Why we choose complex tax-and-spend strategies over fast, easy fixes

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What is the easiest way to assuage a community's concerns over a lack of economic development? Hand out free money, apparently. But money is not free, and the cost to our local communities is far worse than the perceived benefits.

In all the meetings I've seen for economic development, businesses sum up their needs from government simply: GET OUT OF THE WAY. They don’t need a handout; they just need government to stop holding their heads under the water. Unfortunately for businesses, this desire to let the free market operate does not create increased government power and influence; it does not require people to appear before the city council or administration on bended knee; it does not require an increased bureaucracy, or more taxes. This no-cost option merely allows for basic American competitiveness.

Despite these pleas Tampa economic development always takes the same tenor: regulate the heck out of everyone, driving up costs in both time and money, and then dribble back about 10 percent in the form of loans or, worse, grants. It is this economic waste that has crippled many of our neediest communities, but the pattern continues.

In these communities, an oft-repeated pattern emerges. Citizens reach a point where they have had enough. They feel as if the city has abandoned them, and they get together form a community group and slam into the bureaucracy. Eventually the powers that be extend a piece branch and offers to do economic analysis, followed by a plan. It is somewhere in this line of thought were thing go awry, plans drag out and we start to see government take a disruptive role. It does so in the most subtle of ways, starting with “let’s work together” as they actively encourage the community group to apply for grants and to run civic programs. While many say this is the city empowering local residents, what results is a corrupting of the organization, with the community group's bread buttered by the bureaucratic mess.

It is important to understand that these community groups had nothing but the best of intentions, like many idealists when they first go to work for government. But the lure of power and money make simple fixes unattractive.

Here is the simplest example: A city creates, let's say, a facade program aimed at encouraging businesses to fix up the outside of their structures. The incentive comes in the form of grants or loans to accomplish this. Local civic groups are quickly drafted to develop the criteria for how the facades should look or who qualifies for the loans/grants. And, of course, administering the program and getting a cut of the money they are disbursing for “overhead and administrative costs."

The city takes a cut using the same rationale. All of a sudden, $100,000 in taxes aimed at improving a community's aesthetics is now $80,000. (Of course, this is exactly what happened in 2004-2005 in West Tampa using federal grant money, which comes from our taxes. You can download an excruciatingly dull description of the program from 2004 planning documents in this .pdf file; just search for the term "facade" and you will find the description.)

Now let’s say a business proposes cutting regulations instead. Well, there is no money in that for the city. It would lose money on permit fees. It would need less staff to review permits and perform inspections or to administer programs. At the same time, the community group can’t collect money for programs that requires no administration, so this no-cost idea is quickly killed.

Under this scenario, the community suffers as well. In line for the government program dollars, the groups that administer these programs feel that if they stand up to the city to change the rules or make things work better the programs will be eliminated. Once-vocal community groups quickly are silenced.

Editor's note: Spencer Kass is one of our regular guest bloggers who writes about urban and Tampa city government issues. He is a principal in Landmarc Realty in West Tampa.

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