The pregnant pause in The Jackson Laboratory’s bid to expand in Florida speaks volumes about the problems with targeted tax incentives.
The nonprofit genetics research firm, based in Bar Harbor, wants to expand to Collier County in southwest Florida. The lab’s administrators have said they could not expand in Maine, in part because the state could not offer the tax breaks a larger state such as Florida can offer. The lab is seeking $180 million in the Florida deal, an amount Maine could not even consider. Another unspoken reason for looking south is that Jackson Lab could not find the kind of workers it needs — an estimated 244 — in Maine. Yet critics still beat up the Maine state government for not fighting harder to land the expansion, which, as a biomedical institution needing highly skilled workers, is the sort of growth the state should court.
But as 2010 turned into 2011, Jackson Lab dropped its application in Florida, where $50 million in state funding (a first installment) and $130 million in county funding would build and equip a 165,000-square-foot research center. The project has become controversial, with boosters saying it would become a cornerstone of economic development and critics calling it corporate welfare. Jackson Lab officials say they want the project to have a fresh start with newly elected Gov. Rick Scott. The new governor could veto the state share of funding, which would kill the project.
State governments often fall prey to auction fever, bidding up tax breaks to offer to a prospective expanding business. Many have buyer’s remorse. Gov. Scott, quoted in NaplesNews.com, said in a recent visit to Collier County that the bottom line is what state investment means for residents. “On all the projects, whether it’s Jackson Lab or high-speed [rail], we’re looking at what the return is for taxpayers,” he said. “If it’s good for taxpayers, it’s going to happen. If it’s not good for taxpayers, I won’t support it.”
Jackson Lab officials probably called the timeout on the application hoping for a fresh shot at persuading the new state government of the expansion’s benefits. A court challenge to the county portion of the package already has been lodged; the judge will rule whether or not the project serves a “valid public purpose.”
Because states have economic autonomy, Maine is destined to lose out to bigger, more prosperous states when the incentive game is played. But Maine can learn from the Jackson Lab expansion bid. When the state competes against itself, offering tax breaks to keep or lure businesses here, those incentives must meet the same threshold articulated by Gov. Scott — is it good for taxpayers?
Maine’s new pro-business governor must put his staff to work analyzing the efficacy of the state’s many business incentives and encourage the GOP-controlled Legislature to do the same. Gov. Paul LePage wants to pull the plug on unending welfare benefits; will he have the courage to end business incentives that don’t create or save jobs, or do so at an exorbitant cost?