Texas

As a follow up in to the last post, the San Antonio Business Journal recently conducted a poll on public opinion of tax incentives. Of the peope who disfavored incentives, "several said that there is not enough accountability among city and county officials to ensure that companies follow through on what they promise."

Nebraska

Nebraskan officials seem to be happy with their state's new tax credit program, the Nebraska Advantage. From the Lincoln Journal Star:

More companies than expected have signed up for the Nebraska Advantage program, according to Richard Baier, director of the Department of Economic Development.

The agency anticipated closer to 45 or 50 applications during this time period, according to Baier.

“And the investment is considerably higher than we expected,” he said.

“We’re pleased with the results,” the geographic mix and the mix of industry types, said Baier.

There is a nice mix of manufacturing, biotechnology, a call center and high tech, he said.

Paypal in Omaha expects to create the most jobs— almost 2,000 — of the early applicants.

The BNSF Railroad anticipates spending the most, $750 million on improvements statewide.

The nine Lincoln and one Waverly application represent a potential of almost 450 jobs and more than $153 million in investment, based on the applications.

“This is a fantastic tool, a great piece of legislation that has won the attention of site selectors across the country,” said Wendy Birdsall, president of the Lincoln Chamber of Commerce.

People who help make site elections are now talking about Nebraska as “one of the best places to do business,” she said.

Sounds good, for now. I wonder about oversight. Have these companies made legitimate promises that they can keep, or do they inflate their numbers in order to get a tax break with the thought that it is unlikely that the state will keep a close eye on their employment stats?

Florida

From the November 11 Florida Today:

"[A] look at two very different businesses trying to grow shows that not all businesses are created equal when it comes to incentives."

Michigan

In its short history, this blog has probably discussed the state tax break and incentive problems of Michigan more so than any other state. It was with much enthusiasm, then, that I read an article on the economic proposals of the candidates for the state's 21st District state senate seat. From the Kalamazoo Gazette:

[Incumbent Republican Senator Ron] Jelinek said farmers should be given tax breaks to entice them to invest in crops that could be used for alternative fuels, such as corn and soybeans. Tax breaks also should be provided to those who invest in the manufacturing facilities for alternative fuels, such as biodiesel plants.

Jelinek's opponent, Valerie Janowski, a Democrat from Dowagiac, agrees that alternative fuels should be a priority for the state Senate but also sees the state's environment as something that should be better preserved for future generations.

The marketing of the state as a tourist destination should be strengthened, Janowski said, enticing people to come to Michigan to explore and enjoy the many natural attractions, as well as historic and cultural draws, which are present here. . .

Both candidates are concerned about the state's economy and vowed to come up with creative ways to bolster job creation and revive the sluggish economy.

The economy tops his list of Jelinek's priorities, with the senator arguing that the state should invest in the industries of the future. But that doesn't mean the state has to give up on its manufacturing past, he said, it just has to look at the industry in a different way.

``The state is equipped with a good manufacturing labor force,'' he said. ``But we need to focus on manufacturing nonautomotive goods and high-tech products.''

Jelinek proposes having state officials ``travel nationwide'' to entice industries -- both high-tech and nonhigh-tech -- to locate to Michigan.

Janowski, who has been a high school teacher, businesswoman, grant writer and tractor-trailer driver, agrees that the state has a talented work force and that more needs to be done to get the economy back on track.

With the automotive industry in decline, she said, more effort needs to be put into looking at alternative products to manufacture, such as creating the infrastructure needed to produce alternative fuels.

``We need to transform our economy from what we have been to what we need to be,'' she said.

Sadley, the article contains no mention of the idea of lowering taxes across the board.

South Dakota

Interesting things going on in South Dakota. From the ever-popular site, CattleNetwork.com:

ABERDEEN, S.D. (AP)--The Brown County state's attorney says a decision to give tax breaks to a beef processing plant that'll be built just south of Aberdeen cannot be put to a public vote.

Plant developers say the tax help is crucial for the project.

State's Attorney Mark McNeary says the action of the county commission cannot be second-guessed by voters because it was an administrative procedure.

Administrative actions are not subject to public votes, but legislative actions are.

A lawyer for opponents of the beef plant says he thinks it's a legislative decision to provide a break on property taxes, and it can be put on the local ballot if about 12-hundred signatures can be obtained.

A petition campaign is planned.

The Brown County Commission on Tuesday approved a measure that will provide a tax break of $8.6 million for the new beef processing plant.

The tax break will be provided by creating a special tax increment financing district that allows the increased value of the plant to be refunded in property taxes as improvements are made.

Northern Beef Packers wants to build a plant that could process 1,500 cattle a day at capacity.

Let get's this straight. A large company entices a group of bureaucrats to give them a break on their tax burden. The bureaucrats come through, but the problem is that ordinary small business and property owners are not entitled to the same breaks. The small property owners realize that their chances of attaining the same discretionary tax breaks are slim and costs of doing so are high, so they decide to get together to oppose the corporate favoritism on the whole. But then the state's AG tells the smaller property owners that they cannot challenge the tax break -- it is set in stone.

Wow. I'm sure many of my friends out there who read this blog often wonder why the topic of state tax breaks and incentives interests me. Hopefully cases like these make it a little easier to see why: rent-seeking monopolistic government entities such as economic development boards create more problems than they solve and purport to be above the will of the people.

Texas

The Heartland Institute's Budget & Tax News reports on a tax incentive program in Texas that has not gone according to plan. Here is an excerpt:

The State of Texas is demanding that Cabela's Inc. return $28,000 and forfeit another $200,000 from a state grant for failing to create enough jobs at a store that received economic incentives.

Kathy Walt, a spokesperson for Texas Gov. Rick Perry (R), confirmed to the Austin Business Journal on August 15 that the Cabela's store in Buda had failed to create the promised 400 jobs.

If Cabela's had hit its jobs target, it would have qualified for $400,000 in Texas Enterprise Fund money. The firm has to return $28,000 of a $200,000 incentive payment the state had made, as the job creation fell short of even half the promised number.

The grant was offered as an enticement for Cabela's to build stores in Buda and Fort Worth.

That's a good example of costly litigation for the state that could have been avoided if the bureaucrats had relied on the market for job creation.

Pennsylvania

From today's Pittsburgh Tribune-Review:

The state is about to enact an incentive package that officials hope will provide the tax breaks needed to put Western Pennsylvania over the top in its bid to convince Westinghouse Electric Co. to select the area for a major expansion.

Legislation awaiting Gov. Ed Rendell's signature would create a maximum of four Strategic Development Areas offering tax breaks and incentives in four key geographic areas of the state targeted for economic development projects that would create or maintain a minimum of 500 jobs and involve capital investment of at least $45 million. . .

"With the acquisition of Westinghouse by Toshiba earlier this year, many other states across the country are trying to lure this expansion away from Pennsylvania," said state Rep. Joseph Markosek, D-Monroeville, one of the backers.

"We needed to offer a competitive economic development package so that the company will stay in our region and expand its operations here."

What does that say about your state's economic policies when you need to offer a discretionary package in order for a business to stay in a location?

No indication of skepticism towards the plan is given in the article.