When Government meddles in business decisions, taxpayers lose

The DDN doesn’t have both of its articles on the rumor of Reynolds and Reynolds pulling out of Downtown- so I can only link to the short one. The doozy quote comes from the print edition. Here is what the Government thought of its taxpayer-financed propping up of Reynolds and Reynolds by building out the former downtown Elder Beerman building to bring workers who had been in the city, moved to Kettering for a tax break- and then were being moved back to Dayton with taxpayer support:

Reynolds and Reynolds considers move
Reynolds broke ground for its Research Park campus in 1997. In 2003, CityWide Development Corp. named Reynolds and Reynolds the “best economic development project” of the year for remodeling the former Elder-Beerman building.

What happened with Reynolds and Reynolds is a textbook case of why government incentives for relocation in the name of “economic development” only make the CEO rich, and the taxpayers left holding the bag. I’ve talked about it at length on this site over the years (because I’m not a pop-up candidate like Jane Mitakides)- to see them go to this search: http://esrati.com/?s=Reynolds

The great quote comes from the print edition:

“We’ve attempted to reach out to the new ownership. They have refused to meet with us,” Shelley Dickstein, Dayton’s assistant city manager for strategic development, said. “To us, that is indicative that we have no ability to influence a business decision. This is an economic decision that government can’t influence.”

Sure government can influence a business decision Shelley, when it gives large handouts to corporations. What you are really saying is that you can’t afford to buy anymore jobs after years of chasing the carrot by pushing the cart, instead of letting the horse do its job.

The reality is, Mead stayed downtown for the length of its handout- and then left. Reynolds left Dayton when a sweetheart deal was done in the backroom to give them a deal on land in Kettering at Research Park, construction was handled by other big campaign donors, and the Dayton School Board agreed to buy all the old Reynolds real estate in Dayton for crazy high prices, so that the jobs would “stay in the area” instead of being whisked off to whatever other place was offering a better incentive package. The net result: Jobs left Dayton with its 2.25% income tax for Kettering which then had a 1.75% tax rate (great if you are CEO and pulling down several million a year)- and then Dayton begged Reynolds to come back to put jobs in the old Elder Beerman building.

The company was then sold, and the new CEO, who was only here a few years, pocketed over $9.1 million- some of that, could be considered our tax dollars, and now the City is about to lose 400 jobs.

I first talked about a different type of business location incentive back in 2006, with a walk to work tax credit system, that would encourage companies to locate close to employees to reduce our need for imported oil.

Couple that with a return to sanity in public company finance, by stopping what I call the Wall Street Casino, and we may start seeing a return of long-term business strategy, based on true financial growth instead of the pillage while we can business model.

Just imagine if cities spent more time providing public services to citizens, instead of trying to meddle in private business, maybe we’d have less government, more service and companies would actually want to locate here without a handout.

That’s an Esrati idea, which can only come from a candidate free of special interest money, PAC money or corporate lobbyist support.

The other candidates in the OH-3 race, Jane Mitakides and Mike Turner, can’t propose new ways to solve problems, because they rely on the old money to keep them in office.

Something more to think about from the candidate money can’t buy (but, it still means I need donations- so think about sending what you can afford to keep this campaign moving).

Thank you.

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3 Responses

  1. Mike Harmon February 2, 2008 / 12:48 pm
    I found your site on technorati and read a few of your other posts. Keep up the good work. I just added your RSS feed to my Google News Reader. Looking forward to reading more from you.

    Mike Harmon

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  2. Steve Peck February 4, 2008 / 8:56 pm
    As a former ReyRey employee from ’97 until Aug. ’06, I could never understand why the city of Dayton didn’t fight the move to Kettering. Very dumb on their part… But the employees loved the move! Away from all the crime of Germantown St., away from a 140+ year old building and lower taxes. We couldn’t get out there fast enough. But just to be clear, Reynolds did do exactly what you’ve been preaching – a walk-to-work tax credit system. An overwhelming majority of the employees who worked at ReyRey lived south of town and their commute was much shorter. Of course, all my experience is prior to the new owners… besides, in the not so distance future you won’t be complaining about why the City of Dayton letting Reynolds move out of Dayton – we’ll be complaining about the number of jobs that will be lost because they’ll be moving to Houston.

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  3. gene February 5, 2008 / 5:25 pm
    Houston will give them a better deal and then we will have nothing – that is why Dayton needs to step up to the plate and pay the piper – or we will lose more jobs. But of course the genius want to make that illegal, although that could never happen. Talk about dreaming…….

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