Morton Marcus: IEDC tax credits questioned
Thursday, April 20, 2017 9:02 AM
INDIANAPOLIS – Grabill is only 12 miles from New Haven. Both are within Allen County. You can drive from one to the other in less than 20 minutes.
The Greater Fort Wayne Business Weekly (April 7) reports a furniture manufacturer is moving from Grabill to consolidated, larger quarters in New Haven. One reason for the short move is to keep 125 experienced workers together. They may even add 60 jobs in the future.
That sounds good to me. A Hoosier company is doing well and sees a bright future. Workers are not losing jobs. No doubt their commuting patterns will change, but not drastically and most residents of Allen County will note no differences.
It may not be good for Grabill, which will now have vacant buildings that could lead to lower property tax revenues. It will be good for New Haven because one of their vacant buildings will now be occupied, which should increase property values and hence tax revenues.
Yet, the Indiana Economic Development Corporation (IEDC) has offered the company a total of $300,000 in tax credits and $60,000 for worker training, contingent on added workers being hired. Plus, federally funded Northwest Indiana Works will provide the firm with hiring and training assistance. So here is a thriving company making a short move with little economic impact for Indiana, yet being supported with a combination of state and federal tax funds.
Why? Would this firm move out of state without these subsidies? Does this have anything to do with a former leader of IEDC coming from Allen County? In effect, what purpose does this expenditure of tax dollars serve?
I know $360,000 is a small amount by government standards. But our Indiana General Assembly is winding up a session where they can’t seem to find enough money for essential services. Our Congress is ready to cut everything except the military budget and the expenses of Congress and the White House. Yet, what would $360,000 do for pothole repair in Allen County or how many of the county’s children could be supported in pre-K programs for that money?
Regular readers know I’m an ardent advocate for economic development. But do we spend our money wisely? How much of Indiana’s purported “boom” in recent years is due to the remarkable growth of non-durable manufacturing rather than the return of traditional metal bending? Has anyone taken a hard look at all the many economic development programs and assessed their effectiveness? Do we even know how much we have been spending on economic development?
All that must wait for the future. Right now I must correct a statement in this column two weeks ago. At that time I reported 12% of funds for Indiana Legal Services to low-income persons came from the federal government. The correct figure is closer to 65%. Thus, any cut in those funds would have an even greater impact than previously suggested.
Mr. Marcus is an economist, writer, and speaker who may be reached at firstname.lastname@example.org.