We think we got a glimpse Monday night at how the Henderson-Vance Economic Partnership will operate in the future. And it may have been a good thing.
The matter before the Vance County Board of Commissioners was a request from the Economic Development Commission to grant a tax break to ETC, the Yadkin Street cleaning-supply company that has risen from the ashes of a devastating December 2003 fire to be bigger than ever.
Benny Finch, the Economic Development Commission’s executive director, made the straightforward case for giving ETC an estimated $56,715 break on Vance County property taxes over the next five years:
* The company has been a good corporate citizen in Henderson for more than two decades.
* The company resisted tempting offers to move away, taking about 100 jobs with it, instead of rebuilding after the fire.
* The company not only stayed open after the fire, but it kept its employees on the payroll even when the work was reduced.
* The company has opened a 29,000-square-foot expansion that increases the local tax base and reconfirms its long-term commitment to Vance County. The proposed tax break represents the difference between ETC’s pre-fire tax bill in 2003, $5,465, and its estimated annual bill with the expansion, $16,808; the county would allow ETC to keep paying taxes at the pre-fire rate for five years.
* The company might spend the tax savings to help build a 14,000-square-foot expansion and add some jobs.
* The EDC, or at least Finch and Chairman Sam Watkins, kind of sort of all but promised the Demetriades family that if ETC stayed in Henderson, the county commissioners would help the company out.
If such tax incentives are ever the right thing to do, they are appropriate in this case. We hate the state spending Vance County money to bribe companies to build plants in counties that have much lower unemployment rates (we’re not getting over that Dell deal any time soon), but what was proposed Monday night is far different.
First, the incentives are meant to keep a company and its jobs, building on a long-term relationship; there’s no reason to think ETC will shop for another location and another deal in five years. Second, we’re dealing with Vance County money going to a Vance County-based business to keep jobs in Vance County (although any time Forsyth County wants to return the favor from Dell, we’ll be happy to take a check). Third, this type of incentive doesn’t really cost us anything; we keep the same levels of tax revenue and jobs we had before the expansion. Fourth, giving up a little now could get us more taxes and more jobs in a few years if ETC chooses to expand further.
So in general, we support the tax incentive for ETC.
As near as we could tell, the county commissioners are unanimous in agreeing that ETC should get the tax break. But they chose not to act on the request Monday night. That was when things became most interesting.
The commissioners took their time and asked questions.
Danny Wright wanted to know whether ETC added any jobs with the expansion. No, Finch said. “This is more about saving jobs than adding jobs.”
Tommy Hester asked whether Finch had any discussions about ETC adding jobs to secure the county assistance. No, Finch said.
Wilbur Boyd asked County Manager Jerry Ayscue and Commissioner Terry Garrison, who sits on the Economic Development Commission, whether they knew about the offer of incentives to ETC. They did not. Finch said the commission did discuss the matter, but Garrison missed that meeting.
Lacking any advance knowledge of the ETC request, wishing to have time to explore any questions in depth and simply hoping to follow a standard procedure, the commissioners referred the request to their General Government Committee, composed of Danny Wright, Eddie Wright and Tim Pegram. (Danny Wright later noted with a smile that the referral motion came from Boyd and was seconded by Hester, neither of whom sits on the committee.)
The committee meeting is a good idea. It will give the commissioners time to check the details of this proposal. For example, should ETC get 100 percent of the difference between its old tax bill and what should be its new tax bill, or should adjustments be made for such factors as increases in tax rates and rapid decreases in the value of new equipment?
The commissioners also will get a chance to examine and set some guidelines for job-saving, rather than job-adding, incentives. ETC was an extreme case because of the fire and the number of jobs, but in general does the Economic Development Commission do enough at home to keep jobs? Should we set goals on how much we spend on attracting companies and how much we spend on retaining them? Should such offers always get commissioner approval before construction, making them incentives, or should they be accepted after the fact, making them thank-you gifts? Is five years, the standard term for companies coming to town, the right period of time for benefits for companies staying here?
We don’t know the answers to those questions and many others. We appreciate when the commissioners are willing to acknowledge what they don’t know and to take the time to educate themselves on our behalf.
We appreciate even more that the commissioners voted 7-0 to refer the request to the committee even after Watkins rose from the audience and insisted on speaking before the board took any action.
He argued for immediate approval for the full tax break for ETC.
“We came very close to losing these 100 jobs at a time when we were on our knees,” Watkins said. He said the jobs would have left Henderson if the Economic Development Commission had not been willing to make concessions.
He talked about the competitiveness of the economic development environment and about the importance of doing as much for a longtime local company as for an out-of-town business moving in.
Pegram said he couldn’t see approving such a tax incentive without sending the request through a committee.
“I’m certainly grateful for any assistance you can give us in trying to acquire jobs and hold jobs,” Watkins said. “I don’t know that we’ve gone through a committee before. … Whatever you folks need to do, you need to do.”
The conversation went on like that for several minutes. Watkins kept pushing. And one commissioner after another explained that although ETC should get the aid, the request had to go through the committee.
So now we’re left to ponder how much of what we saw foreshadows a future led by the Henderson-Vance Economic Partnership.
Our pessimistic side focuses on the unfortunate path the ETC incentive took. A couple of people involved in economic development “intimated” that a company would get public aid, even though no elected officials knew about it. That put Vance commissioners in the awkward position of fulfilling a virtual promise they didn’t make or undercutting future economic recruitment efforts.
That’s the type of scenario we fear with the arrival of the partnership. Although the private group won’t be able to spend any public money without the approval of the commissioners and/or the City Council, how realistic is it to expect either governing body to say no when Watkins, Finch or some other representative of the partnership begs and pleads for the very future of Vance County?
But our optimistic side notes that the commissioners did, in fact, resist that type of pleading Monday night. For the second consecutive meeting, the board received a request from Watkins, stared him in the eye and refused to be rushed. As they did with the partnership endorsement request, the commissioners referred the matter to a committee for a thorough vetting.
Once the partnership’s business reaches a public body, it becomes subject to the state law on open meetings, as opposed to the bylaws of a private organization, and secrecy becomes much harder to maintain. Good government always grows best in bright light.
On the other hand, the partnership got what it wanted after a month wait, and Watkins is sure to get the ETC tax break approved. …
Hey, just say no to pessimism, and let’s hope for the best.