Wise Decision, Outlook Excellent
Our county commissioners recently appropriated $100,000 for Wells Fargo based on a deal the State of Maryland worked out to hand the bank $1 million to keep them in Maryland. This was based on an agreement made seven years ago under a previous Board of County Commissioners.
Wells Fargo remained in the area and kept up its end of this deal. They retained and hired employees as the state and local government requested. This was the use of a government tool to retain a company. Interestingly, the state and local governments actually gave money to this facility to retain its business.
What has been amazing during this process is the lack of real or feigned indignation toward our local or state government about this deal. Yet, when our local government works toward helping business create new jobs and new residents, the outrage is vociferous!
The Jefferson Tech Park is just such a situation. Actually, while it has similarities, the major difference is the lack of tax liability by the public for the Jefferson Tech Park, while the Wells Fargo deal cost us all well over $1 million.
We have recently been discussing the various methods government can use to forward business and improve our economy. While austerity methods are necessary for these times, it does not mean that government agencies cannot reach out to help various businesses which spawn much larger returns throughout the larger community.
Our building industry creates jobs and careers for many local employers and business people. Not only do we hire numerous individuals to work on the various building projects, but the influence on other local businesses is immense. We have so many companies that hire people to create, service, promote, replace, install, and generate new building products and work for customers.
What has taken place is a simple agreement between our local government and the developers of the Jefferson Tech Park to allow for good financing of this project. The legalities surrounding this agreement ensure that taxpayers will not be left on the hook for this agreement, yet the outrage now comes from those who believe we have somehow shorted the public on necessary tax resources.
The way the financing works is via a tax structure called TIF (Tax Increment Financing) in which the developer pays off the bond (loan) through a special tax called a CDA (Community Development Administration). The proposal gives a specified timeline to pay off the debt and the TIF allows for an increase in the tax revenue as the property gains value. It is at this point that the rub seems to have hit some in the community. Rather than having those increased taxes (due to property value increases) available to the general budget of the county, the increased payments will go toward paying off the debt the county helped the developer access.
What is neglected in this analysis is the increased tax base from the new homeowners and businesses this proposal can spawn. What has not been mentioned by so many is the decrease in residential properties taking place within the Jefferson Tech Park area – the original proposal was for 1,600 homes, but this deal with the county lowers that to only 800 homes.
It should be recognized that no business can operate without making a profit. Building homes is a central aspect to the American economy, (like making food, cars, and the other products we still have in this nation). For instance, while a grocery store may sell very high-end and expensive steaks, it also sells milk, eggs, vegetables, etc. It is these latter things in which the preponderance of the income and profit accrues. This is a similar situation to the building industry – while companies do come into areas, the majority of building includes new homes for the many people who live in our community.
Hence, the help from the Board of County Commissioners to lend its good name for additional financing resources is a beneficial act of government to spur economic benefit. The liability still lies with the developer and the taxpayer will never be held liable. The county will derive an increased tax base from this proposal and the increases in residential taxes will easily offset any necessary payments toward the debt incurred by the developer.
Wise governing and business means putting your assets where they can do the most good. In this instance, the decision by the county commissioners to offer assistance for financing will encourage much greater results and return on investment, unlike the current federal situation of throwing money around through a stimulus program, something that has cost a great deal but shown little valuable results. This decision will offer many local businesses the necessary impact and will result in a greater tax base for any necessary infrastructure needs.
Unlike the many decisions to spend our money by previous Boards of County Commissioners, this was a wise use of the county’s good name. We will not carry any liability, but we will see a wise stimulus to our local area.