by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Alison Acosta Fraser reports for the Washington Examiner on positive developments surrounding targeted incentives, or corporate welfare, from state governments.
Lawmakers in state capitols across the country have sown some seeds of progress in reining in corporate welfare. This is an important shift. Corporate welfare fundamentally undermines a free and flourishing economy. It is an insidious use of government power to create special privileges for the well connected few.
Florida had one of the year’s biggest successes. Just before adjourning, the state’s legislators ended a multi-million dollar corporate welfare program in existence since 1996. They did this by simply denying the $250 million in funding Gov. Rick Scott requested for “Enterprise Florida.” Scott and other Florida leaders rightfully want to compete for new businesses and win — there’s nothing wrong with that. But state legislators recognized that funneling tax dollars to politically favored industries and companies — something many states do — is the wrong way to do it.
It was a tough fight, and it’s still making headlines. The governor and his allies launched a statewide public relations campaign arguing that the funding was necessary to “incentivize” businesses to move to, or expand in, the Sunshine State. And, of course, create jobs. Noticeably absent from their arguments, though, was just how the quarter of a billion dollars of taxpayer money would be spent. One state senator remarked that “Exactly how that $250 million gets spent is really secondary to the fact that we’re going to put it out there, we’re going to tell America, all the companies in America, that we’re going to have this money.” Really?
These types of corporate welfare “enterprise funds” are often the vehicles elected leaders use to claim that their actions create or save jobs. But these job promises frequently do not pan out. For example, during one six-year period, the Michigan Economic Growth Authority incentive program created only 14,000 jobs of the 123,000 promised. Little wonder it was abolished in 2011. A scathing audit of the Texas Enterprise Fund found, in addition to serious procedural deficiencies, that jobs created fell significantly short. Perhaps growing word of these kinds of results inspired Gov. Scott’s call for auditing Enterprise Florida after its funding was killed.