Lawmakers Debate State Economic Development Policy

Jan 13, 2017

A philosophical debate is taking shape in the Florida Capitol about what role the government should play in the economy. How lawmakers come down on economic development programs could have real consequences for Governor Rick Scott’s top priorities.

Credit Phil Horton via flickr / https://www.flickr.com/photos/plh9026/

When you think of state lawmakers, ‘philosophical’ probably isn’t the first word that comes to mind. But Speaker of the House Richard Corcoran is changing that. It all boils down to a fundamental question: what makes a strong economy?

The state hands over millions of tax dollars to public-private partnerships designed to jump-start the economy. Corcoran is eyeing those programs, and questioning whether they should exist at all. Take Visit Florida, the state’s tourism promoter, which recently came under fire for its handling of a secret million dollar contract with the rapper Pitbull. Roger Dow heads the U.S Travel Association and he defends tourism marketing.

“We’ve got evidence, state after state that have cut budgets quickly begin to lose market share, lose jobs, lose economy as a factor of ten, twenty, and thirty of what they cut,” Dow said.

But Corcoran says people don’t come to Florida because of a television commercial.

“It’s really driven by the economy. When people are doing well and they have extra money, they’re taking their kids to Disney World. And when they don’t, they stay home,” Corcoran said.

So how can the state bolster the economy? That’s where Enterprise Florida comes in. It’s the state’s main business recruiter, which sometimes turns to economic incentives to seal a deal. It’s that practice of handing money to outside businesses that’s attracting most of the heat. But Cissy Proctor says the post-recession recovery didn’t happen by itself. She heads the Department of Economic Opportunity.

“Private sector businesses lost over 900,000 jobs. Over the past five years those businesses have created over one and a quarter million new jobs. Economic development on that scale doesn’t happen without an investment,” Proctor said.

Corcoran calls the practice corporate welfare, and says it gives certain companies an unfair advantage. And Shawn Kantor agrees. He’s an economics professor at Florida State University.

“Politicians do a really, and bureaucrats and professors, do a really bad job of picking winners and losers. The market does a much better job,” Kantor said.

But outside of academia, proponents say incentives can make a difference for local economies. Kelly Smallridge at the Palm Beach County Business Development Board sees them as a bargaining tool.

“And while incentives don’t make or break the deal, they tip the scale in our favor. And in that particular situation we would use an incentive to address our location weakness,” Smallridge said.

But Florida’s Chief Economist Amy Baker points out, with an economy this size, scrambling for a few jobs here and there isn’t effective statewide.       

“Eight and a half million workers in Florida… trying to attract a worker at a time would be a very onerous task,” Baker said.

Baker and Professor Shawn Kantor agree: research and development, education and infrastructure build a robust economy, not incentives.

“When you look at surveys of corporate chiefs about their decisions to relocate, way down low is the small giveaways that legislatures often do. They’re interested, businesses are much more interested in the fundamentals of the economy. So I would just implore you to focus on those sorts of things,” Kantor said.

Corcoran for his part, seems to have already made up his mind. Last year he led the charge to block Governor Rick Scott’s request for $250 million in economic incentives, undercutting Scott’s job creation plans. Corcoran’s philosophy hasn’t changed much since then.