2012 State Economic Development Incentives Survey Report

Source: Council for Community and Economic Research (C2ER), May 2013

Economic development incentives remain prevalent and continue to be viewed by economic development practitioners as important tools in the quest for state and regional economic growth. These are among the findings from the Council for Community and Economic Research (C2ER) nationwide survey of state incentive
program managers…

The nearly 1,800 economic development incentive programs currently in use by states are meant to influence the location of business investment and to promote job opportunities. This number of programs represents an almost doubling of the combined tax and non-tax programs available to businesses since 1999, the year C2ER completed its first survey of incentive program managers and also began to track the number and types of state business incentives.

This dramatic increase in state business incentive programs has come despite continued controversy over their use, including criticism about whether public funds should be used to pick “winners”; whether these programs deliver intended results; and whether states can continue to afford them.

A look at the number of economic development programs by state, when normalized to the number of business establishments within a state, provides a measure of state business incentive “program intensity”. Based on this measure, the states with the highest incentive program intensity include Alaska, North Dakota, Kansas, Oklahoma, New Mexico, Mississippi, West Virginia, Delaware, Connecticut, Rhode Island, Vermont, and Maine.

Other key survey results found that programs surveyed for this report had a general goal of encouraging economic development and growth in their respective state through business assistance, however the services and tools provided by the different programs varied widely. Financial assistance is still the primary approach that most states adopt, with about half of the programs providing tax-related benefits to businesses. In addition, nearly 35 percent of the programs provided direct financing and lending to businesses….