Bill Schweke
Are There Grounds for New Hope
At least from a reformer’s perspective, 2006-2007 were not really great years in the history of incentive accountability, transparency and cost-effectiveness. The state of North Carolina is now a “leader” in size and heterogeneity of incentive packages. Companies, consequently, are responding by raising their expectations, asking for more money and keeping certain issues “hush-hush.”
After some bad publicity regarding the Google deal, NC senate leadership created a Joint Select Committee on Economic Incentives. It has a broad mandate, asking, for instance, questions such as
- What is the state doing and at what cost?
- What are the state’s economic development goals and should they be changed?
- Are the state’s incentives furthering these goals?
- What incentive approaches in NC and the rest of the U.S. give the best return on public monies?
- How might the legislature be better informed, regarding incentive policies, programs and impacts?
- How are the state’s investments best protected
The Fiscal Research Division of the NC legislature, on behalf of the Committee, is conducting an Economic Development Inventory. (This is a Unified Development Budget under a different name.) The final report will spell out how much the state is spending, on- and off-budget on all types of economic development (not just business attraction subsidies). In doing so, it will help determine what the state’s real fiscal priorities are (e.g., community colleges, small business management assistance, location subsidies, etc.). Included in the report will be timelines of spending growth and how might priorities have changed, comparisons with other spending programs, spending relative to the size of the NC economy. Staff hope this inventory will be updated frequently, as well as encourage better and more current data on tax expenditures.
In addition, the University of North Carolina at Chapel Hill has been asked to undertake a complementary and deeper evaluation of incentives, reaching clear conclusions about what’s working and what’s not.
Keep your fingers crossed. This is a great venue for fundamentally rethinking about what’s most important for fostering economic development.
CFED and others are dedicated to helping these efforts find the truth and make any needed hard decisions. So, there is some new hope on the horizon.