Economic Cop-out

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The contention that enterprise zones represent a public subsidy in disguise is the result of a superficial analysis. In Missouri, the tax benefits available through enterprise zone designations are an investment backed by citizens and public officials. The enterprise zone "investment" is designed to pay off in jobs and increased revenues. The fact that 20 states now have programs and 12 states are drafting enterprise zone legislation is evidence of the value of the concept as a development tool.

Blundell's attempt to compare American zone programs to the British example is terribly misguided. Missouri could never experience Great Britain's property devaluation problems. Our regulations specifically guard against intrastate and/or intracity relocations and grant property tax abatements only for new construction or improvements to existing structures. Further safeguards are found in our competitive designation process, which establishes zones only in areas of extreme distress.

Our criterion limits designation to a few areas and would in no way facilitate massive relocations of residents and businesses. Relocation may be a problem for the British, but it is not a factor upon which to base a relevant comparison.

Blundell briefly touches on the cost of job creation to the British government, but the analysis does not mention the benefit ratio. Are British officials logically going to invest without hope of profitable return? Enterprise zones are not give-away programs by any means. Missouri expects to attract $5.8 million in economic investment per zone, stimulating $18.3 million in economic activity. The state of Louisiana "conservatively" estimates a return of $1.20 for every tax dollar invested. A Coopers & Lybrand study of Connecticut and Florida programs found that, during the 10-year study period, enterprise zone tax incentives generated cash-flow benefits ranging from $137,730 to $178,130 for small companies, and from $533,360 to $1,059,420 for larger companies.

Contrary to the author's criticism that "free-market enthusiasts" cite regulations and taxation as "overwhelming barriers to . . . entrepreneurial rejuvenation," enterprise zone administrators emphasize exactly the opposite. In Missouri, businesses consider regulation and taxation to be serious difficulties, but certainly not overwhelming impediments. Businesses are very interested in the program, and believe it will induce companies to locate in distressed areas and hire difficult-to-employ persons.