Turn good jobs spigot back on, legislators, and be heroes
For two years Florida’s development agencies, including Miami-Dade’s Beacon Council, have been handicapped in luring high-paying jobs in industries that trigger higher than average economic growth. That needs to change, and only the Legislature can do it.
Until two years ago the Legislature funded tax incentives for 10 targeted groups of businesses that agreed to create 10 or more new jobs paying at least 115% of the state’s average wage. The enormously successful program created far more well-paid jobs than were promised.
Then, the Legislature inexplicably cut it off. In the coming legislative session, funding should be restored. There is no reason not to.
The worst part of the program, begun in 1994, is not its impact, which is high, or its cost, which is actually zero, but its name: The Qualified Target Industry (QTI) Tax Refund Program. Quite a bureaucratic mouthful.
If that great sales tool for jobs were just named Good Jobs for Florida, or Jobs Bonanza, or Higher Pay Jobs, getting the Legislature to fund it would be a no-brainer. And all of those names really fit.
Communities use the program when companies in key sectors look to expand or move and Florida is one of several places they consider. As they decide, companies look at criteria including quality of labor force, housing, distance to markets, schools quality, climate, local pay scales and far more – every company has different desires.
One factor they all look at is what incentives a community or state will give them if they go there. Site selectors working for those companies say incentives average ninth on the scale of factors when choosing – but lack of incentives frequently rules a community out from the start, and at the end of a close race tax incentives can tip the balance.
Unfortunately, for two years Florida has been about the only place in the nation that has not had these incentives, and it made a huge difference in good jobs we didn’t get.
Florida Tax Watch, which is campaigning to get the state to restore the incentives, says companies in the program actually more than repay the state: the companies produce on average $5.30 in additional revenue to the state for every $1 of tax incentives they get – and they get incentives only after they’ve met agreements on jobs to add and wages those jobs will pay. This incentive actually pays us rather than the other way around.
That answers the only real doubt about the program: some call it corporate welfare. In truth, it’s corporate payback.
Would it be better if companies came here and produced great jobs without the state offering any incentives? Sure. But it wouldn’t be realistic, because everyone else is handing them money in one way or another and we aren’t.
It’s like an arms race: it would be great if the United States could persuade every nation to disarm and we did the same. But until we can persuade others, we arm. It’s costly but necessary.
Unfortunately, we disarmed alone in the jobs battle. Who knows how many jobs and how many millions we lost – but we do know that our losses are more than five times as much as what we saved. Not smart.
Moreover, those losses have been in 10 target areas that we prize: corporate headquarters; financial and professional services; global logistics and trade; information technology; life sciences; research and development; manufacturing; clean technology; defense and homeland security; and aviation and aerospace. Their importance to us in diversifying from lower-paying industries and in enhanced job opportunities for our residents speaks for itself.
It’s not outsize money involved: the program offers $1,000 in tax credits for every job (after it is created) paying 150% of prevailing wages, $2,000 per job paying 200% of that wage, $2,000 more in designated high-impact sectors or increases of a company’s exports through a seaport or airport here by at least 10%, and a $2,500 job bonus in brownfield areas.
In the three-year window before the Legislature pulled the plug on funding, the state gave $12.74 million in tax refunds – and gained more than $68 million in net added state revenue. In its last funded year, 159 businesses created 7,890 jobs, far above the 4,822 they pledged.
The new jobs grew personal income in Florida by nearly $1.6 billion and consumption by nearly $1.5 billion, says nonprofit and nonpartisan Florida Taxwatch. That is what we give away when we shut down the incentives spigot, which Taxwatch says is “the cornerstone to the state’s efforts and the key to attracting high quality jobs to our state.”
This program has been overwhelmingly successful by every measure and far more than pays its own way. What is not to like? Legislators who vote yes become jobs heroes while adding to the state treasury.
They can’t afford to say no for a third year. Nor can we.