Opinion

LIGHTNING EDITORIAL: Tax incentives work

By Bill Moss, Published: January 29, 2014

The Henderson County Board of Commissioners launched the new year with two important commitments that will lead to new jobs.

The board on Jan. 6 authorized economic development incentive payments of $107,000 for a juice bottling partnership in Mountain Home and $187,669 for AGI Shorewood, the packaging maker that operates a plant in East Flat Rock. Both cases proved instantly that the incentive payments had paid off. Clement Pappas and Graham Packaging collaborated to add 15 new jobs at the Mountain Home Industrial Park.
The Shorewood expansion is even more impressive.
The company committed to investing $8.6 million and adding 50 jobs paying more than the average factory wage. It's the first major incentive agreement since Elkamet to bring jobs to the Hendersonville-East Flat Rock area instead of Mills River and Fletcher, which have accounted for much of the industrial job growth over the past five years.
We don't miss the days of Tea Party followers lining up in the assembly room to flaunt their ignorance over how economic development incentives work. But sometimes we wish they would show up so they could be schooled.
As an investigation by the Hendersonville Lightning showed, economic development incentives have helped grease deals resulting in investment of up to $270 million and the creation of 1,007 jobs over the past five years. And it turns out that many of the companies for a variety of reasons are not following through to ask for the money. In other words, economic development incentives are even more efficient than we thought.
County commissioners have been remarkably disciplined about keeping silent when Tea Party scolds rail against tax incentives. The critics repeat stock lines about "corporate welfare" or the government "picking winners and losers." It's nonsense.
Last week, Shorewood did announce a plant closing in Indianapolis the same day it announced the expansion here. It can happen. The real victory for Henderson County and its workforce is that the East Flat Rock plant won the competition with a proven record of efficiency, speed and quality. More often our competition, as we have seen with successful innovation at G.E.'s Lightning Solutions plant, is not another state; it's Mexico, the Philippines or China.
Henderson County has actually been more conservative than some counties in how it calculates incentives. It uses direct costs, not add-ons like electricity and other development costs, to draw up its incentive contracts. And the county does enforce tightly written contracts.
Although there is room for argument about return on investment when it comes to tax dollars, the verdict is clear on this one. The economic development program led by the Partnership for Economic Development and supported by Henderson County taxpayers is a proven success. It doesn't just work well. It works even better than advertised.