Several northern Virginia communities could try to land National Science Foundation, Washington Examiner, December 28, 2012

. . . and so it continues:  Fairfax County refuses to say whether it is considering giving away millions in homeowner tax revenues to attract the National Science Foundation to the county--from Arlington.

By Taylor Holland

ARLINGTON, Virginia — The fight to lure the National Science Foundation — and its 2,000 employees and $7 billion annual budget — out of Arlington County is heating up, with several northern Virginia communities maneuvering to become the agency's new home.

The General Services Administration, the federal government's real estate manager, this month pushed back the deadline for the foundation to move into a new facility to 2016, a two-year delay that will give builders time to construct a new headquarters.

The extension means that sites along Metro's nearly completed silver line — including Tysons Corner, Reston and Herndon — will be available to compete for the science foundation, whose lease in Ballston expires next year.

Fairfax County officials, however, declined to discuss whether they will enter the bidding.

Still, it is now a "wide-open competition" for northern Virginia sites that can provide cheaper space for the agency . . . .

As we have pointed out in a recent post citing comprehensive research by the New York Times, subsidizing corporations to come, stay, or expand in any locality has been a largely useless and clearly unfair way to spur economic stability if not growth.  Homeowners are left to pick up the costs of the subsidy to the corporate arrivals and often build and maintain the infrastructure to support the new businesses. 

The result:  Growing residential property taxes and under-investment in residents' needs--schools, parks, the arts, social services for the needy, etc.--so that corporations will come or stay.   This is apparently the case with the NSF which is looking to leave nearby Arlington County after 20 years if it can garner enough swag despite the pleas of Virginia's two US Senators for NSF to stay at Ballston.  And, as NYT points out, often these incentives don't work. 

For the rest of this article, click here. 

As Companies Seek Tax Deals, Governments Pay High Price, New York Times, December 1, 2012

As the Fairfax County Board of Supervisors takes on the issue of added taxes in Tysons early in the new year, it is useful to put the issue of corporate tax incentives in perspective.  In the Tysons case, the Board is reviewing a proposal by the the County's Reinvestment Board to create a Tysons transportation service tax district to cover the $5 billion needed over the next 40 years to pay for Silver-Line development-linked roads and public transit there.  The tax would add about a eight percent to the tax bills of Tysons homeowners and a similar amount to the bills of landowners/developers there. 

As Reston 2020 and the RCA Board of Directors have stated previously, it is unfair to force residential taxpayers to pay additional taxes from which they will garner no offsetting income while subsidizing corporations.  Developers/landowners can anticipate huge profit increases from tripling or more their development in Tysons--and passing on any added tax costs to their clients, renters, and buyers.  Residents have no such opportunity.    

And this does not include tax incentives routinely provided by Fairfax County and Virginia to induce companies to move to northern Virginia.   And, of course, every inducement given to a company to re-locate here--including Intelsat's recent decision to move to Tysons after receiving a $1.3 million grant from the Governor's Opportunity Fund--means that residents of those jurisdictions must dig more deeply to cover the costs of providing infrastructure and other services for their new corporate neighbors.

In this NYT article, Louise Story reveals the scope of those subsidies and how, in the end,  they are largely feckless on a larger-scale basis.  Here's how her story begins:

In the end, the money that towns across America gave General Motors did not matter.

When the automaker released a list of factories it was closing during bankruptcy three years ago, communities that had considered themselves G.M.’s business partners were among the targets.

For years, mayors and governors anxious about local jobs had agreed to G.M.’s demands for cash rewards, free buildings, worker training and lucrative tax breaks. As late as 2007, the company was telling local officials that these sorts of incentives would “further G.M.’s strong relationship” with them and be a “win/win situation,” according to town council notes from one Michigan community.

Yet at least 50 properties on the 2009 liquidation list were in towns and states that had awarded incentives, adding up to billions in taxpayer dollars, according to data compiled by The New York Times. . . .

Later in her article, she notes the nationwide nature of this ill-advised and unfair tax subsidy policy:

 The Times analyzed more than 150,000 awards and created a searchable database of incentive spending. The survey was supplemented by interviews with more than 100 officials in government and business organizations as well as corporate executives and consultants.

A portrait arises of mayors and governors who are desperate to create jobs, outmatched by multinational corporations and short on tools to fact-check what companies tell them. Many of the officials said they feared that companies would move jobs overseas if they did not get subsidies in the United States.

Over the years, corporations have increasingly exploited that fear, creating a high-stakes bazaar where they pit local officials against one another to get the most lucrative packages. States compete with other states, cities compete with surrounding suburbs, and even small towns have entered the race with the goal of defeating their neighbors. . . .

 . . . For local governments, incentives have become the cost of doing business with almost every business. The Times found that the awards go to companies big and small, those gushing in profits and those sinking in losses, American companies and foreign companies, and every industry imaginable.

Workers are a vital ingredient in any business, yet companies and government officials increasingly view the creation of jobs as an expense that should be subsidized by taxpayers, private consultants and local officials said.

The bottom line:  Local governments give up $9.1 million EVERY HOUR in business incentives, an average of more than $80 billion per year.  

For the rest of this comprehensive article, click here.  

Then ask yourself--and your supervisor--if it's fair for Tysons residents to pay added taxes so the corporations there can make even greater profits. 

The Uselessness of Economic Development Incentives, The Atlantic Cities, December 7, 2012

By Richard Florida

This week, the New York Times ran an important series of articles on state and local incentives to business. The reporting was terrific, but even better is the data set the Times put together on the scale and scope of these incentives. The paper points out that its reporters spent some 10 months compiling data from states, cities, and counties.

All told, states, cities, and counties give away some $80 billion to companies each year, including both expenditures and tax abatements, according to the Times' estimates. . . .

. . .  Our biggest takeaway: there is virtually no association between economic development incentives and any measure of economic performance.   (Emphasis added.) We found no statistically significant association between economic development incentives per capita and average wages or incomes; none between incentives and college grads or knowledge workers; and none between incentives and the state unemployment rate. . . .

. . .  The broad body of evidence on incentives, including the Times series, finds that incentives do not actually cause companies to choose certain locations over others. Rather, companies typically select locations based on factors such as workforce, proximity to markets, and access to qualified suppliers, and then pit jurisdictions against one another to extract tax benefits and other incentives.  . . .

Click here to read the rest of this article.  

Maybe Virginia and Fairfax County should be putting more taxpayer money into education and transportation than in to the pockets of corporations that would probably come here anyway.  If this article and the research behind it have merit, those investments of taxes would have a greater payoff in terms of greater economic growth.