Playing the Incentives Game: Are Texas' Economic Development Wars a Zero-sum Deal?

The Economic Arms Race: This story is the first in an occasional series exploring how taxpayer money is fueling economic development — a phenomenon that has transformed North Texas. It was produced after months of research and reporting as part of the Dallas Morning News' Idea Lab fellowship, a collaboration with the University of Texas at Austin's school of journalism.Long before Amazon touched off a frenzy among cities competing for the 50,000 jobs the Seattle mammoth promises to bestow on one lucky metropolis, there was Rockwell Collins and there was Richardson.The defense contractor — which, in the spring of 2007, employed about 450 people in Richardson’s booming telecom corridor — wanted to expand. Local officials wanted the company to do that in Richardson, and they began putting together a modest package of financial incentives to assist.First, though, they found out they had competition. Not from California, not from Chicago or Atlanta, but from a neighboring city.“Unfortunately, Plano has decided to mimic Frisco with a strategy of indiscriminate buying of companies,” one Richardson official wrote in an email obtained by The Dallas Morning News as part of an effort to better understand how cities in Dallas-Fort Worth vie for jobs using grants and tax breaks.“This could be a fairly expensive border war,” another had warned.Richardson managed to hang on to Rockwell Collins — but only after the city responded to the threat of a competing bid with an extra $400,000 grant.A decade later, that’s not an eye-popping figure in a nation where states and cities spend $45 billion to $90 billion a year to lure companies to their communities, according to two of the relatively few attempts to put a dollar figure on what experts have described as a ballooning phenomenon.  Continue reading...