Last week the Collier County Commission meeting highlighted the importance of transparency and the need for voter approval of an economic incentive program in Collier County.
When discussing Commissioner Georgia Hiller’s request to have the property tax abatement incentive put to a referendum, several commissioners were amazed since it was either a program that they don’t have or a program that they don’t use.
This incentive would allow “businesses to offset the annual cost of property taxes (for 10 years) as an inducement” to stay in, expand in or relocate to Collier County.
In actuality, the program has been in existence since about 2004, and these same commissioners have approved the use of the program three times — although no money has been spent so far.
While this isolated economic incentive program doesn’t justify a referendum, voters do need to legitimize the whole economic incentive program and approve a funding source.
In the last six to seven years, Collier County has spent approximately $1.5 million on economic incentives, plus $400,000 each year to the Economic Development Council (EDC) for the Public/Private Partnership program.
The commission’s interest in spending $130 million for Jackson Lab last year raised public awareness of economic-development issues and, with Arthrex and other businesses applying for multimillion-dollar incentives, future funding of such a program could be substantial.
There are good arguments for and against economic incentives, but if a significant amount of money is going to be spent on the program there should be a public debate, an identified funding source and voter approval.
If the public wants to use its tax dollars for economic incentives, there should be legitimate, stable programs developed with sufficient money to be successful and payments contingent on actual job creation and retention.
And it is imperative to include all economic incentive programs in the discussion, with no backdoor financing alternatives.
Last year, Collier County commissioners approved an innovation zone ordinance that would use property taxes to fund economic development. So far, they haven’t created any innovation zones.
Under this program, a geographical area would be approved as an innovation zone, and the tax revenues collected from that area in a base year would be calculated. Then, in future years, any property taxes collected over and above that base amount would be put into an economic development trust fund to be used to “further economic development and/or redevelopment within the respective innovation zone.”
Obviously, over time, as the economy improves and people and businesses move into the innovation zone, the amount of money collected into this trust fund — and diverted from essential countywide service needs — would be significant.
Also, an innovation zone suboptimizes economic development and the potential need for incentives, which is a countywide issue, not a “geographical zone” issue.
The whole economic development incentive program should be defined, potential funding sources evaluated and submitted to the voters in early 2012.
Property taxes would be the most obvious funding source. Voters approved this type of funding for Conservation Collier and the Naples Zoo. A specific tax (millage) rate could be identified, with a sunset provision, as Conservation Collier has, and voters would periodically have the opportunity to continue funding the program or not. While incentives might be important now, they could be unnecessary in the future and funding terminated.
A sales tax surcharge of a half-cent or 1 cent could be used, but by Florida law only a portion of this tax can be allocated to economic development. The local government infrastructure surtax option can be used to build roads and bridges, buy land for parks and conservation, and up to 15 percent of the proceeds can be used to fund economic development.
Some counties have passed this sales tax option and, over time, have accumulated significant funding for roads and parks, including economic development — while reducing the property taxes needed for these county improvements.
While property taxes are paid only by county property owners, a sales tax increase would also be paid by tourists and nonresidents.
We need to have the public discussion, determine what kinds of economic development should and should not be supported, look at the funding options and craft a ballot question for 2012. Then let the voters decide.
Vasey has a bachelor’s degree in economics from Rice University and a master’s degree in public financial management from American University. She worked as a senior financial analyst for the Department of the Army and has served on the Collier County Productivity Committee for the last 12 years.