Keep those incentives

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Tinkering with incentives is playing with fire

By Sherry Robinson

Job creation has been the Holy Grail for as long as I’ve been writing in New Mexico – 35 years, and one byproduct of our long struggle to spin straw into gold is the economic development incentive.

We have dozens of tax breaks and gimmees to lure companies. Even in good times they’ve drawn criticism, but now, as the state attempts to balance the books, and candidates cast about for campaign fodder, there are new calls to examine their use and the public’s return on investment.

It’s a dandy idea, but we’ve heard it before.

The answer in the past and the answer now is to establish and maintain a credible system of accountability, but we’ve never been willing to spend the money. In the last session, lawmakers passed and the governor signed a bill that requires the state to track and report cost, return and job creation of new incentives, but presently agencies either don’t have the information or can’t divulge it. And the bill was unfunded.

If we got such a system,  companies receiving incentives would be required to do a fair amount of reporting. But some candidates and lawmakers want to get government off the backs of business, and historically, elected officials of both parties have been reluctant to ruffle the feathers of the golden geese.

Other states offer pretty much the same incentives, and a number of ours are designed to offset burdens unique to New Mexico (relief from the gross receipts tax, for example). If we want to dismantle our incentives, we need to be darn sure that Colorado, Arizona, Utah and Nevada – our competitors – are dismantling theirs. That’s not likely to happen.

Even talking about tinkering with the incentives or other public support is tricky. Every attack on the film incentives has cost us a few projects.

Look what happened in Roswell. When city officials announced their plans to review the use of lodger’s tax revenues to fund the UFO Festival, a tourist magnet, the city and event organizer were swamped with calls asking if the event was still being held, entertainers cancelled, a silent partner backed out and two national news shows decided not to send crews.

Veteran economic developer Mark Lautman recently wrote in New Mexico Business Weekly that if you removed all the companies that accepted incentives to come here, “our economy would look like Detroit’s.”

“Let’s get something clear,” he says. “Economic development incentives are not being abused, and have not been abused in the past. All the moralizing and second-guessing going on about incentive deals that were made before the recession should be tempered with hindsight.”

Incentives, he reminds us, are a fact of life. “If you want to win – need to win – then you will need incentives, and good ones. The last thing we want to do at the bottom of a recession and the beginning of a recovery is send our economic developers and community leaders into battle against competing communities with no bullets.”

As if to drive home this point, Rio Rancho Mayor Tom Swisstack said last week during a speech, “I will fully support the use of incentives to locate businesses in Rio Rancho that citizens want.” In case anybody missed his point, he said it again.

Rio Rancho, the state’s fastest growing city, has been the poster child of job creation, and not just because it’s piggy-backing on Albuquerque. The City of Vision has chased employers aggressively and fostered a can-do culture in City Hall that zips along permits. Every other community in the state should take note.

I’m not saying we shouldn’t discuss the incentives, but let’s do it with our eyes open and take blanket statements by political candidates with a grain of salt.