Spare economic development tools: Visit Florida, Enterprise Florida

Tallahassee promises to be the site of a grudge match once the Legislature convenes on March 7 with the hostile political wrangling between Gov. Rick Scott and House Speaker Richard Corcoran continuing. The war of words over the future of two state agencies suggests great political theater will be center stage. Enterprise Florida, the state’s job creation and economic development tool, and Visit Florida, the state’s tourism marketing vehicle — Scott’s pet agencies — are on the chopping block.

House Republicans say state spending by both agencies amounts to “corporate welfare.” The governor, who had convinced the Legislature for years to allocate exorbitant sums for both, labels the opposition to his budget requests as “job killers.”

Rather than eliminate Enterprise Florida completely and gut funding for Visit Florida, greater oversight and efficiency should be on the legislative agenda.

The revelation that Visit Florida paid Pitbull, the Miami-born Latin Grammy and Grammy award-winning rapper, $1 million to promote the state caused some heartburn in Tallahassee. The agency’s chief executive officer resigned over the lucrative contract, which included the production of a music video. Corcoran had to sue Pitbull in order to access the contract. That lack of state transparency on a questionable deal warrants a mandate that Visit Florida publicly disclose all its contracts.

Outraged House lawmakers, who once threatened to eliminate Visit Florida, instead threw Scott a bone and voted to slash funding from this year’s $78 million down to $25 million. At least the agency could receive life support from the House. Since the measure passed all three committees to which it was assigned, the legislation heads to the full House for a vote sometime during session.

Manatee County enjoyed a robust year in 2016 as hoteliers and resort proprietors reported high occupancy rates throughout the year, erasing season as the only tourism gold mine. The county’s marketing arm, the Tourist Development Council, formulates strategies but only makes recommendations to the Manatee County Commission, thus providing the oversight and transparency lacking on the state level.

Elliott Falcione, the executive director of the Bradenton Area Convention and Visitors Bureau, opined on Visit Florida’s vital mission at a council meeting earlier this month. “The easiest way to explain the importance of Visit Florida is the case study from Colorado in the early ’90s when they felt like the world knew about all the attributes that Colorado had to offer so they stopped marketing the state of Colorado. ... Some economists will tell you they (Colorado) still haven’t recovered today from what they did in early ’90s.”

A 2016 study, “An Analysis of State Tourism Promotion Funding,” found that with the expenditure of $1 million in taxpayer money on marketing, the accommodations industry only captured a mere $20,000 on that investment. Thus, the authors concluded, when the tax expense is compared to the gain in economic activity, “it’s clear that state subsidies for tourism promotion produce huge negative returns on investment,” Michael LaFaive and Michael Hicks wrote in an op-ed published in the Tampa Bay Times.

The state logged another record year for tourism, with 112.8 million visitors in 2016 — the sixth consecutive year that visitation has increased. The governor credits Visit Florida. House leaders disagree. Can the state afford to quit nurturing Florida’s top industry, tourism? We think not. Tourism is too valuable to the state economy.

On a targeted, smaller scale, Manatee County’s promotional efforts appear to be working so well, some Anna Maria Island residents and officials plea for less marketing in order to reduce traffic congestion.

Enterprise Florida is a marketing tool, too, selling the state to businesses around the world, promoting low taxes, seaport and airport convenience, and, of course, the weather among other positive attributes. The goal is job creation by recruiting new industries to diversify and grow the economy. High-paying jobs are the gold standard.

Limited government conservatives as well as liberals cite favoritism, improper influence and special arrangements as some of the reasons to ax Enterprise Florida. Instead, that money should be spent on public safety, infrastructure and education to boost the economy. Incentive programs overlook the fact that small businesses drive job creation. Incentive deals pick winners and losers. Let the free market reign. Reduce taxes on businesses and households.

On the other hand, Florida is sparring with other states that offer incentives to attract high-wage jobs. Site selectors hired by corporations would look elsewhere for expansion. States such as Texas mount aggressive campaigns to boast about incentives and a business-friendly environment. Scott has gone on many business recruiting trips around the nation and boasts about his victories.

A case in point about the viability of incentive involves the entertainment industry. Florida recently quit offering tax breaks to film production companies. Producers of a Ben Affleck movie set in Ybor City instead went to Georgia and built a set resembling Tampa’s fabled Latin Quarter. Why? Georgia offered up to 30 percent in tax credits on whatever the production company spent in the state. Florida ran out of incentive money in 2012, having spent the Legislature’s 2010 allocation of $296 million.

Just like Visit Florida, the state can ill afford to completely drop out of the competition. The state Senate has yet to enter the fray, and the governor can exact revenge on House projects with his budget line-item veto pen. Regardless, Enterprise Florida should survive.

This story was originally published February 23, 2017 at 2:03 PM with the headline "Spare economic development tools: Visit Florida, Enterprise Florida."