Legislative interest in incentives is changing how economic development decisions are evaluated.

This post is part of an occasional series reviewing state reports evaluating economic development incentives.  Here we look at the September 2013 report, “Comparison of Selected Nebraska Tax Incentives with Tax Incentives in Other States,” from the Nebraska Legislative Audit Office.

A key takeaway for the broader audience interested in incentives policy is that legislatures are becoming more active in setting guidelines and establishing protocols for evaluating incentives.  These standards are being set outside of economic development organizations (EDOs), but the EDOs will be responsible, along with other state agencies, for providing inputs to the evaluation and will be judged by these metrics.  

Other interesting points from the evaluation section of this report: 

  • Incentive evaluation and reporting styles are as different across states as are the tax structures and incentive policies themselves.
    • Some focus on job creation and economic measures.  Others emphasize compliance, while some stress fiscal impact.
    • A few states still simply list the projects they have funded and projected impact or — worse — summaries by program area with no detail on projects or actual outcomes.
    • We at Smart Incentives believe this latter approach has become inadequate to meet the needs of all economic development stakeholders, but especially legislators and other elected officials.  
  • There is a divide between the states that refuse to release project details (based on privacy concerns) and those that release AND make accessible full project data, including costs and actual, documented outcomes.
  • More state are reassessing how to evaluate incentive programs, with a strong fiscal bent to many of these efforts.

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