Patriotism and Economic Stimulus

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There is no doubt that we in Central Texas are hurting more economically than we have in a long time. Wherever I go, I hear hopeful speculation of what federal dollars our region may draw down. I too am hopeful that federal stimulus will chart a course toward new or renewed investment in education, health care and energy independence. But, we must do our part locally to the greatest extent possible so that federal dollars can be routed to the most desperate areas of our national economy.

The following chart illustrates how our region is better off than our state and our country in most metrics of economic health.

This is not to say there aren’t folks in our community that were hurting before the downturn and even more folks who are hurting now.

For long-term economic health we as a people must invest in education and healthcare. While our school districts and our healthcare district and its partners do what they can with inadequate public funding, these issues largely require action at the state and federal level.

In the short term, local government has a role to play in lessening the impact and duration of the downturn. In addition to supporting our school districts and our healthcare networks, county government can:

•    Keep taxes as low as possible;
•    Provide good and necessary jobs in county government;
•    Accelerate needed county capital improvement projects and road projects to inject additional work into the construction industry;
•    Provide workforce training and placement for those in need of work;
•    Provide rent and utility assistance to those who are struggling;
•    Provide foreclosure prevention counseling to those in fear of losing their homes;
•    Provide down payment assistance and lease-to-own opportunities for qualified home buyers; and
•    Target specific industries as a bulwark against economic uncertainty.

I hope that the first seven bullets above are not controversial. I expect and welcome controversy on the last bullet.

“Special support” is most often understood as some form of preferential tax treatment or abatement to lure a large employer to our region that would not otherwise locate here. I am not a fan of tax abatements generally for several reasons. First, the best ways for county government to attract and support businesses of any size are to keep taxes low, services high and infrastructure maintained. Second, most jobs are created by small businesses. And third, academic research over two decades indicates that, more often than not, tax abatements simply reward industry for going where the market was taking them anyway. However, I believe there is utility in offering abatements to industries providing a social benefit in a timid market, such as:

•    Encouraging businesses to locate or remain in targeted areas;
•    Innovation with a social benefit that has not yet gained sufficient market share to be cost competitive; and
•    Hiring and training of the otherwise under-skilled or under-employed.

An Economic Development Subcommittee of the commissioners court has been formed to examine all the tools for economic enrichment available to county governments. Tax incentives or abatements are among those tools along with other more traditional lures such as workforce training, robust infrastructure, public safety and the like. The members of the subcommittee are Commissioner Ron Davis, Commissioner Margaret Gomez and me.

I hope that the subcommittee will not favor an entitlement program of abatements distributed to all comers meeting a scoring matrix. My initial thoughts are to recommend a policy requiring an appropriate weighing of:

•    Desired future conditions for the community – what geographic areas of the county are most suitable for industry, what demographic populations are most in need of job training and employment, and what industries best fit these geographic circumstances and demographics?
•    Objective criteria – a scoring matrix including such elements as type of industry, numbers of jobs created, health insurance coverage provided, cost of utility, road and other infrastructure necessary to support the proposed business, demonstrated venture capital investment, etc.; and
•    Current economic circumstances – will the impact of the tax abatement shift undue burden onto other taxpayers or will the job creation benefits outweigh the shifted burden?

What you can do:

•    Attend and testify at our Economic Development Subcommittee meetings. I will post the meeting times and places on my website at www.SarahEckhardt.com.
•    Write or call the subcommittee members with your ideas:
         Commissioner Eckhardt – 854-9222, sarah.eckhardt@co.travis.tx.us
         Commissioner Gomez – 854-9444, margaret.gomez@co.travis.tx.us
         Commissioner Davis – 854-9111, ron.davis@co.travis.tx.us
•    Join the policy debate within other local governmental entities through attending public meetings, writing Letters to the Editor and talking to your neighbors and colleagues.

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