.
In addition, the Lee County Visitor & Convention Bureau removed the Lee County chamber's location from its maps and has not worked with the group for several years. D.T. Minich, the bureau's executive director, says the bureau did that because he values his organization's relationship with the other not-for-profit chambers
It sounds like Minich was strong-armed by the not-for-profits.
The not-for-profit chambers are pushing for legislation to ban for-profit chambers from using the term, "chamber," ostensibly to protect the reputation of the term. But from our reporting, the Lee County chamber is doing a fine job for its 800 members.
With that legislation vetoed once by Gov. Jeb Bush, the Greater Fort Myers Chamber of Commerce is not taking any chances and is suing the Lee County chamber over the use of that name.
This is unseemly for organizations supposedly interested in the free market. It sounds more like a monoply interest than promoting good business principles. And that is obvious even to some traditional chambers executives.
Steve Tirey, president of the Chamber of Southwest Florida, a regional not-for-profit chamber in Fort Myers, has a clear enough vision to see the irony of what the chambers are doing. He says they should not be afraid of competition: "After all, we're supposed to be bastions of free enterprise."
Well put.
Rod Thomson can be reached at [email protected].
GULF COAST EDC BUDGETS
County Budget
Pinellas $2,700,000
Hillsborough $2,000,000
Lee $1,816,652
Sarasota $1,576,984
Collier $1,300,000
Pasco $845,000
Manatee $784,000
Charlotte $775,000
Total $11,797,636
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