Q&A of the Day – Palm Beach County Question 1 Passed, But Is it a Good Thing?
Each day I feature a listener question sent by one of these methods.
Email: brianmudd@iheartmedia.com
Social: @brianmuddradio
iHeartRadio: Use the Talkback feature – the microphone button on our station’s page in the iHeart app.
Today’s Entry: Hey Brian, Thanks so much for all you do. I have an argument for any incentives to be given to companies coming to Florida. First of all, many incentives are given to companies already. Companies like Walmart and Amazon are already the largest recipients for these. They need to be here to sell product. Yes, they create jobs, but they can’t sell if they do not hire. So why give them money? If their prices are a bit higher, so be it. Why give them more power to push small business out? You mentioned companies like Carrier, Scripts (terrible waste of incentives), and Pratt Whitney. They are/were already here. Many of the top execs already live here and they do not want to leave. The likelihood of these types of businesses leaving is slim. There are many other companies moving to Florida because of other great reasons. Why should we give more tax money away? My family has been in real estate development for 3 generations here. We have signed deals committing companies to operate in Palm Beach County. They then went and got incentives to “open” here. I see this as another way for government corruption to occur. We have a great state where people want to be. No need to incentivize them. I would not care if we missed a deal just because the tenant couldn’t get taxpayer money. There will be another company coming soon who will come anyway.
Bottom Line: Today’s note is in response to the ballot question that Palm Beach County’s voters overwhelmingly approved on Tuesday and specifically my endorsement of the ballot proposal. As I stated in recommending a “yes” vote for the proposal I said: Palm Beach County has had a long-standing policy in place which has allowed county officials to use their discretion to offer incentives to attract businesses to the county and to encourage their growth once here. Voters first authorized the county to offer incentives for businesses under this property tax break initiative in 2004. Under Florida law the program must be reauthorized by voters every ten years. Over the past decade 20 businesses were recipients of incentives under this program.
Palm Beach County’s economy has consistently outperformed the national economy and often the state’s economy as well. It’s in the county’s economic interest to remain opportunistic and flexible when opportunities arise. Palm Beach County would risk losing out on expansion and relocation opportunities in the future if this provision is no longer in place.
While most voters in the Palm Beaches agreed, there obviously are also many like the listener who submitted today’s note, who don’t, and I respect that position. I am happy to address the specific concerns outlined in today’s note which is representative of feedback I heard from others in opposition to the proposal after my recommendation. I’ll take the concerns piece by piece as outlined.
- Companies like Walmart and Amazon are already the largest recipients for (incentives). They need to be here to sell product. Yes, they create jobs, but they can’t sell if they do not hire. So why give them money?
The answer is that retail companies like Walmart and Amazon haven’t received anything from Palm Beach County’s incentive program. The companies that have received incentives under the program in the previous decade are:
- MobileHelp, FinFronk Enterprises, Esports Play, MPLT Healthcare, ORBCOMM, Carrier, Gulfstream Product Support Corp., Granite Telecom, Tecomet, Zimmer, Otis, KRS Global Tech, Tellus, Lockheed, Pratt & Whitney, SBA Communication, ADT, Digital Risks
Without getting into the nuts and bolts of those companies, and specifically their local operations, these aren’t company operations that need to have a footprint in the Palm Beaches in order to operate their businesses like the examples cited. They had, and have, options about where to operate.
- You mentioned companies like Carrier, Scripts (terrible wastes of incentives), and Pratt Whitney. They are/were already here. Many of the top execs already live here and they do not want to leave. The likelihood of these types of businesses leaving is slim.
True, they are unlikely to leave, however the question with many of the established companies is about where they may expand operations as the companies grow. Just as Florida is home to many operations for businesses that are headquartered out of state, the same is true for companies headquartered within our state. If, for example, we can encourage an expansion of operations locally as opposed to outside locations, that has the potential to be a win-win and that’s the dynamic that was in play with those examples.
- There are many other companies moving to Florida because of other great reasons. Why should we give more tax money away?
Yes, it’s accurate that many companies have been and are attracted to Florida for a variety of reasons. In the context of the matter at hand the question isn’t about why Florida – it's about why within Florida should it be Palm Beach County? As residents of Palm Beach County are aware, the cost of living is higher than in most other parts of the state. That’s true for operating businesses as well. The crux of the incentive program isn’t designed to be competitive with locations outside of Florida, it’s to be competitive with other Florida destinations in lower cost counties.
- I see this as another way for government corruption to occur.
I agree entirely. It’s important to remain vigilant in monitoring the use of these types of incentives. There is transparency into this program that can be monitored.
- I would not care if we missed a deal just because the tenant couldn’t get taxpayer money. There will be another company coming soon who will come anyway.
Actually, that may not be the case. Florida’s most recent employment report shows that the state’s unemployment rate is 3.3%. Florida’s private sector employment grew by 2.3% over the past year, adding 201,500 jobs. The West Palm Beach metro’s unemployment rate is currently 3.8% - having risen by a half point from last year’s lows with the metro losing 1,276 jobs over the past year. Palm Beach County’s labor market has clearly underperformed Florida’s economy over the past year. This buttresses the case for the county having the ability to incentivize business relocations and growth within the county. Our local economy has been so strong for so long it can be easy to take it for granted. And a key reason why our local economy has been so strong is due to attracting and growing diverse businesses that often provide high paying jobs in part due to the incentive program.
Over the prior ten years there’s been positive ROI on literally every recipient of incentives. The total cash outlay by Palm Beach County has been $3.95 million. The total property tax incentive amount has been $6.25 million. The total investment in the county by the recipients has been $428.2 million during that time and the most recent 5-year economic impact has been $5.72 billion. You could subtract $5 billion from that total, and it would still be a massive economic win for the county. That might help you to feel better about the incentive program being reupped for another ten years.