Local Economic Development Incentives in the US
1. Description of the Issue
Local economic development incentives constitute essential aspects of urban development economic policies. Such incentives are meant to enhance the development of cities that are considered underdeveloped. The enticements assume different forms. However, the common ones are the policies for providing tax incentives together with improvement of infrastructure (Anderson and Wassmer ‘Bidding for Business 82). Government provides enticements for financial development in different ranks starting from home and state echelons to countrywide ranks. Fundamentally, economic incentives refer to the cash and or near-cash aid that is provided by local, state, and/or national government to boost or attract various businesses to operate within a given jurisdiction (Greenbaum 75). The key goal of offering local financial enticements is to foster progress within certain targeted areas. In return, this strategy helps in employment creation in the underdeveloped cities while also encouraging infrastructural growth to take place in stagnant cities. In the long-term, the plan also generates revenues to states and local governments. Amid these benefits, the issue of whether local economic incentives, which are aimed at fostering urban development in the US, qualify as a cost-effective mechanism of inducing economic growth in the underdeveloped urban areas is relevant to public policy developers.
2. Importance of the Issue
The effectiveness of local economic development is an important issue facing many metropolitan areas in the US. For instance, ensuring distribution of various businesses within all metropolitan areas and/or retaining economic activities without negating the...
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Local economic development incentives enhance the development in urban areas that have high rates of unemployment. This goal is achieved by using the incentives to attract and retain business in the effort to boost employment levels. The general concession is that increment of employment reduces poverty levels, hence raising the overall wellbeing of communities. This justifies funding local economic development incentives in the US using local government revenues generated from communities. A prevalent issue surrounding investments of local government revenues in local economic development incentives is whether they are the most cost effective mechanisms of inducing the development of metropolitan. In a bid to offer a response to this query, cost benefit analysis for the investments of local government revenue in local economic development incentives is important.
Now, a normal sized town contains fast-food joints, supermarkets, malls, and superstores, but a small town lacks that appeal. The small-town could be the most beautiful landscape known to man, but lack the necessary luxuries in life that a typical American would benefit from. Carr and Kefalas make this statement that emphasizes the town’s lack of appeal, “Indeed the most conspicuous aspects of the towns landscape may be the very things that are missing; malls, subdivisions, traffic and young people” (26). The authors clearly state that they realize that towns, such as the Heartland, are hurting because of the towns’ lack of modernization. For all intents and purposes, the town’s lack of being visually pleasing is driving away probable citizens, not only the native youth, and possible future employee’s away from a possible internship with the town. The citizens with a practice or business hurt from the towns inability to grow up and change along with the rest of the world, yet the town doesn’t realize what bringing in other businesses could potentially do for their small town. Creating more businesses such as malls, superstores and supermarkets would not only drive business up the roof, but it’ll also bring in revenue and draw the
... motivation for wealthy individuals to return to the inner-city core but it also provides impetus for commercial and retail mixed-use to follow, increasing local revenue for cities (Duany, 2001). Proponents of gentrification profess that this increase in municipal revenue from sales and property taxes allows for the funding of city improvements, in the form of job opportunities, improved schools and parks, retail markets and increased sense of security and safety ((Davidson (2009), Ellen & O’Reagan (2007), Formoso et. al (2010)). Due to the increase in housing and private rental prices and the general decrease of the affordable housing stock in gentrifying areas, financially-precarious communities such as the elderly, female-headed households, and blue-collar workers can no longer afford to live in newly developed spaces ((Schill & Nathan (1983), Atkinson, (2000)).
Suburbs: Protected Markets and Enclave Business Development.” Journal of the American Planning Association Winter 1999: 50-61.
It was interesting to find that 39 percent of all earnings in New Orleans come from residents who worked in the central city. I did not think that the central city of New Orleans had such a dense market for higher paying jobs! This fact is very positive for the city, and hopefully the corporate services industry continues to grow here in New Orleans because the density allows for overall productivity. And the suburban property values outside New Orleans depend on the availability of jobs and an active economy in the Central Business District. So places like Metairie and River Ridge or “edge cities” really rely on the strength of the central city of New Orleans. Therefore it should be the vested interest of both city and suburban residents to scrutinize federal policy that affects the economic health of all cities.
Local governments rely on property tax as a source of revenue to pay for school. Yet people in the urban areas pay the higher tax than suburban and wealthy communities, states on the other hand, relies on The Average Daily Attendance (ADA), which calculates state aid to school districts, tends to discriminate against urban school districts with high absentee rates by automatically, and excludes 15 percent of its student aid. Therefore, in many urban areas, the state ratio of funding remains significantly lower than 50 percent out of the tree entities the federal government allocates the least amount of funding. Residents in these areas who are under edu...
What if a tax increase came to a city because of a sports team, would it be alright? Of course not, right? Well, consider being told as a tax payer and being told it will help the economy of city to build a stadium. However, a tax increase is never highly looked upon, and large companies sell extraordinary economic growth, and cannot produce the promise.
In California, the finance structure of local government gives them more incentives to approve commercial (non-residential) housing development. Cities and counties find fiscal benefits come primarily from the commercial development, such as hotels, restaurants, and retail establishments. The tax revenue received from these establishments could often offset the cost for a local government to provide public services. On the contrary, the affordable housing developments cause more local costs than yielding high tax revenues. Therefore, local governments have the motivation to develop commercial establishments by zoning considerable lands for such purposes. Consequently, many cities and counties have approved their land use planning disproportionately towards commercial
Jelier, Richard W. and Sands, Gary. Sustaining Michigan : metropolitan policies and strategies. East Lansing: Michigan State University Press, 2009. Book.
Reshaping Metropolitan America provides an outlook of the next fifteen years for infrastructure development in the United States. Nearly two-thirds of the buildings that will be necessary to handle the projected half billion residents of the Untied States by 2030 are not built yet. We also need to reshape our cities to handle the inversion trend; families and the next generation want to move back and live near downtown. Richard C. Nelson, the author, supports this population shift but does not strongly support it. Instead of trying to create room and additional infrastructure in downtown areas, Nelson believes that metropolitan areas should start to urbanize its suburbs to accommodate desired urban living. The American population is also changing
The development of the United States Highway System has had negative impacts on the urban character of our country’s cities. One of the main catalysts, if not the main catalyst, of urban sprawl has been the development of transportation. It has made it extremely convenient and easy for people to move farther out of the inner city and develop rural America. As a result many prominent cities across our country have felt the effects of sprawl through diminished downtown economies. Highways have also played a key role in the standardization of American urban environments. Many urban areas around the country have lost their character and senses of place that they once used to embrace. More effective strategies to halt these issues should be implemented by the government. Different strategies in locating highways and strategies to help discourage the use of automobiles would assist in revitalizing urban centers, decreasing traffic congestion, and dependency on the automobile.
A decade of decline. (1993). Managing the federal government. 1-20. Dearborn, P. M. (1993, Summer). Local property taxes: Emerging trends. Internal governmental perspective 10-12 Taylor, A. (1996, May 25). Dole's call for gas tax repeal fails to spark voters Congressional quarterly report: Economics and finance. 1212 --1378. The economics of taxation. (1995, November 2). The economics of taxation. Suanders, L. (1995, June 19). Avoiding the rack Forbes, 13, 208.
Gentrification is generally a sign of growth in economics. As money flows into a neighborhood, many characteristics of everyday life are transformed for the “better”. Buildings and parks are modernized and revamped. Jobs become available with the increased construction activity and new service and retail businesses. The funding for local public schools will increase as the property tax base increases. There are many benefits of gentrification. However, the questions posed by critics of gentrification are, "Do new and old residents alike equally share the benefits of economic growth?" and "Socially, what is the cost of economic growth?" These two questions provoke a host of others, such as: Who benefits the most from this growth? What will be the damage to the cultural and social fabric of the neighborhood with the arrival of new expectations, tastes, and demographics?
... the last decade, it can be concluded that the state and economic experts have failed to create mechanisms that could aid and promote growth in those marginal cities that slow down the state’s economic growth. Different regulations, as well as incentives, could be implemented in those cities to promote the creation of jobs and that way lower the unemployment rate. With the expansion of the GDP, the cost of living has also raised for the citizens of California, causing millions of people who do not have equal access to high disposable personal incomes to live in poverty. In the long run, this huge gap between the developments of the different areas could really harm the economy for the state of California, by dividing the population into poor and rich areas, and making it impossible for the poorer population to put up with the overall high cost of living of the state.
MacManus, Susan A., Revenue Patterns in US Cities and Suburbs: A Comparative Analysis. New York: Praeger Publishers, 1978.
Big cities have many advantages over small towns. Goods and services are more readily available. Greater selection means more competition which often results in lower prices for those goods and servic...