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Columbia Missourian

GUEST COMMENTARY: EEZ: Scourge, savior or waste of time?

By Steve Spellman
May 29, 2012 | 6:00 a.m. CDT

Gosh, this Enhanced Enterprise Zone is a hot topic in Columbia.

Economic development advocates such as REDI are constantly looking for "job creation" strategies and found the state's EEZ program as something that might fit here. It turns out several census blocks in town would qualify, so they went and fast-tracked it for approval, as companies looking to come here were shopping for such municipal offerings. However, it turns out a diverse local opposition arose unexpectedly, and legal complications bring us to reforming the EEZ board.

The EEZ has gotten a lot of flak for the "blight" connection, which makes people feel discouraged about their homes. Other American communities have seen blight designations as a gateway to eminent domain abuse. There is something to this. When both George Kennedy AND Bob Roper agree on an issue, you know something must be up.

Although EEZ is new jargon here, related strategies (TIF, Chapter 100, etc.) are not unique to our town.  More broadly, every political leader on Earth seems to offer a solution on how to "create jobs."

There's basically three ways to "create jobs" these days:

1. Direct subsidy payments from the public treasury to receiving businesses — aka "corporate welfare" (free money tends to help a business thrive and hire more people).

2. Lower business taxes (and regulations) overall, freeing up opportunities for free enterprise to occur (lower costs help any businesses thrive and create jobs and allow workers to create their own jobs).

3. A combination of the two, whereby special tax treatment is extended to selected industries and firms, in selected geographic areas, and even within certain periods of time (so a largely market-based economy, but just tilt it in certain desirable directions).

So in my three job-creation options above, EEZ is not (1) a check cut from tax coffers, nor is it (2) a free market situation, so it's (3) a complex work-around to favor at least a few targeted types of enterprises, to achieve limited autonomy over a little of their taxes. Oh, and create jobs.

It's complicated, and as far as I can tell, the EEZ really doesn't do a lot overall. If implemented, authorities get to pick qualifying geographic areas, in which they choose only a few types of businesses, who if they expand their business operation, they can abate half the increase in property taxes. They can also get tax credits if they can prove to the state they made some new hires. Those are awfully limited benefits.

Still, this is less restrictive than the TIF program used by the two downtown hotels, which has: a more limited area, few types of projects, a $10,000 application fee and individual approval from the City Council. That's a big wad of red tape.

Will EEZ "create jobs?"  Maybe some. In fact, some jobs likely will be created. When a company that qualifies for EEZ benefits gets this government-granted business advantage, it stands to reason some companies will locate here, and some existing firms here will expand and hire more people.

That is what is seen. However, what is not seen? What about the business just outside the zone? Or the business that expanded last year already locking in full-price property taxes? Or the homeowner who is leery (legitimately or not) that there's less use in hiring a contractor to remodel their kitchen if a future city council decides to force a sale to some private entity? These equally reasonable disadvantages are not being calculated as "jobs lost" to present us with a net potential jobs created from EEZ.

People can bicker about these theories all day. But what I don't get is whatever happened to the old-fashioned business platform of free enterprise? An agenda that advocated for (relatively) low taxation and a reasonable regulatory environment? That seems a lot less complicated; and then at least socially-oriented, left-leaning activists would know what they're fighting against.

It seems that well-meaning business leaders and business-friendly public servants have become resigned to the perpetual existence of significant tax burdens and regulatory regimes (mostly from Washington) that no mere mortal can comprehend, and so have instead committed huge efforts and staked their reputations on complex economic development programs, to help at least some types of business. This with the promise that employment opportunities for the everyman will flourish as a result.

This is a darn spot we're in to resign job creation possibilities to hopes of scraps from the economic table on one hand, and/or an open door to cronyism on the other. But I guess local leaders have given up on truer free enterprise, so EEZ, etc. are the "tools" the state grants so local leaders are empowered to at least "do something." So here we are.

Steve Spellman hosts “The Mid-Missouri Freedom Forum” on KOPN/89.5 FM on Tuesday from 5 to 6 p.m. He is a member of the Missourian Readers Board. Questions? Contact Opinion editor Elizabeth Conner.