RALEIGH – Sometimes you have to savor the half-loaf.
Coy Privette, the former state legislator and longtime conservative activist who most recently has served the citizens of Cabarrus County on their board of commissioners, has managed to save taxpayers millions of dollars. A private developer wanted direct cash subsidies and property-tax breaks in order to build a hotel and convention center near Lowe’s Motor Speedway and Concord Mills. City officials and much of the area’s political establishment wanted to give it to him. But Privette and his allies on the county commission balked at the idea.
The developer will still get a sweetheart deal, as it turns out: $938,000 worth of city land for free to build his hotel, another parcel rent-free for 15 years for the convention center, and a parking facility for the complex built on still more city-owned land and financed by a $1 million federal grant (for which Rep. Robin Hayes seems responsible, not exactly to his credit).
But thanks to the fiscal conservatives on the Cabarrus commission, he won’t be getting $9.4 million in additional subsidies over the next 20 years, including property-tax exclusions and proceeds from the local tax on lodging. This appears to represent a reduction in the originally proposed subsidy of about 78 percent. Actually, the taxpayers didn’t get to keep just half of their loaf. They retained all but a few slices – not bad for a bunch of county commissioners that have caught a lot of flak for their supposedly "short-sighted" position on the proposed Cabarrus convention center.
I can understand why the incentives issue is such a controversial one. If other cities or states are offering tax breaks, free land, or cash subsidies, can North Carolina and its local communities really afford not to compete on the same terms? I think that the answer to this question is no, that there is no substantial evidence that the economic growth of a state or region is substantially enhanced by targeted incentives policies. Indeed, by substituting political judgment for profit-seeking behavior, that kind of economic-development approach is likely to weaken the economy, not strengthen it, by routing resources away from their most productive use and imposing real costs on existing households and businesses. Moreover, I believe that most business leaders in North Carolina think that other public policies, such as broad-based tax relief and improvements in education, deserve public officials’ attention to a far greater degree.
However, at least there is some plausibility to the notion that if your competitors choose to cheat, you can either cheat or lose.
The problem in the Cabarrus case – now in the process of being replicated, with much higher cost to taxpayers, in Raleigh, Wilmington, and a number of other cities – is that investing additional dollars into the convention-center business is just sheer folly. This is not the growth industry of the future. In fact, cities that are much stronger attractions for conventioneers, places such as Atlanta and Boston, are struggling to make their costly facilities justify their existence. There is absolutely no compelling reason for North Carolina localities to confiscate any of their citizens’ money to devote to building new convention centers.
Yet they continue to plan exactly that. At least in Cabarrus, the costs of the mistake have been significantly reduced by some wise and steadfast public servants.
Hood is president of the John Locke Foundation and publisher of Carolina Journal.