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OUTSIDE BUSINESSES usually
Both parties seek financial gain, which is why Fredericksburg has offered or aims to offer incentive packages--sales-tax rebates and such--to Kalahari water park, fancy Wegmans grocery store, Capital Ale House microbrewery/restaurant, and, for expansion purposes, downtown's Kybecca wine shop. The city hopes that these enterprises, at a time of flattening municipal income, will stimulate much of the taxable spending that Fredericksburg needs to operate.
Alas, it isn't only the felicity of the English language that "incenting" violates. It also runs roughshod over sound democratic and free-market principles. For example:
Private businesses should rise or fall on their own merits, neither hindered nor helped by government.
Tax policy should not be twisted to the benefit of some companies and the relative detriment of others--i.e., those passed over for government-bestowed goodies. These "losers" are sometimes, outrageously, compelled to provide tax support to their very competitors.
Entrepreneurial suc-cess is impossible for entrepreneurs themselves to forecast--remember the Edsel?--much less governments.
Such principles are now greasy spots in the road outside City Council chambers, and it's about time that body said "enough." But let's also recognize that the council's foray into incentives, the sort of expedition that has backfired in some communities, is in ours palliated by circumstance, prudence, and strategic coherence.
Mayor Tom Tomzak notes that the city is facing $90 million in mandated capital improvements, not to mention pressure on municipal-labor costs from Northern Virginia, at a time when the retail Mecca of Central Park is challenged by the counties' newer retail Medinas. Ginning up revenue is essential, and if that isn't done through business activity it will be done through property taxes.
Moreover, says Dr. Tomzak, the object of all this pump-priming is "to put feet on the street" downtown. It's hard to see how unsubsidized watering holes could cheer the presence of a Capital Ale House in their midst--unless Fredericksburg aspires to become a pub-crawl destination--but the mayor hopes that the microbrewery and the expanded Kybecca will encourage sidewalk life and longer store hours by nearby shops. There seems little danger that the rebate-blessed businesses will ruin downtown's character: Two of them wouldn't be there, and the other two would be "chains" with very few links, none farther than Richmond.
Finally, it's a sad reality, as Fredericksburg Regional Alliance President Gene Bailey recently wrote, that virtually all localities play the incentives game, and to sit out a hand is to lose the chance of winning a sweet revenue pot. "If one community chooses not to act," Mr. Bailey wrote, "another community will."
Is there a way to stop this bidding frenzy? Maybe. In the General Assembly, Del. Mark Cole, R-Spotsylvania, recently helped launch a study of local-government incentives for economic development. "We may find out," he said, "that some of these incentives are doing more harm to the community than good." Maybe Virginia could ape Arizona, which this year halted the Greater Phoenix incentives war that saw $621 million in public benefits diverted to Big Retail in a decade. Arizona is now considering a statewide ban on incentives bidding, and several other states, including North Carolina, are pondering moratoriums.
One, two, three, altogether now, Fredericksburg: "Stop us before we incent again!"
