Delaware economic developers recently convened to explore ways to improve their state and local economic development incentives. On February 26, about three dozen leaders came together to examine the role these incentives play and consider how they can be used in a more judicious and transparent way.
Center for Regional Economic Competitiveness (CREC) President Ken Poole and Ellen Harpel of Smart Incentives (who also serves as a CREC Senior Fellow) presented lessons learned from their experience in working with representatives from more than 30 states on the issue during the past two years. The conversation focused on:
- principles for effective and responsible incentive use
- trends and innovative approaches to designing impactful state and local tax and non-tax programs, and
- basic analytical methods to be applied when considering offering incentives and assessing outcomes
Good program design that makes incentives easier to monitor and evaluate is critical. The session leaders also discussed ideas about techniques to ensure that economic development leaders achieve a suitable return on investment (ROI) while mitigating risks.
Key points are that economic developers must:
- consider what their states or localities are expecting to achieve by offering incentives
- operate as the chief negotiator on behalf their communities or states
- conduct careful due diligence and cost-benefit analysis
- ensure that the deal they make is codified in an agreement, and
- provide transparency and accountability throughout the process
Crafting Smart Incentives for Impact and Accountability was hosted by the Institute for Public Administration at the University of Delaware. We would like to thank Troy Mix for organizing this program.