Incentive spending isn’t charity; we need to see the payback

’Tis the season of charitable giving, ranging from coins dropped into the kettle of a streetcorner Santa in the holiday spirit to millions given in the spirit of end-of-year tax jockeying. But while we should give, government shouldn’t give our tax dollars away for us.

When Miami-Dade puts millions into incentives for a company to grow or film projects like those Miami Today reported last week, the money shouldn’t go out the door as a gift but as an economic investment paying specific returns.

If you think the county is just playing Santa Claus by giving away your taxes to big business, it’s because you aren’t seeing results. Incentives are designed as investments that grow, paying back more than we spend. Economic data should prove that; we shouldn’t have to take it on faith.

The county does indeed set goals, but it never tells the public how well goals are met. Even less do we know what return on investment that money achieved, or even if the county tracks the gain or loss of tax funds for each investment.

Business tracks returns on investment because funds are scarce and opportunities to spend are broad. The United Way tracks the impact of its grants because it also is in a position of wide needs and narrow fund streams. Why should government be different?

Local government may in fact track the actual bang for every incentive buck, though I doubt it. The Pew Charitable Trust says 28 states do so, although not in a standardized format that could rank each state’s incentive effectiveness against others.

What would help us all understand incentives used as economic levers is a standardized scorecard of all incentives and what they have achieved. Since they may take a decade to play out, update the scorecard quarterly. 

What hints we get about the impact of programs is never in dollar-for-dollar comparisons of investments and returns. How much did the county put into a jobs incentive and what has it repaid the public so far?

Careful recordkeeping can be revelatory. If one kind of investment yields more than another, put future incentives to work where we get the most impact. Incentives aren’t charity but investments, some more economically effective than others. 

Publicizing incentive impacts will make clear where taxes go and what we get back. That can build support for new incentives that pay us back more in taxes from recipients and in new high-paying jobs.

Data should precede any incentive as a project is given economic targets. How much do we realistically expect to generate? 

Later comes an assessment of the incentive’s use based on trustworthy data vetted by the county commission’s auditor or the county clerk, who also is to become the county’s financial chief. That data needs to be verifiable. You can footnote reports with glowing intangibles for PR spin.

Data of course must be meaningful. Charities are often rated by how many programs they complete or how many people they serve or the magnitude of their local support, but for economic impact – and perhaps charitable rankings too – such feel-good reports don’t tell you how well they did at anything. Monetary impacts are more definitive. Pew’s reports from 28 states plus large cities could give the county a start on crafting a realistic dashboard of its own.

With such a dashboard, all 13 commissioners will get breakdowns on how each district benefitted from incentives. While all incentive investments aren’t equally good and dividing funds by district is far worse, the impact to each district could give commissioners comfort that an investment miles away comes home to their areas in jobs and spending.

The county should want to rank the return on all investments for effectiveness. Commissioners don’t aim to toss taxes down ratholes, nor does the public, which needs to see how effectively our county does (or does not) spend our taxes.

Yes, it will cost money to follow the money. But proper incentive spending, like advertising, doesn’t cost – in the long run it should pay us back many times over. Recipients that can’t detail the impact of incentives were the wrong ones to fund, and we shouldn’t do it again.

Miami Today appreciates business incentives that have a specific target and achieve goals. That’s good use of taxes.

But we do need to know what we got in return because, unlike dropping change into Santa’s kettle, we want to drop our money where it works best. It’s not random charity, and we expect tangible results.