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Our View: The plunder of business subsidies

  • By
  • | 5:00 a.m. December 16, 2010
  • Sarasota
  • Opinion
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Gov.-elect Rick Scott knew when he entered the state’s political arena and certainly knows now that turning around Florida’s economy is likely to be the toughest challenge he will have faced in his professional life.

The objective is simple on paper: Create an environment that gives entrepreneurs and existing businesses — here and elsewhere — incentives that are more persuasive and convincing to invest in Florida than elsewhere. Scott has teams of economists and Florida business people examining this. And we could fill several pages of this newspaper with steps that must be taken to make that happen.

One of the steps we would not recommend is the one every economic development specialist and scores of county and city commissioners and state legislators pull out of their briefcase: giving companies tax breaks and subsidies tied to moving here and creating jobs.

That is and for the past 25 years has been the standard operating procedure in the field of economic development. Everybody does it.

But it’s wrong.

Lately, Sarasota County has become much more aggressive in this arena than it has been in the past. To be sure, the county’s 12% unemployment rate has a way of getting politicians’ attention — that maybe they should think more about creating an environment for attracting commerce than focusing on how to make their empty public buses more “green.”

To this end, Sarasota County recently joined the subsidy/incentive practice by earmarking $10 million of taxpayer money to companies expanding or moving here to create jobs. Some of the beneficiaries:
• PGT Industries, the Venice window and door manufacturer. It is expected to receive about $600,000 in subsidies and $16 million in tax abatements on equipment when it moves most of its North Carolina operations here.

• Sanborn Studios, a new TV production venture of Sarasota’s Ken Sanborn, is expected to receive about $650,000.

• Tervis Tumbler, one of this region’s big success stories, is expected to receive about $450,000.

• Texas-based Swimwear Boutique will receive $50,000 for moving its administrative and online operations here.

These are among nearly 20 companies benefiting from the Sarasota County Commission and state of Florida’s generosity. All in the name of economic development and creating jobs.

But there is no justification for any of these subsidies. One of the best illustrations of this unjust largesse came to light earlier this month when Ryan Jasper, chief executive officer of Sarasota-based Swim World Inc., told the Sarasota Herald-Tribune: “Our tax dollars are moving in our competitor.”

Swim World, by the way, has built its business to 11 stores and 65 employees — without one dime of tax subsidies.

All of the economic development professionals will tell you if Sarasota County is to be competitive for business expansion and relocations, it will have to play in the incentive game because everyone else does.

No it doesn’t.

One of the reasons states and counties feel compelled to give tax breaks is because their tax laws and regulations are barriers to begin with. If lawmakers would look at the obstacles that shoo companies to begin with, they wouldn’t have to plunder everyone else. Think about it: How would you feel if you were Ryan Jasper at Swim World — writing a check to the government, which in turn takes your money and hands it to your competitor? That’s not economic development; it’s plunder.

+ $10 minimum wage
In this space last week we noted to our surprise that Sarasota City Commissioner Terry Turner, a Ph.D. economist, was among the majority of commissioners who did not favor placing a referendum question on the March city ballot to rescind last year’s vote raising the city’s minimum wage to $10.70 an hour.

Commissioner Turner says it’s not that he favors the $10.70 an hour minimum wage. He doesn’t, not at all.
He says he would prefer that question go on the ballot at the same time several other pending charter questions go on the ballot. It was a timing issue; not the merits of the minimum wage.

Mayor Kelly Kirschner wants voters to know he and Vice Mayor Dick Clapp favored putting the question on the ballot.


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