Increased transparency necessary
From Florida Center for Investigative Reporting
“It will create jobs.” This by-now-familiar claim is used to sell every new plan to use taxpayer money in cutting deals with private industry. Every year the State of Florida grants hundreds of millions of dollars to businesses in return for promises that these businesses will create jobs by hiring more people and generating added economic activity. Our state gives these “economic development incentives” as tax credits, tax exemptions, tax refunds or outright grants through about a dozen different programs most overseen by Enterprise Florida, the state’s quasi-public economic development organization. These are tax monies that would otherwise go to pay our teachers or to build our roads. In the name of job creation we give them instead to for-profit businesses to compete with other states and create jobs in industries like film, manufacturing, life sciences or sports & tourism. We are rightfully skeptical.
In a free market democracy state government’s fundamental role includes things like supporting public education and maintaining and improving the state’s infrastructure. It does not include investing the public’s money in private companies. “Picking winners” simply does not sit well with most of us. So when we fund these projects we do so only by making a well-justified exception. Is there a public good that can only be achieved by a limited investment of the public’s resources? Is this a project that financial experts agree will pay off? Can we measure the projects’ results in order to back up these claims? If the answer to these is yes, then an exception might be justified. That is, however, how it ought to work.
Reports of major failures in our private partnerships just this year have hurt the credibility of our economic development incentive programs. Our state lost $20 million dollars in one recent project meant to attract a visual effects film studio to Port St. Lucie. The company soon went bankrupt, leaving Florida on the hook. Another half million dollars went down the drain in Miami-Dade when an Enterprise Florida project failed. Making matters worse Integrity Florida, a government watchdog group, released a scathing report in February on Enterprise Florida. The report documents preferential insider dealing in our state’s system for awarding private public partnerships.
In response other legislators and I have been working in a bipartisan way to enable taxpayers to “look at the books.” Sen. Eleanor Sobel and I have sponsored legislation that would make sure our state evaluates our economic development incentive projects more accurately and more transparently (SB 572, HB 563). Our bill requires the state to maintain an accessible online database where this information is published and regularly updated for the public. Meanwhile, Senator Andy Gardiner and Representative Ray Rodrigues have sponsored a bill requiring economic development incentive programs be regularly and independently reviewed for effectiveness (SB 406, HB 641).
If we want effective and efficient government that uses taxpayer dollars wisely, open government is the indispensable ingredient. Access to accurate information on our private-public partnerships and regular evaluation of them is sorely lacking. How else can we separate the “job creator,” who temporarily partnered with the state to create a win-win for both industry and public, from the “crony” who figured out a way to get taxpayers on the hook for a business venture?
Rather than take a time-out to figure things out, however, some of our state’s leaders seems intent on charging full speed ahead. Proposals to expand these programs are making their way through our legislature. One of our governor’s principal initiatives this year, for example, is to expand tax exemptions for manufacturers. Many of us want to believe in the idea. Asked for evidence that these tax breaks are needed to generate permanent new jobs we legislators are repeatedly just told “it will work.” It would mean our state hiring fewer teachers and deferring needed infrastructure upgrades, but we are simply asked to take it on faith.
Another proposal seeks to award $90 million in state tax revenue and $200 million in local hotel tax revenue to the Miami Dolphins in order to modernize Sun Life Stadium. The team owner’s net worth was just announced at upwards of $4 billion. Yet the public is told that only with a public-private partnership will we see any more South Florida Super Bowls and the economic benefits they bring. No rigorous independent analysis is proposed to justify these claims. Instead we are again to take it on faith.
It is time to stop, look at the books and reform our system of economic development incentives. With increased transparency, taxpayers will have an opportunity to oversee our investments, to advocate these programs’ expansion or call for their repeal. This is, after all, our money.
José Javier Rodríguez is a state representative serving District 12, in Miami.
