Herald editorial: Are incentives a good idea?

Local governments have been offering incentives to attract or keep companies for years, and Lee County is by no means alone in its practice of offering cash payments and/or tax breaks to private businesses.
Proponents of incentives will argue that they bring in jobs and money that would otherwise not be here because of stiff competition with other cities and counties also looking to attract business. Those opposed to the idea of incentives compare it to gambling, as nothing is keeping a business from up and leaving or going under.
The debate has swirled again locally with the recent announcement that New Jersey-based Wyeth Pharmaceuticals Inc. is planning to cut about 10 percent of its work force throughout the United States. Wyeth is one of Lee County’s largest employers, and if 10 percent of the 1,400 men and women were let go, that’s 140 jobs.
The bad news comes less than a year after the Lee County Board of Commissioners awarded $911,858 in incentive funds to help finance the construction of an administration facility at Wyeth. The board voted 6-1 in April to approve the package with the understanding the new 180,000-square-foot facility, when completed, would contain an auditorium, training room and offices for 600 employees.
With the uncertainty of current jobs at Wyeth, there’s obviously uncertainty about needing space to contain 600 people. There’s also an obvious question … was the nearly $1 million incentive a waste of Lee County taxpayers’ money?
“It is not the responsibility of government to use taxpayers’ money to provide gifts or favors for one business over another,” Commissioner Linda Shook said at the time of the vote. She was the only opposition vote that day.
And it was a tough vote to make, we’re sure. Governments shouldn’t be forced to decide between approving incentives and possibly not getting new business (or losing a business). Incentives are usually well-intentioned, too, as we’re sure the Wyeth package was.
But we called it “gambling” with taxpayers’ money earlier, and in hindsight, this seems like a gamble that did not pay off.
And incentives have backfired in several other North Carolina cities as well.
Last year, officials approved the state’s first usage of tax increment financing with the creation of the Carolina Crossroads development project in Roanoke Rapids, with the Randy Parton Theatre as the centerpiece. The theater has been the center of controversy ever since, and revenues have fallen far short of what was expected at the time the state approved the TIF.
Another incentive package valued at $260 million that landed a potential $600 million Google data center for Caldwell County has also been an embarrassment to North Carolina. That $260 million has netted a little more than a few warehouses to store some of Google’s equipment.
We understand the arguments for incentives, but we feel Lee County should learn a lesson from the rest of the state (and the recent Wyeth news) and think twice before throwing money at the next company interested in coming or staying here.
We have great schools, a solid work force, beautiful countryside, great location and other true “incentives” that should be drawing businesses and people here.

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2 thoughts on “Herald editorial: Are incentives a good idea?

  1. Aside from the whole government mucking around with the free market angle, one of the worst things about incentives is the inequity of it all. Despite the fact that the vast majority of jobs in the country are in small business, these incentives are invariably given to large, foreign (i.e. outside NC) corporations, rather than rewarding or aiding the companies that started here and are trying to grow. (And worse, it’s done with the taxes paid into the system by these same small business owners)

  2. If a tax break is good for one company, why not all? If the purpose is job growth, taxing businesses, especially small ones, should be the last thing to do. We can only hope that the tax incentive was; a) incremental, b) based on performance so that companies are rewarded the incentive for job growth and not paid up front. Thanks Dems.

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