Is local economic development a equal playing field?

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The Stephenville City Council’s economic development program continues to evolve, and not in a good direction. News that the council has voted to give tax breaks to those who want to bring a Hoffbrau to the building once occupied by Fiddle Creek once again raise questions of basic fairness to existing Stephenville businesses.

The argument in favor of the tax breaks is simple:  The land and building once occupied by Fiddle Creek yield little in revenue.  A new restaurant would increase the revenue of the land, provide more jobs to local residents, and yield more property and sales tax revenue.  If the amount of the new tax revenue yielded by the land, building, and people of the new restaurant exceeds the value of the tax breaks, the decision to grant the tax breaks will, in the long run will have been a good business decision.  At least so say the overwhelming majority of those who have commented on the decision so far.

But what about the basic fairness of the decision?  Is it fair to grant tax breaks to some businesses while denying them to others?  Is it fair to require some restaurants in Stephenville to pay more in taxes so its prospective new competitor pays less?  Shouldn’t we have just one set of rules for everyone, fairly applied to all?

Dr. Malcolm Cross
Dr. Malcolm Cross

Obviously, the majority of those who’ve expressed an opinion think these considerations are irrelevant.  They believe the economic benefits that may be derived from the tax break outweigh the issues of fairness I consider so important.  And nobody can argue that the city council, by acting as it’s done, is doing anything illegal. 

But I can’t help wonder whether over the long run there may be greater damage done to the morale of the city than the economic benefits it may incur (nobody knows whether those economic benefits actually will materialize).  How long will the voters tolerate policies which play favorites?  How long will they support tax policies which require some to pay more, and allow others to pay less?

Perhaps for ever—or perhaps not as long as this city council thinks.  I’ll keep doing  my best to raise people’s consciousness about the basic lack of fairness in rules which are not applied equally or evenly to everyone.  I suspect I’ll have little success in the near term.  But let me reiterate my own economic development program, which involves no tax breaks or favoritism for local businesses.  It’s really quite simple:  Quality services; a reasonable tax rate high enough to finance quality services but not so high as to discourage productivity; simple rules supporting fair competition, and a level playing field, with fairness to all and favoritism to none.

Of course, while my own approach does not involve aid to new businesses, it doesn’t prevent aid either.  There’s no reason why the Chamber of Commerce or STEDCO can’t give aid if hey choose.  They’re both private entities, and they’re free to do give their money as they see fit.  And other private organizations, or citizens for that matter, should feel free to invest their own money rather than that of the taxpayers, if they so choose.

By the way, as usual, when economic development issues arise, as they did on various Facebook sites where I participated in discussions, some had to raise once again the issue of Lowes, claiming it did not come because the council wouldn’t vote it tax breaks to make it easier to compete against local businesses.  So, as usual, I reminded anyone who would listen (admittedly, a tiny minority of those with a Lowes obsession), that Lowes had already told us its research said no store it established in Stephenville would make a big enough profit to justify its establishment.  I also reminded them that in my opinion the city council had no business helping local businesses by keeping Lowes out, or hurting local businesses by bringing Lowes in.  Government should merely be an umpire promoting fairness to all; favoritism to none.

Malcolm L. Cross has lived in Stephenville and taught politics and government at Tarleton since 1987. His political and civic activities include service on the Stephenville City Council (2000-2014) and on the Erath County Republican Executive Committee (1990 to the present).  He was Mayor Pro Tem of Stephenville from 2008 to 2014.  He is a member of St. Luke’s Episcopal Church and the Stephenville Rotary Club, and does volunteer work for the Boy Scouts of America. Views expressed in this column are his and do not reflect those of The Flash as a whole.

6 Comments

  1. I do not think it is fair to those restaurants who are already here and have been paying taxes, some for many, many years. Some may be barely hanging in there. And although Hoffbrau owns the restaurant (maybe….it could be a franchise), it will not be called Hoffbrau.

    SEDA needs to be out hustling bigger industries – those that would not be in competition with local businesses. That might be a good use of their/our monies.

    Life may not be fair, but the city and our money do not need to make it even less fair than it already is.

  2. I’d like to know the statistics showing that economic growth was greater in the 2014-2015 period than in the 2008-2014 period as well as the policies that allegedly produced the growth reflected by the statistics. And, no indeed, life isn’t fair, but our policies can be, including the policy that says the tax code applies to everyone equally.

  3. Stats? Look around genius.. New development at the old coke building and adjacent hotel that sat empty for years (I know FMC used the coke building but that’s not new development). Little Caesars and Jimmy Johns.. New town housing by Andy Hansen (place by JC park, 108 N, and by city to name a few). Talk of the business district, new community center, and purchase of old Fiddle Creek Building to name a few more.. And I know these are talk at this point but it’s more than was done prior to a few years ago..

  4. Well, Anonymous, I’m sorry you’re not brave enough to use your real name. But that’s beside the point. You mention s lot of economic activity but you omit the fact that all this was done without any action taken by SEDA. You actually prove my point that the best actions government can take are to provide quality services at a reasonable price, maintain sn even playing field, and let a free market go to work with little more government interference other than protecting property and making sure everyone plays by the rules. No favoritism, corporate welfare, or tax breaks necessary.

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