William Patrick
As the debate over whether to fund Florida’s state economic incentive programs rages at the Florida Capitol this week, a new government study offers plenty of fodder for critics of such programs.
In a new report by the Office of Program Policy Analysis and Government Accountability, a nonpartisan legislative research office, researchers evaluated eight state-level economic incentive programs over a three-year period beginning in fiscal year 2012.
Key findings include:
- 232 projects received 295 incentive awards in the form of cash grants, tax refunds and tax credits.
- Most of the incentive awards went to existing Florida businesses that have more than 1,000 employees.
- Incentive projects were awarded $156.2 million during the three-year period, and $597.4 million since their inceptions.
- 134 incentives (45 percent) were terminated due to lack of performance during the review period.
- Seven counties received most of the award money, while 31 counties received no incentives.
The report singled-out several of the eight incentive programs for under-performance and lack of oversight.
The Innovation Incentive Program gives cash grants to selected organizations and accounts for the highest percentage of incentive awards at 49 percent. The return on investment has been dismal.
“Most Innovation Incentive recipients have been unable to achieve job goals and several left the state prior to contract completion,” the report says.
Notably, Sanford Burnham medical research institute is listed as one of the cash recipients that hasn’t met employment or capital investment goals.
The Department of Economic Opportunity is currently trying to claw-back half of the $155 million Innovation Incentive award received by the Orlando institute. The project failed to create its required 303 jobs over 10-years. Sanford Burnham says it has no intention of paying back any taxpayer money.
Since the Innovation program’s inception, the state has paid out $435 million in grants to nine companies, which created a total of 927 jobs.
The report further pegs the New Markets Development Program as needing “enhance(d) oversight.”
The New Markets Development Program encourages capital expenditures in low-income rural and urban communities, but there are no formal criteria for allocating the program’s tax credits.
New Markets projects are primarily located in just two counties, Miami-Dade and Hillsborough. While all of the program’s available incentive awards have been allocated, legislative analysts said assessing the impact of the program was hampered by “inadequate reporting requirements.”
“If the Legislature funds additional New Markets tax credits, it could direct the Department of Economic Opportunity to use scoring criteria to allocate them,” the report states.
Another incentive program, known as the Enterprise Zone Program, under-performed on economic and social indicators to the extent that it will be phased out by 2018.
On the bright side, program auditors determined that the projects receiving government incentive payments during the review period created 13,378 jobs and made $1.3 billion in capital investments.
But DEO terminated 134 incentives for 124 projects during the three-year period because the recipients failed to meet contractual performance goals.
They were supposed to create 12,822 jobs and make $195 million in capital investments. They didn’t.
Instead, only 213 jobs were created, or 1.7 percent of those committed by contract, and $2.7 million in capital investments were made.
House Speaker Richard Corcoran is an outspoken opponent of taxpayer-funded incentives for private businesses. Corcoran rejects publicly subsidizing private companies and has vowed to block Republican Gov. Rick Scott’s $85 million funding request for Enterprise Florida, the state’s top incentive wielding job-recruitment organization.
Scott and other supporters say the programs are necessary for job creation and economic growth, as well as persuading out-of-state companies to relocate to Florida.
Legislators from the House and Senate are scheduled to discuss the report Thursday during a joint auditing committee meeting at the Capitol.
The incentive evaluation is the second report in as many months conducted by the Office of Program Policy Analysis and Government Accountability. A December report showed Florida’s incentive programs were under-performing compared to competitor states.
House lawmakers filed a 172-page draft bill to eliminate Enterprise Florida last week.
Scott told reporters on Friday at an Orlando jobs summit that he is confident the House bill won’t become law. “We’re on an unbelievable roll right now. We’ve got to keep this going,” Scott said.
