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DEPARTMENT OF ECONOMIC DEVELOPMENT REPORT PRAISES DEPARTMENT OF ECONOMIC DEVELOPMENT PROGRAMS

December 08, 2006

In advance of a report by the state auditor on econimic development incentives, the Iowa Department of Economic Development spun its own report yesterday saying how great their programs are. From today's Des Moines Register:

Companies that receive state incentives to expand have created or retained about 72 percent of the 15,173 jobs pledged, according to a report released Thursday.

The companies also say they've invested 96 percent of the $2.44 billion pledged for new offices, factories and equipment. The Iowa Department of Economic Development said 227 companies were required to report their progress.

The report shows the state's economic development efforts are working well, said Michael Blouin, IDED director. The report shows that the nearly 11,000 jobs created and retained pay an average hourly wage of $18.75 - or about $39,000 annually.

So by their own reckoning, that's less than half of the 25,000 they were claiming before the election, at a cost of about $7,400 per job. But that's only part of the story:

To create the jobs, the state has awarded those 227 companies $81.8 million in loans and grants, and paid out about $51 million of it. The amount does not include tax breaks provided to companies.

So the $7,400-per-employee bribe doesn't even include Iowa's 24 economic development tax credits? And what's worse, there's no way to show how many of these jobs would be created without the bribes. Surely some of them would. And most importantly, there's no estimate of how many jobs are lost because businesses avoid Iowa and its high taxes that are imposed to bribe other businesses.

Mike Blouin, Director of the Department of Economic Development, falls back on the favorite excuse of economic development professionals:

Blouin said the report won't change the minds of people "philosophically opposed to economic development incentives for job creation."

"In an ideal world, I wouldn't disagree with them. Our problem is that we're competing with everyone else in the world for the jobs," he said.

No, by taxing our existing businesses to lure and subsidize their competitors, we only compete with the other loser states. We quietly smother with high taxes the vast majority of businesses that don't get the incentives so that Mr. Blouin and other economic development professionals can call press conferences to highlight their successful bribes.

The states with real growth do it with low taxes, not with incentives and subsidies. We're not even in the game with them.

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