Sunday, November 04, 2007

Barranda asks a fair question in the comment section of the previous post

Bascially "Barranda" asked what I would do different if I were in charge of Economic Development in this region. He asks this question because I spend a fair amount of time criticizing how Economic Development is currently done.

His question is fair and I will do my best to answer it. People who read this blog regularly know my answer; however, those who visit less often may not know how I think we should handle Economic Development.

Here is what I would change as far as local Economic Development:

1. First of all I would stop using Tax Increment Financing (TIF). TIF districts erode the property tax base and are not a good idea.

2. I would next change the local policies on granting tax abatements. First of all most people do not understand what a tax abatement is. Every time a tax abatement is granted to a business this transfers taxes from the business that gets a tax abatement and forces this burden onto all other businesses. I do not like tax abatements in general; I would like to see our local Government stop giving tax abatements entirely and instead lower the overall tax rate for everyone. This will allow everyone to pay somewhat lower taxes and will prevent Government from determining which companies will succeed and which will fail by giving special treatement to certain business by granting them tax abatements. (Please realize that 70% of all new jobs come from small busineses and almost all of the tax abatement dollars go to large companies)

For example our City Council just granted a tax abatement to a McDonalds franchise. Other McDonalds franchises in this City have never received a tax abatemebt; neither has Burger King, etc. Our City Council has relieved one McDonalds location of a quarter of a million dollars of taxes and is forcing other businesses to pay these taxes for this McDonalds.

3. There are several organizations the focus on local economic development. These organizations should be combined into one or two organizations and they should be streamlined so they do not consume a lot of tax dollars. They should focus on making recommendations to local government that would allow companies to grow (Changing zoning rules etc), on educating local business owners on sources of funds available to business owners from Indaina and the Federal Government, and on marketing this region to new business owners. We should advertise that we do NOT grant tax abatements and that all business owners can expect to pay one consistent (and lower) tax rate.

4. I would next focus on zoning, land use, and needless regulations that impede business in this city. We need to trim the size of local Government and create a small set of rules that are enforced conistently.

The above four steps would ge a good start.

Mike Sylvester

5 comments:

J Q Taxpayer said...

We are close on beliefs on this one. However, I would love to set down with John Stafford and have him explain these all to me. The man can take tax issues and bring them to a level every person can understand.

But here is my thoughts, none the less.

1- I agree with you on TIF.

2- Tax abatement are only given on the new capitol investment. So your current property tax does not go down if you are already have a running business.

I think capitol equipment should not be subject to property tax. Why do we tax a company for a $750,000 piece of equipment that one person runs and someone producing software on a $5,000 computer is hardly taxed at all?

Also salary income has to play a roll in it. The amount of tax break you get is based also on actual payroll. Not what some company may claim it will be, but what it is!

3- Econ Develop groups look more like a various groups trying for the same pie. Many of the people serving on them have their own agendas.

Fort Wayne - Allen County should have ONE. Then if this group wants to have a member on the Northeast Indiana group would be fine. That is it people!

A large company is hardly going to locate within the city limits of Fort Wayne. There is a number of reasons and the least is the property tax issue. I am talking square feet for their building and not the number of employees.

A real high tech business may want to locate downtown or in some building complex, within the city limits. There is also a number of good reasons for such.

What we don't need is people setting on the board that may have a vested interest in things happening one way or not happening at all.

4- I will agrew with you. Often when you look at any rule/law book their are things that came about to address one issue. That issue has long gone by the way side but we still force everyone to jump through the same hoop.

I would send every business owner in Fort Wayne a questionaire to see what they would like to see changed. All of the data would be collected and posted on the Internet, minus the company name it came from.

The businesses and public would have maybe three months to comment. It would require a form of signing up to post comments.

Then we decide where we go from there. No, everyone is not going to get everything they want. But if we see a common thread of what we are doing wrong, then we change it.


You and I could pretty much agree on the starting point.

Doug H. Sec, Lib Pty AC said...

Mike,

I generally agree with what you have posted here but would like to throw my $.02 in.

#1) Agree 95%. Everything I have learned about TIF's is generally bad. That said I am certain that a project would come along every now and then where the use of a TIF would be better than that status quo. I don't believe anything is 100%, thus a TIF every 15 years might be useful.

#2) I agree 100%. One of the problems I have is that the service industry will follow consumers WITHOUT receiving tax abatements. If there are viable customers service of all kinds will come to swallow up their money. Fast food, Walmarts, Jiffy Lubes, etc will build simply because there is a population base that they can take money from. By giving a tax abatement to any new company you are allowing politicians to show favoritism and cronyism at their whim. I think I would favor assisting in some way a local business that had an opportunity arise to expand but for whatever reason couldn't do it as quickly as the market may demand. In this case it would be fair for local government to help a local business but NOT in a way that shifted any burden onto other citizens and/or businesses in the area. Perhaps assisting in expediting low interest loans or some other assistance in conjunction with the private sector. Whatever the case any government assistance should ONLY go to existing businesses in the community and NOT to bring business in from the outside.

#3) I am not so certain here. I am not familiar enough with the local organizations that you may be implying but I agree in principle.

#4) I agree with reducing regulations that impede the creation of or growth of small businesses in our community. I would also say that the rules we pass must not just be consistently enforced but also have such regulations that can be easily enforced and NOT by complaint alone. We have regulations from Federal, State and Local governments that are beyond counting. I wouldn't be surprised if some of these overlap. It does us no bit of good to have 10,000 regulations of which only 500 are enforced with any regularity.

#5) We need to look at cutting our dependency on State & Federal handouts. We have had local law enforcement standing around enforcing seat belt laws. According to Sheriff Fries this was paid for by Federal Grants. There was no need for Fort Wayne to take this money. We can help the national debt by being one of the few cities to begin publicly turning down such waste. The less dependent we are on outside revenue streams the less damaged we will be when the State & Feds begin to face economic ruin due to poor spending practices.

#6) While I would heavily support existing small businesses this doesn't mean we ignore potential growth. We must do a better job of simply marketing Fort Wayne. We have excellent schools and can supply a wide variety of businesses that would want to locate here with trained employees.

Respectfully,

Doug Horner (L)
Candidate, City Council at Large

J Q Taxpayer said...

Doug,

You make a point. We have some of the lowest electric rates (not the lowest but pretty far down the list), natural gas rates (not the lowest but pretty far down the list), some of the best quailty water, and sewage treatment (yes we are dealing with issues from years before). Utility wise, we can grow and that is something many places all over the US can not say.

Anonymous said...

SYLVESTER FOR MAYOR or CONGRESS or JUDGE!!!

barranda said...

Thanks Mike. Will you permanently post this?