Archive for the ‘Enterprise Zones’ Category

Enterprise Zones Have No Net Effect on Employment in California

June 24, 2009

This month, the Public Policy Institute of California released a study that describes the economic impacts of the state’s Enterprise Zone program.  Its findings:  “…the program, on average, has no effect on job or business creation.”  That’s a tough break for the California Association for Local Economic Development, whose members proposed expanding the $500 million program to help stimulate the state’s economy.  The study’s conclusions shouldn’t be a surprise, though.  Other studies around the country have found that Enterprise Zone (EZ) programs are poorly managed and often stray from their original intent to incent job and business creation in disadvantaged urban areas.  In the Chicago area, EZ tax credits have actually contributed to greater metropolitan inequality.  New York is in the process of attempting to rein in Empire Zone companies that for years have failed to meet basic program requirements.  A forthcoming Good Jobs First study shows that many companies in two of Ohio’s largest metropolitan areas simply move from zone to zone to reap the benefits of EZ subsidies.

At a time when state and local budgets are stretched to the breaking point, results-oriented economic development should be a priority.  States and cities can make every dollar count by investing in schools, fixing infrastructure, and creating quality workforces.  More tax giveaways won’t generate consumer demand for goods and services – they’ll only further damage budgets.

Canadian Aircraft Manufacturer May Fly South for Subsidies and Cheap Money

April 3, 2008

Missouri lawmakers have fast tracked legislation that creates a new state income tax credit program to lure Ottawa-based aircraft manufacturer Bombardier Aerospace to Kansas City.

If Missouri’s package passes, the $375 million aircraft assembly plant will receive an estimated $300 to $400 million in “Enhanced Enterprise Zone” credits over 22 years. However, it was the weak American dollar (which has lost about a third of its value versus the Canadian dollar over the past five years) rather than the subsidy that prompted Bombardier executives to consider relocating to the U.S.

Both Kansas City Mayor Mark Funkhouser and Kansas City Star columnist Chris Lester, frequent critics of subsidy giveaways, are in favor of the deal. That’s because this is not a typical subsidy deal. World Trade Organization regulations forbid aerospace companies from receiving subsidies, so Bombardier would have to pay back the tax credits through fees charged to buyers of jets assembled at the plant.

Meanwhile, Canadian officials are teaming up to offer a $488 million incentive package to keep the expansion site at home. While it’s unclear if the bigger subsidy will be enough to overcome the weak American dollar, one industry analyst questioned whether Bombardier is using the Missouri offer as leverage in its talks with Canadian officials.

In other jet-set subsidy news…

Michael Scheeringa, CEO of Cuyahoga County, Ohio-based FlightOptions LLC wants a big tax break. After all, it would only be fair.

That’s after it was announced in March that NetJets Inc. would receive about $68 million in state and local subsidies to assist in the $200 million expansion of its Port Columbus Airport aviation campus. FlightOptions and NetJets are direct competitors in providing private flights to corporate executives and, Scheeringa points out, the subsidies give NetJets an unfair competitive advantage.