The Palmetto Insider

The blog of the South Carolina Policy Council

Even in LA, Government Driven Economic Development Out of Fashion

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One year ago, voters in Los Angeles County defeated a measure very similar to what the South Carolina Legislature is now considering in H 4478, “The S.C. Economic Development Competitiveness Act of 2010.” Los Angeles County’s Proposition E would have amended the Los Angeles city charter “to clearly express the authority of the City of Los Angeles to provide incentives to businesses that will encourage economic development and provide public benefits to the City of Los Angeles and its residents.”

Here in the Palmetto State the underlying effect of H 4478 would be to expand the scope of government-driven economic development and, through changes to the tax code and existing economic development statutes, make state-driven economic development a fait accompli.

Opponents of the Los Angeles ballot measure like then mayoral candidate Walter Moore and the Los Angeles County Democratic Party argued that Proposition E would have only helped businesses that have powerful political connections. They pointed out that the measure would not have increased employment overall, but would have simply shifted employment from businesses that don’t have powerful political connections to businesses that do—with no net increase in jobs.

Sounds eerily like the taxpayer-funded incentive deals currently being considered in South Carolina.

Moore, a perennial Los Angeles government gadfly, said the measure “would let the career politicians at City Hall continue to give hundreds of millions of dollars of your tax money each year to politically connected companies. These programs are unfair, and do not increase employment overall. Rather, experience here and in other cities and states shows these programs simply redistribute taxpayers’ money to a chosen few. Simply stated, it’s ‘welfare for the rich.’”

The Los Angeles Daily News editorialized against Proposition H, saying, “This proposal writes some vague language into the city charter that could be terribly abused by politicians.” And the Los Angeles Times said, “Charter Amendment E follows a disturbing and increasingly frequent pattern in ballot measures created by elected officials and placed before voters. It seeks a transfer of power to the political body but fails to enumerate just what that power may be.”

Los Angeles taxpayers were well served by the open debate on government-driven economic development. That’s not happening here, where lawmakers are disguising an economic power grab in the name of “Economic Development Competitiveness.” In reality, it means more of the same failed taxpayer-funded special interest deals, and less transparency in how lawmakers are spending your money. South Carolina has spent more than $1.5 billion on economic development incentives and exemptions over the past 10 years. Thus far, taxpayers have little to show for these efforts—and worse still, little way of even determining their effectiveness.

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Written by Robert Appel

March 26, 2010 at 12:44 pm

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