By Paul Gable
Independent Republican gubernatorial candidate Tom Ervin should be thanked for introducing economic development incentives into the political discussion recently.
While Gov. Nikki Haley campaigns around the state claiming to have created 57,000 new jobs in South Carolina during her first four years, Ervin recently released a report debunking much of Haley’s claim.
Maybe the voting public will now realize that neither state bureaucrats at the S.C. Department of Commerce, nor operatives at locally created economic development entities have any business throwing taxpayer funded “economic development incentives” at businesses they hope will create new jobs in the area.
And it is only hope. Many of these businesses are shopping for a government handout, at the expense of current taxpaying businesses and citizens, and will go to the highest bidder.
As this discussion goes forward, it is important to remember it is not only South Carolina where the foolishness of taxpayer funded incentives goes on.
Haley’s newest best buddy, New Jersey Gov. Chris Christie who was in the state one month ago campaigning for Haley’s re-election, may be the poster child for dumb government incentives.
In early 2011, Christie announced $260 million in tax breaks over a 20 year period for the Revel Casino. The New Jersey Economic Development Authority quickly approved Christie’s plan for state support of the casino project and, one month later, Revel Casino secured $1.5 billion in funding needed to complete construction.
At the April 2012 opening of the casino, Christie called it a “model” for reviving Atlantic City. Reviving Atlantic City tourism and gambling was a major goal of the Christie administration.
“This Administration is deeply committed to making greater progress on the reform agenda we’ve laid out to turn around Atlantic City’s gaming and tourism economy, make it a premier destination resort, and strengthen its role as an engine of economic growth and job creation for the state and region.”
–Governor Chris Christie, September 7, 2011
The tax breaks weren’t the end of indirect help from the State of New Jersey. In late 2013, the New Jersey Pension Board invested $300 million of state pension funds in Chatham Investments, a hedge fund with a 28% ownership stake in Revel Casino.
The casino opened in April 2012 and never made a profit. It was in chapter 11 bankruptcy twice in two years and closed in September 2014. Revel Casino was built at a cost of $2.4 billion. It recently was sold at auction for $110 million.
Paraphrasing Scotland’s national poet Robert Burns – ‘The best laid schemes of mice and men often go awry’. This is never truer than in the field of government funded “economic development” schemes.
Wishes and hopes often become “reality” in the minds of government officials. The demise of the Revel Casino was easily predictable. Atlantic City was in the midst of losing gambling revenue when it was launched. Atlantic City gambling revenues are only 50% of what they were eight years ago and won’t soon rebound, if ever.
Yet, hoping to turn this around in one major government initiative, Christie led the State of New Jersey into the Revel Casino development.
I’m sure Christie had a “study” from some government funded economist, demonstrating how much the Atlantic City and state economies would be “stimulated” from the Revel Casino project, to justify his use of public money.
These studies are nothing more than plugging assumptions into an equation formulated to arrive at a predetermined result. But, boy, are they popular among politicians.
Ervin’s report will not stop the fervor among politicians for government funded economic development incentives. However, it may be a starting point for opening the voting public’s eyes to just how this public money is spent.
Speak Up…