Take care with incentives

Jan. 09, 2014 @ 04:02 AM

Some claim they are the backbone of economic development.

Still others suggest without them, there is no opportunity for growth in a community like Rutherford County.

These, of course, are tax breaks offered to businesses in hopes of luring their relocation or expansion to a community with the end result of employing that community's workforce.

Incentives can come in all shapes and sizes, ranging from a huge 10-year break on property taxes to the small match on a building re-use grant.

We have seen both in Rutherford County and both have been successful in sustaining or bringing in business to the area.

But, these incentives carry a risk.

The biggest risk is government entities being left with little gain if a company which receives tax breaks leaves after their incentive package runs out.

One safeguard to incentives is the caveat of a promise of job creation and investment into a business infrastructure before grant dollars can be used.

We were encouraged after Monday's introduction of Richard Lindenmuth as the interim head of the Economic Development Partnership of North Carolina which is the nonprofit organization taking over the recruiting of companies, films, tourists and sporting events to North Carolina.

The encouragement came when Lindenmuth — a former CEO — suggested these incentives were only a minimal slice of the economic development pie.

"Incentives truly do not make the difference," Lindenmuth said in an article by The Associated Press. "Incentives are important only in the sense of trying to get very specific help to a particular company. I look at incentives just like I would inside an organization. If you pay a bonus to one individual, it does not provide an incentive to the organization."

We certainly understand the need for large incentive packages to lure in such businesses as Boeing, BMW and other large companies looking to make significant long-term investments to the state.

But, for the kinds of business Rutherford County and the surrounding area hope to attract, we have to be cautious of giving away the farm at the risk of losing our shirts in the end.

The trade off for large tax breaks is an increase in the overall tax base by putting people back to work who will spend money and add to sales taxes or buy homes thus increasing the property tax base.

That may be good and all, but we can ill afford to just bring companies in by dangling a large tax break package in their face only to see them walk away when the tax breaks run out.

As we enter a new year, we hope state and local officials take heed and do proper due diligence when offering these kinds of packages to new and existing businesses.

Jobs are necessary for our county and bringing in new business is always good news.

We have to make sure our community is not left holding the bag if new businesses desert after their sweet incentive packages run out.

By Matthew Clark, for the Editorial Board


The Daily Courier Editorial Board consists of community members Jerry Brewer, Kyle Bingham, Alex Moore, Tom Padgett and Cliff Strassenburg as well as Editor Matthew Clark