Wednesday, January 23, 2013

Success Depends on What You Measure

By Jim Vaughan, Senior Fellow.  

Jay Bookman, a columnist and blogger at the Atlanta Journal Constitution, has raised an interesting question that should have economic and community developers and state policy makers redefining their strategies for growth.

Citing Georgia’s success in producing the kind of regulatory and tax environment that business leaders say they need to grow and prosper, Bookman asks what the state has to show for it.

“Our state and local business tax burden ranks eighth lowest in the country, according to a 2012 analysis by Ernst & Young,” Bookman said. And since 2001, Site Selection magazine has never ranked Georgia out of the top 10 for business climate.

But Georgia’s unemployment rate of 8.5 percent is “significantly higher than the 7.8 percent national average and the ninth highest rate in the country, tied with Mississippi,” Bookman notes. In terms of per capita income, Georgia ranked 25th in 2001 and had declined to 39th in 2011. And Georgia had the 17th highest poverty rate in the country in 2001. “By 2011 it had the nation’s sixth highest poverty rate,” Bookman writes. “We are slipping and slipping fast.”

With lowering the unemployment rate, raising incomes and addressing the high rate of poverty being obvious priorities for the state, Bookman opines that the State Legislature will likely approve state funding for a new football stadium for the Atlanta Falcons, and balk at renewing a hospital tax that will keep “tens of thousands of poor Georgians covered by Medicaid.”

(Subsequent to Bookman’s post, the State Senate extended the tax on hospitals aimed at filling a Medicaid shortfall. And other observers say the stadium may not have the public support needed to win over legislators who are balking to act.)

But whether Bookman is right that state leaders will opt for football over health care, he is right to ask if the state’s economic development strategy is achieving its goals. And the answer depends on what you choose to measure.

Market Street Services was founded on the belief that economic development is about improving the lives of people. The plans we develop with our client communities include actionable and measurable strategies to attract jobs and investment; to prepare and recruit the skilled workforce businesses and institutions need to prosper; and to advance sustainable and livable communities.

During my career as local chamber executive, I made the case for business-friendly policies, for tax and cash incentives to land new businesses, and even to build a new stadium. But we also supported additional funding for public education, programs to alleviate hunger and poverty, and initiatives to redevelop declining and underserved neighborhoods.

Economic developers and their public and private sector partners almost always measure the success of their programs in terms on jobs created, new companies attracted, taxes generated from the new investment, and even from new stadiums being built. But what about counting the economic benefits derived from expanding health care and other programs to improve the lives of people?

In my state of Texas, Governor Rick Perry, an outspoken advocate for using state incentives to attract new companies, has said the state will reject another form of incentives, the federal funds available to states to expand Medicaid. This, in spite of the fact that the incentives—$85 billion from the Affordable Care Act—will provide Medicare coverage to more than half of the 6 million Texas residents currently without health coverage.

Why is it that using tax money to help finance a new stadium is almost always celebrated as an economic development success while providing health care through Medicare is derided as welfare?

Jay Bookman gets it. It depends on what you choose to measure.