Like it or not, local governments can't count on being able to attract, retain and grow businesses these days without the ability to offer them tax breaks and other incentives. Updating the terms of those tools to fit these difficult times makes sense, which is why the Wichita City Council decided last week that companies could qualify for extended incentives if they had fulfilled their commitments on at least two of three performance criteria — job creation, capital investment and cost-benefit ratio.
As Wichita City Council member Sue Schlapp said, emphasizing the need to be flexible in extending such benefits: "We all know in the economics of the world today, lots of other places would love to have what we have or what we're trying to get."
Still, the City Council could have been less clumsy in appearing to tweak its economic development incentive policy just enough to squeak through questionable tax-break extensions for Coleman Co. and Big Dog Motorcycles.
Worse, when the council approved the Big Dog deal on a 5-2 vote, its members reportedly were unaware that the company had hired an investment banker to explore a possible sale or merger. Plus, city documents about Big Dog listed its employment at 115 when the number actually has dwindled to 30 to 40 (from a 2005 high of 336).
A policy meant to guide the use of tax abatements and other tools doesn't work well if decisions are based on faulty information.
And some would be skeptical that 189 temp-agency workers Coleman used in 2007 meet the company's job-creation commitment and qualify it now to keep its tax abatements for another year.
Mayor Carl Brewer rightly noted Coleman's proud place in Wichita's history and identity, though. "We don't put a dollar value on it," he said, but Coleman had a role, for example, in persuading USA Track & Field to pick Wichita for its 2011 Junior Olympics — an event expected to attract more than 6,500 athletes and have an economic impact of $11 million to $13 million.
"When partners need help, we should continue to help them," Brewer said.
Especially in this downturn, opting out of the economic development game altogether isn't an option for Wichita and Sedgwick County if the community wants to keep its economy strong long term.
That's why the Greater Wichita Economic Development Coalition has Dallas-based Site Selection Group at work studying the local work force and economic conditions and crafting a strategy for which industries to target and how to reel them in.
Tax breaks and public bonds and loans are hardly the Wichita area's only selling point to potential employers. The skilled work force, low cost of living, good schools, reasonable tax climate and other assets help, too.
But the reality is that, as Brewer said, "Businesses will go where they can get these incentives.... We have to be competitive."