My View: Cease fire on company poaching

 

My View: Cease fire on company poaching

 

Date: September 21, 2011
by: Rod Thomson | Editor/Editorial Pages

 
 

 

We steadfastly maintain that government offering tax dollars as incentives for companies to expand or move to Sarasota or Manatee counties is bad public policy. It allows government politicians and bureaucrats to pick winners and losers, and it does little, if anything, for net job creation by taking with one hand and giving with the other.

Further, the policy absconds with money from current tax-paying companies to give to prospective tax-paying companies — some of which will be direct competitors to current taxpayers. An example of this is giving Whole Foods tax breaks to locate in downtown Sarasota, two miles from Richard’s Foodporium, which had been paying taxes all along.

It’s bad policy. But you can see the argument for it: Everyone is doing it, and so we have to do it to remain competitive. A better response to everyone doing it would be simply to create the most competitive atmosphere possible for job-creating companies and then let the market do its thing. Tube Dude just got $100,000 from the county with the hope of adding 44 more employees to its current five. It grew from zero to five with no “incentives.”

However, the absolutely most egregious element of this policy is the cross-county poaching that goes on between Sarasota and Manatee counties. The latest example is Sarasota County giving Hoveround Corp. — a Manatee County-based company that makes electric wheelchairs — $250,000 if it moves the company south of University Parkway to Sarasota County and creates 44 new jobs.

So-called economic development leaders will say a company such as Hoveround will generate more in property taxes and will more than pay for the grant in time.

But that may not be true in the bigger picture, because Manatee County fires back and lures Sarasota companies using Manatee taxpayers’ money. And how many companies never show up because of the levels of taxes and regulation?

Nonetheless, the counties issue glowing press releases on their job creation. Sarasota County economic development officials claim 21 companies that have received about $8 million so far from that fund have added more than 1,000 jobs.

But officials never point out how many companies leave the county — or went out of business — and the job losses entailed there. It is awfully self-serving for politicians and economic development officials to send out press releases and hold press conferences for each company lured through other people’s money and not include companies lost. It’s dishonest.

Sarasota County created a $10 million fund to steal companies from other communities, including its neighbors. What would make anyone outside of government, which is most of us, think that government would do a good job of deciding which businesses to back? Nothing. But it sounds great in a press release.

Take Gemesis Corp. The Lakewood Ranch-based diamond-manufacturing company was a hot item in 2007 when it took county financial incentives to expand its production capabilities. County officials were eager to grab the microphone at the groundbreaking, where then-Commissioner Shannon Staub called Gemesis “the crown jewel of the county.”

Gemesis has now moved its offshore production to Malaysia and downsized from a 60,000-square-foot facility to one of 25,000 square feet. Employee count has falled from 50 in 2007 to between 15 and 20 today.

But government and quasi-government officials keep taking tax money and deciding which businesses in a neighboring community to try to steal. It is just wrong.

Leaders in both counties should not have to be reminded how interrelated our economies are and how interrelated the tax base is. Many people live in Manatee County and work in Sarasota County and vice-versa, particularly when it comes to Lakewood Ranch.

Call a truce on this horrible waste of government energy and, most important, taxpayers’ money. It would not be hard. Economic development officials in both counties should get together and agree to a cease fire. We’d all be winners.

Rod Thomson can be reached at rthomson@yourobserver.com.

 

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Currently 1 Response

  • 1.
  • Completely agree. When will we learn that destruction destroys, collaboration creates? Also, I do not believe a cease-fire will ever happen unless/until a bigger carrot is created.

    Reality Pill: when dollars flow, they do not recognize county lines. There is exponential growth to be realized via collaboration and cooperation. The cost of creating a multi-county enterprise zone is far less than the cost of border raids, with far greater short- and long-term rewards. We won't kvetch about Gemesis jobs going overseas when we hold Gemesis up as a success story and are busy attracting and welcoming new business. I'm not saying its easy, I am saying its worth doing since the efforts and results are repeatable, self-renewing and self-funding. How many times can we run cross-border raids before there's nothing left worth taking?
  •  
  • Moira Toner
    Wed 28th Sep 2011
    at 1:00pm
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