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VOL. 7 | NO. 7 | Saturday, February 8, 2014

Editorial: Seeking a Better Solution for Local Economic Incentives

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There has to be a better and simpler way to play the incentives game when it comes to economic development.

If no one in the highest positions of authority really prefers the current arsenal of economic development incentives, why don’t they start to change them?

We’ve heard it from Tennessee Gov. Bill Haslam, Memphis Mayor A C Wharton Jr. and Shelby County Mayor Mark Luttrell several times over when they are asked about the local use of payments-in-lieu-of-taxes, or PILOTs.

The statement that they would prefer not to have to offer any incentives is always followed with the necessity for us to be able to compete with the incentives offered by the two states that border us.

But it isn’t the much talked about “apples to apples” comparison.

Our quest for economic development is simply too dependent on PILOTs even taking into account the unique challenges we face. The culprit is our continuing failure to start from scratch and instead add pieces to something that hasn’t made sense for quite a while.

The bureaucratic infrastructure grows as the economic development incentives become more elaborate. And our incentives become more elaborate as our leaders search for ways to make the system more accountable.

The administration of Tennessee Gov. Bill Haslam has found a way to make this much simpler at the state level. It’s called Fast Track funding for economic development. A grant for infrastructure and other public parts of an economic development project instead of a complex system of calculations and claw backs that seldom leave a mark.

PILOTs exist to find a way around the statewide prohibition on waiving or forgiving property taxes and other ad valorem taxes. It’s a dodge that is technically not a tax waiver but in reality is.

It makes us wonder whether going to some form of the state’s Fast Track grants on a local basis might not wind up allocating the same amount of money with less red tape – possibly even less total money. A grant is straight forward, easier for everybody to understand and therefore easier to assess than the complicated matrix presently used and deciphered by attorneys for all involved.

It’s also a better and more basic discussion about accountability and value that could make for a better judgment taking into account our competition but also allowing us to keep our eye on the long-term goals that causes our leaders to speak of five-year economic plans in holy terms.

All we see now is long-term plans for specific types of jobs and industries that go out the window the minute a site consultant for anyone shows up in this part of the country.

A set of grants for public infrastructure based on some amount less than the current total of property taxes abated by payments-in-lieu-of-taxes sounds like it should be a simpler decision.

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