The 2013 Chairman’s Report: State Business Incentives from the Council of State Governments sums it up nicely: “We simply don’t have the information we need to make good decisions about incentives.”

This report adds to the drumbeat of calls for better data and greater transparency in incentive programs.

Among its conclusions:

  • State policymakers don’t have an accurate accounting of the most basic of information about their state’s incentive programs – the cost.
  • Solid evaluation of existing programs is lacking.

These blunt statements are true, if discouraging, and demonstrate that current practices in evaluating incentive programs are unsustainable.  Increasingly, public officials will be looking to economic development professionals for better quality information on incentive use.

The report goes on to note:

“Legislators are often unaware of the kinds of programs being administered by state economic development officials and practitioners, who implement the policies the legislature approves, which can lead to decisions that may not reflect the realities that practitioners face every day.”

This lack of basic understanding is a tremendous problem for the economic development field.  The CSG working group members behind the report recommend convening regular conversations across the legislative and executive branches to help both practitioners and legislators work together more effectively to accomplish their economic development objectives.

Economic development organizations need to prepare to work with their elected officials on incentive policies and programs, report more thoroughly on incentive use, and — this will be the real challenge — explain both their cost and effectiveness in achieving intended goals.  

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