By Paul Gable
Economic development incentives will be more transparent thanks to a new Governmental Accounting Standards Board disclosure requirement.
The GASB is a private nonprofit agency that provides standards and oversees governmental accounting throughout the nation.
Thanks to this new requirement, government agencies must now tell taxpayers how much tax breaks given under the guise of economic development incentives actually cost.
The new requirements take effect December 15, 2015.
Those incentives often take the form of state income tax credits, property tax reductions through fee-in-lieu agreements, free or reduced rental payments for government structures and cash incentives.
It is past time that taxpayers were told just how much governments are giving away to corporations who promise to create new jobs and sometimes actually do.
In a report that accompanied the new requirements, the GASB said giving up revenue (in the form of incentives) is sometimes a gamble.
I would say it is primarily a gamble.
Corporations play this game well. It’s not about economic development or creating new jobs to them. It is only about where they can get the most for the least cost to them.
Who cares if the taxpayers fill in the rest?
The Horry County experience with AvCraft is a perfect example.
After failing to reach economic development goals in Tyler, Texas, Ben Bartel, the AvCraft CEO at the time, came up with a new line of BS he sold to Horry County and AvCraft moved to Myrtle Beach International Airport amid much economic development hoopla and promises of creating 400-600 high paying jobs.
Maybe we shouldn’t be too harsh on Horry County, the German government also fell for Bartel’s promises.
AvCraft created no new jobs and Bartel ultimately lost the company to bankruptcy.
But, Avcraft remained in Horry County through several more iterations of the company structure, each one coming with requests to Horry County for rent reductions and other considerations.
AvCraft filed for its final bankruptcy in March 2015 and the last of the company assets were sold at auction several months ago.
But not before it received millions of public dollars in direct payments, rent reductions and other considerations.
None of the 400-600 high paying jobs promised were ever created but a company that should have been out of business years ago managed to survive well beyond that time thanks to government largesse.
At least now the taxpayers will know the actual cost.
Speak Up…