Comment and analysis on all things Charlotte

Opinion item to read (3 of 3): Incentives for Carowinds

This column is from Sarah Curry, director of fiscal policy studies at the John Locke Foundation. Because of its regional focus, it appears in its entirety:

The city of Charlotte and Mecklenburg County have approved a proposal giving Cedar Fair Entertainment, the corporate owner of the Carowinds amusement park, $922,468 in incentives over the next three years to help the park build new rides and attractions. The city council approved its $330,000 share Sept. 16, and county commissioners endorsed their portion of just under $600,000 the following day. The money comes from something called a Business Investment Grant.

Luckily for Carowinds, the city and county have done some creative negotiations, because this type of investment is inadmissible under the rules of the grant. In the meantime, property tax rates are increasing for the 2014 fiscal year by 3.17 cents to 46.87 cents per $100 of valuation.

The grant program outlines the eligible business growth clusters that can receive funds. They include manufacturing; corporate headquarters; transportation and distribution (logistics); emerging technologies and industries; or financial, insurance, and professional services. None of these includes the entertainment industry.

City officials say the grant would help boost the hospitality industry — another industry not on the list — but politicians change the rules all the time, don’t they? Moreover, there is also a minimum requirement for job creation that’s a condition of getting the investment grant. This project doesn’t meet that criterion, either.

The grant requires the project to create at least 20 new jobs paying equal to or greater than the average annual wage rate for the area (currently $44,000), yet the city estimates that only 15 new jobs will be created with an average salary of $43,000, along with 270 seasonal jobs with an hourly wage ranging from $8.10 to $8.25.

More than $900,000 in incentives will give high school students summer jobs and pay 15 people below the area’s average salary; that doesn’t sound like a good investment to me. I think the intention of the grant program was to bring in high-paying jobs so that those people would pay taxes and eventually add wealth to the area. That was the argument in 2009 and 2010 when this grant program gave more than $7 million to Siemens in exchange for almost 1,500 new jobs paying almost $20,000 more annually than the jobs at Carowinds will pay.

So how did the government get around its own rules? The pay requirement changed last year. The Charlotte Observer reported that “the previous requirement for the grants was that the new jobs pay at or above the region’s median wage. … But in an effort to attract manufacturers, the City Council last year said that a grant recipient [need] only meet the average for the type of businesses they are in. The change was meant to attract manufacturers. At the time, city staff said they didn’t think it would be used for restaurants, shopping centers, or entertainment centers.”

It gets better. Carowinds is on the state line, so the park receives incentives from South Carolina, too. One of the economic development workers for York County, S.C., told the Charlotte paper “the amusement park has gotten a property tax reduction of roughly 40 percent for ‘decades.’” So the park is getting almost $1 million from North Carolina along with a property tax deduction from South Carolina.

This is a bad idea for everyone involved, except Carowinds. Property taxes are Mecklenburg County’s largest revenue source. These taxes pay for fire, police, greenways, parks, local libraries, and schools. Property tax rates have been increased to pay for these government services. It makes no sense for a city to pick winners and losers.

If Carowinds wants to invest and build more rides, it can do so without government money. Local governments should do what they can to keep taxes low for everyone and provide only necessary services to citizens. Last time I checked, roller coasters weren’t a necessity to be provided by local government.

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February 2016
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