Phoenix—In 2015 Pima County officials put taxpayers on the hook for $15 million in new debt in order to build a new headquarters for a private company called World View Enterprises. County officials said they were subsidizing this business to help improve the economy. In a new study released today, a California State Northridge professor explains that subsidizing individual companies at the expense of taxpayers and other businesses is rarely a recipe for economic success. Instead, she recommends the County focus on reducing regulations and improving community services that will benefit all businesses.
“Instead of negotiating subsidies to individual private firms, such as World View, Pima County should focus on efforts that make the community attractive to firms in general and to the workers they might hire,” said Shirley V. Svorny, Ph.D., an economics professor at California State University Northridge. “The County would be best off directing its resources toward local public services.”
To spur economic activity, Dr. Svorny says local governments have several alternatives to risky, World View-like deals. Her new study, Economic Development in Pima County, outlines several alternatives, including:
- Limiting unnecessary regulations that raise firms’ costs and reduce their competitive
- Revising zoning laws to facilitate location decisions and to reduce the costs of the
- permitting process.
- Limiting Pima County influence over land use decisions.
- Lowering business and individual tax rates.
- Prioritizing the provision of core services and producing them efficiently. Amenities
- such as road maintenance, public safety, and the maintenance of open spaces for recreation are attractive to firms and to the employees they hope to hire.
- Reducing the cost of local government services through privatization or vouchers. Both may create competition that encourages efficiency and improves service quality.
- Privatizing incremental highway infrastructure to reduce construction costs and speed up progress.
- Reducing traffic congestion and pollution through the use of variable rate highway tolls.
Dr. Svorny also recommends Pima County capitalize on the significant private investments the Port of Tucson and Union Pacific Railroad have already made to make Pima County a lynchpin in cross-border trade. Pima County should encourage additional investment in the port, by making the business and land-use permitting process easy, fast, and predictable, and allowing private development of new roads and infrastructure, she says.
“With the recent improvements to the Port of Tucson the port has the potential to serve as a major point of interchange for goods moving across the U.S. There is not much that can be done at the local level about the uncertainty over trade with Mexico created by the current presidential administration,” said Dr. Svorny. “But any company considering a move to Pima County to take advantage of the port should not be put off by a County planning process that explicitly favors companies that promise high-skill jobs at the expense of other jobs that may ultimately put more Arizonans to work.”
Read the new report Economic Development in Pima County here.
Read more about the Goldwater Institute lawsuit challenging the taxpayer subsidy to World View Enterprises here. That deal has been ruled illegal by a Pima County judge because the County did not follow state law when awarding the tax money.