When the Florida Legislature reconvenes in special session in June there are a number of important issues on the table. Amid the highly visible bills on education, healthcare and the state budget, there is pending legislation on another important, but less understood, state function — economic development and the role of financial incentives, such as tax credits.
These incentives are a powerful, and necessary, tool for Enterprise Florida Inc. (EFI), the state’s primary economic-development organization. Thanks to incentive packages, coupled with aggressive business recruitment led by Gov. Rick Scott and our state legislative partners, EFI set new records last year for business recruitment and capital investments. More than 36,000 jobs and $2.8 billion in capital spending by new and expanding businesses will boost the state and local economies over the next few years as part of our competitive business recruitment efforts.
Yet, financial incentives are often misunderstood and viewed, by some, as unnecessary in an attractive state, such as Florida, that has so many assets, including our natural beauty and enviable climate, a business friendly tax structure and a skilled, diverse workforce.
But, such views are shortsighted. It is a simple fact that without incentives, Florida would be severely disadvantaged in the fiercely competitive business of economic development. The competition — other states, Texas, the Carolinas, Georgia and others in the South and Southeast — have a well-stocked arsenal of incentives as they aggressively recruit new business to boost their economic profile.
Without competitive offerings, Florida quite simply is a nonstarter. If Florida, as a state, is going to play in the economic-development arena, we have no choice but to stock our toolkit with a robust portfolio of financial incentives.
The perennial criticism of financial incentives often neglects to distinguish between how these incentives are managed and what is being done to ensure that taxpayer money is being used in a productive and efficient manner. In weighing the value of incentives, we must ask what is government doing to ensure that companies deliver on their promises when signing an incentive agreement.
First, and most important, Florida has among the most stringent rules for performance. Companies do not get a cent unless the agreed upon performance goals are met. Also, that the deal be a good one for all parties — Florida taxpayers and the business considering locating, or expanding, here.
Incentives cannot make a bad deal good. Supporting a risky venture that has little chance to get off the ground, and succeed, is not what business incentives are about. But, the right incentives can make a good deal an even better one. In that case, it is a win-win for Florida residents and for the companies that choose our state to call home.
Florida stands at the crossroads. While traditional industries, such as tourism, agriculture and the military, have long been the foundation for our state’s growth and prosperity, we must aggressively seek and nurture new and diverse industries to provide the 21st-century jobs that will allow our state to continue to thrive. Toward that end, we need to further develop targeted industries with solid growth potential including technology, aerospace, manufacturing, international trade and logistics.
Economic development policy has long been part of state and local government planning, and the provision of financial incentives is one of the mainstays of business recruitment.
Unless there is a national policy regulating — or even banning — such incentives, states in pursuit of new business will continue to offer them. And, if Florida hopes to be competitive, we must have the tools.
When state legislators return to session next month, they must decide whether Florida will continue to be a player in the competitive business of economic development. I encourage community leaders to reach out to our elected officials to stress just how important financial incentives are to Florida’s continued growth and success.
Bill Johnson is a former director of PortMiami and currently serves as Florida’s secretary of commerce and president & CEO of Enterprise Florida.