Bacon's Rebellion

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San Jose Mayor Sam Liccardo: No Special Deals for Amazon

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James A. Bacon
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San Jose Mayor Sam Liccardo

San Jose, Calif., Mayor Sam Liccardo, a Democrat, wrote a column in the Wall Street Journal today explaining he will not offer subsidies or incentives to induce Amazon to locate its second headquarters in his city:

Why do public officials throw away taxpayer dollars in subsidies while trying to promote economic development? Perhaps because they can. The subsidy represents something tangible that officials can point to as the factor that “sealed the deal” to create more jobs.

The harder work of investing public dollars in schools, infrastructure and amenities takes years of concerted effort but has far greater payoff. A healthy  economic ecosystem that supports innovation and growth is what makes a community attractive to a company like Amazon. …

The key is to craft policies that apply to all fairly competing employers. Cutting special deals with individuals companies isn’t the right strategy.

Wise advice. Virginia localities vying for the Amazon project need to take a honest appraisal of themselves. If they can’t compete for the Amazon deal without giving away the store, (a) Amazon probably won’t be interested anyway (even if it encouraged them to submit a bid), and (b) they will regret it if by some miracle they actually win. For many, it doesn’t even make sense to compete. Packaging proposals costs resources (staff time, consultants) that could be better spent on second-tier projects — such as the $1 billion Facebook data center in Henrico County to be announced later today.

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3 responses to “San Jose Mayor Sam Liccardo: No Special Deals for Amazon”

  1. Steve Haner Avatar
    Steve Haner

    Uh, a favorable tax rate on its equipment is highlighted as a reason for the Facebook decision:

    “The county (Henrico) has taken steps this year to attract other data centers by dramatically reducing its tax rate on computers and equipment related to data centers, which store and process vast amounts of digital information.

    In April, the Board of Supervisors cut the tax rate by nearly 90 percent — from $3.50 per $100 of assessed value to just 40 cents per $100. The new rate went into effect July 1.”

    It is not a special deal for a single company, but it is for a single industry – a tax bill down almost 90 percent. Other county taxpayers are paying the old rate on their business personal property and machinery. There is also special favorable treatment for data centers under the state sales and use tax, and I suspect there will be a special rate for electricity. This is the world we have created, and unless everybody agrees to stop doing it, unless everybody disarms, many many state and local governments are going to keep doing it…..

  2. LarrytheG Avatar
    LarrytheG

    re: ” The harder work of investing public dollars in schools, infrastructure and amenities takes years of concerted effort but has far greater payoff. A healthy economic ecosystem that supports innovation and growth is what makes a community attractive to a company like Amazon. ”

    so it’s the business and employee – friendly – ecosystem that if it is place – becomes the “superior” incentive?

    So what are these things that businesses like Amazon like to see as part and parcel of a prospective community to locate ?

    In general, a favorable business tax environment – and a place where employees want to work – and live and play and shop.

    so …if you end up offering financial incentives to make up for shortfalls in the business/employee ecosystem…. then you have sort-of screwed up from the get go…

    Try to get “conservatives” to think this way…. this is why most successful cities are “blue”, right?

    The standard GOP vision is minimal gov involvement and cost .. and no higher taxes for the “extras”… right?

    Metro to fiscal conservatives is liability. To Dems and Amazon.. it’s an asset.

  3. LarrytheG Avatar
    LarrytheG

    so…. would we see “incentives” in terms of up-front investments in infrastructure and amenities designed to attract business… i.e. economic development … or not do that and instead pay what amount to “bribes” to attract a business that otherwise doesn’t see anything to attract them to that location?

    Clearly the major of San Jose believes you do have to “invest” in the city – and that means collecting and spending money from taxpayers.. for “the greater good”… AND so he does not have to offer cash “bribes”.

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