Economic Development Should Focus on Good-Paying Jobs (video)
After millions of dollars and decades of business tax incentives to boost economic development, why is Arizona still a low-wage state?
Arizona doesn't have an "affordable housing crisis," we have a low-wage crisis.
Too many people are living on the edge, working multiple gig economy jobs to make ends meet. Some people are one life event away from eviction or foreclosure because they are spending too much of their income on housing.
The City of Tucson, Pima County, the State of Arizona and Rio Nuevo ALL have multiple levels of business incentives (AKA corporate welfare, AKA tax giveaways).
How many millions of dollars are these governmental entities giving away1 and exactly what are taxpayers getting for their money? That information should be brought into the sunshine. It is not transparent data now. The taxpayers have a right to know, but according to the most recent Auditor General Report on the Arizona Commerce Authority (ACA), the ACA reports are inadequate and incomplete at best. (Read the highlights here.)
How many good-paying jobs are being created with business tax incentives? Nobody knows because the ACA hasn't been paying attention, according to Auditor General report. From what I can find, there are projections but no concrete jobs numbers, which is aligned with what the Auditor General said. What are Arizona taxpayers getting for their money?
My suggestions on jobs and economic development …
1) We should be tougher when negotiating business tax incentive deals. Each business tax giveaway should have measurable goals, including targeted and quantifiable job creation. Much ACA testimony in Ways and Means or other committees of mine focused on gig economy jobs. We need to cast off the gig economy. Those jobs don’t pay the rent … literally. The City of Tucson, Pima County and Rio Nuevo are currently incentivizing too many low-wage hospitality/restaurant/tourism jobs with GPLETs and other deals.
Effectiveness evaluation, regular performance reviews, and a five-year sunset reviews should be built into every tax giveaway. If the corporate tax break does not meet it's goals and the taxpayers don't get a concrete benefit from the deal, it's done after five years or earlier depending upon performance reviews. Let’s be strategic about our investments.
2) We should be diversifying our economy. Tucson is too reliant on tourism. We should be incentivizing good-paying, full-time jobs that pay the rent.
3) As budget cuts loom, we should preserve all of the jobs we possibly can. It doesn't do the workers any good, it doesn't do their families any good and it doesn't do the community any good when people are laid off. We all suffer when our neighbors’ lives are thrown into financial chaos.
4) Local and state governments should report long-term effectiveness data for business tax incentives. Local and state governments combined have been doling out millions of dollars per year in business tax incentives — of different types including free land and free buildings — for more than 20 years. Taxpayers deserve to see the long-term data that shows the Commerce Authority’s multi-layered "luring" strategy has done more than just give away our taxes.
It’s time to show us — the taxpayers — the money that was spent and what we got for it. When I was a freelance writer, my niche was writing and designing annual reports. Auditors provided the numbers. My job was to explain the financial report’s highlights and create the bar graphs. Annual reports always included financial graphics for the past year, five- or 10-year performance graphics on key metrics (like jobs), and the long-term trends, along with my reader-friendly explanations2.
Taxpayers deserve to see that level of reporting on business incentives from the Arizona Commerce Authority, as well as from county and municipal governments statewide. Government entities have invested hundreds of millions of taxpayer dollars in business incentives since the ACA was created.
After all that economic development investment, why is Arizona still a low-wage state with a growing homeless population, an affordable housing crisis, a starving public education system and patchy infrastructure maintenance? Because Arizona invested in private businesses … and not the people … or future generations … or the common good.
Economic development should focus on building infrastructure and good-paying jobs -- not doling out Corporate Welfare. Building, updating and maintaining roads, bridges and other infrastructure will spur commerce and create jobs in construction and commerce. There are multiple direct benefits to focusing on infrastructure -- and there’s no trickledown economics.
Related Articles
Auditor General’s Sunset Review of the Arizona Commerce Authority, September 2023
Highlights from Auditor General’s ACA Review
Audit Flags Lavish Spending by Arizona to Woo Business Executives. State Leaders Defend It.
Senate Panel Blasts Commerce Authority in Face of Audit, Legal Questions
Attorney General Mayes Finds ACA CEO Forums Violate Gift Clause
Maps Show Business Tax Incentives But Not the Money
Marketing to Corporate Transplants Focuses on Gleaming Buildings & Making Money
Governments are “giving taxes away” in that they are not collecting it. When the city or county builds buildings for a private corporations on government land, those businesses will never pay property tax. The property tax burden shifts to the rest of us! All of the businesses built at the two tech parks and the county sports complex pay no property taxes. This is just one example of a corporate tax giveaway.
Many government websites often include DRIP information (Data Rich, Information Poor) — lots of numbers and legalese but no explanations. Lay summaries should be included to explain the numbers to the public.