Austin’s Economic Incentive Payments: $19 Million & Counting
Austin got a look at the return on its investments Thursday.
The city currently has 11 active economic incentive agreements in place – deals with companies like Visa and Apple stipulating that as long as a company meets negotiated hiring and spending goals, they’ll receive annual benefits from the city, often in the form of tax breaks. Total incentives, if honored over the course of their entirety, approach $73 million.
At Thursday's Austin City Council meeting , the city’s Economic Growth and Redevelopment Services Office (EGRSO) tallied up the cost and benefit of incentives paid out through 2011: almost $19 million in incentive payments, Nearly all that money went to Samsung, which netted $18.5 million over five years.
City staff pointed to $4.8 billion in verified investment over that same time and Austin’s job growth as a sign incentives are worth it.
Council member Bill Spelman asked, given Austin’s rosy economic picture, whether it was time to reassess incentive agreements. “Does it make sense for us to slow down, or conceivably even stop, making new deals for new start ups, for new relocations,” he asked.
EGRSO director Kevin Johns said new recruiting efforts could target new populations – retaining Austin’s college grads for example, but more importantly, employing underserved populations.
“We have measured the unemployed, the hard to employ –it’s about 10,00 people in Austin,” Johns said. “And that population, we need to recruit the manufacturing and technology companies for those people.”
Those new recruiting goals are a target of Opportunity Austin 3.0, the latest iteration of the Austin Chamber of Commerce’s economic development program. Targeted industry sectors include general and advanced manufacturing, clean energy and power tech, life science and bio-tech, corporate HQ relocations and more.
Citing the chamber’s goals for a six percent reduction in the poverty rate, and a seven percent reduction in the child poverty rate, Spelman said “to be able to sell an economic development program to a hardcore incentive cynic like myself – if you an sell me on the idea of economic incentives, this is the way to do it.”