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Theme Park Gets Tax Incentive, While Private Citizens Get Tax Increase

posted on in Fiscal Insight

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The city of Charlotte and Mecklenburg County are going to vote on a proposal to give Cedar Fair Entertainment, the corporate owner of Carowinds, $922,468 in incentives over the next three years to help the park build new rides and attractions.  The city council votes on their $330,000 portion tonight and the county commissioners on their portion of just under $600,000 on Tuesday.  The money is coming from the Business Investment Grant.  Luckily for Carowinds, the city and county have done some creative negotiations, because this type of investment is inadmissible under this grant.  In the meantime, property tax rates are increasing for FY 2014 by 3.17 cents to 46.87 cents per $100 of valuation.

The grant program outlines what the eligible business growth clusters are that can receive the funds.  They include manufacturing, corporate headquarters, transportation & distribution (logistics), emerging technologies & industries, or financial, insurance & professional services.  None of these include the entertainment industry.  The city has said that the focus is more on the impact to the hospitality industry – again not an industry listed on their list – but politicians change the rules all the time, don’t they?  If all of this weren’t enough, there is also a minimum requirement for new jobs to be created with the investment grant.  This project doesn’t meet that criterion either. 

The grant requires at least 20 new jobs paying equal to or greater than the average annual wage rate for the area (currently $44,000), yet the city estimates that only 15 new jobs will be created with an average salary of $43,000 and 270 seasonal jobs with an hourly wage between $8.10 and $8.25.  The more than $900,000 in incentives will give high school students summer jobs and pay 15 people below the area average; that doesn’t sound like a good investment to me.  I think the intention of the grant program was to bring in high paying jobs so that those people would pay taxes and eventually add wealth to the area.  That was the argument in 2009 and 2010 when this grant gave more than $7 million to Siemens in exchange for almost 1,500 new jobs paying almost $20,000 more than the jobs at Carowinds will pay.

So how did they get around it?  Well, they said it was going to impact the hospitality industry (I still have no idea how that works.) and the pay requirement changed last year.  It has been reported by the Charlotte Observer that

the previous requirement for the grants was that the new jobs pay at or above the region’s median wage, which is about $44,000. But in an effort to attract manufacturers, the City Council last year said that a grant recipient only meet the average for the type of businesses they are in.  The change was meant to attract manufacturers. At the time, city staff said they didn’t think it would be used for restaurants, shopping centers or entertainment centers.

Oh, it gets better.  Carowinds is on the state line, so that means the park receives incentives from another state, as well.  One of the economic development workers for York County, S.C. "said the amusement park has gotten a property tax reduction of roughly 40 percent for ‘decades.’"  So not only are they getting almost a million dollars from North Carolina, but they get a property tax deduction from South Carolina, too. 

This is a bad idea for everyone involved, except Carowinds.  Property taxes are Mecklenburg County’s largest revenue source.  These taxes pay for fire, police, greenways, parks, local libraries, and schools.  Property taxes have been increased to pay for these government services.  It has been proved by many analysts that taxes hurt economic growth, so why would a city stretch the rules on a grant program to help a specific business cut their property taxes and then raise them on everyone else?

Government needs to stop choosing winners and losers.  If Carowinds wants to invest and build more rides, let them do it without government money.  The local governments should do what they can to keep taxes low for everyone and provide only the necessary services to citizens.  Last time I checked, rollercoasters weren’t a necessity to be provided by local government.

Fun Fact: See Carowinds’s North Carolina property tax bills from the last three years below.

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Sarah Curry is Director of Fiscal Policy Studies at the John Locke Foundation. Previously, she worked for the North Carolina State Senate as a research assistant for the chairs of the Senate Agricultural Committee and headed the research efforts for… ...

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