Using research, anyone can become an expert in proving excessive corporate/real estate incentives exist in Memphis and Shelby County. These 3 below documents provide support for the existence of a minimum of $300M+ in excessive incentives. The former results in $25 to $35M in annual Memphis/Shelby tax revenue shortfalls due to excessive incentive policy. This represents $25-35M per year not going to true economic development like public transit, workforce and small business development. See below:
Tennessee Comptroller 2018 PILOT Report – One only has to count in the PILOT report the number of parcels under PILOT contract in each of the municipalities in the State of Tennessee. If one does that, it will be revealed that Shelby County has 431, Davidson 25, Knox 52 and Hamilton 38 parcels under PILOT contract. Benchmarking against the greatest holder in Knox County at 52 parcels under PILOT and prorating based on Shelby County’s greater population by 2x the existence of 104 parcels under PILOT contract could be defended for Memphis/Shelby. The excess from this evaluation results in a 327 parel PILOT excess when compared to Knox County and greater when compared to Nashville/Davidson County.
Making Sense of Incentives – Dr. Timothy Bartik’s research, primarily on state tax incentives programs, provides a methodology for evaluating local job incentives programs. If one applies Bartik’s research, as modeled in his research, they will multiply EDGE Scorecard claimed revenues by 12.5%. As of 2/23/20. EDGE claimed revenues are $1,426,974,324. This will translate into the following evaluation: $1,426,974,374 x .125 = $178,371,796 in adjusted revenue. Next one takes adjusted revenues and subtracts $592,846,121 in abatements to arrive at net tax revenue in the following evaluation: $178,371,796 – $592,846,121 = $(414,474,325) in projected taxpayer losses. This equates to approximately $35M per year in defiicient Memphis/Shelby tax revenues due to excessive incentives.
Benchmarking Research – The following benchmarking research conducted by this blog reveals a $320M excess in EDGE awarded incentives. Using data as of the end of 2018 from EDGE, The Indianapolis Business Journal, Nashville.gov and The Bureau of Labor and Statistics, Memphis/Shelby incentives are benchmarked against two municipal peers in Indianapolis and Nashville. Additionally, macroeconomic data regarding small business vitality and gross domestic product is also contained which reveals tax incentive policy has not worked for the overall Memphis/Shelby economy. $320M equates to approximately $25M in deficient Memphis/Shelby taxpayer revenue shortfalls dues to excessive incentives.
The above can be used as research based tool in making the business case to redirect economic funding more toward true economic development in workforce, transit and small business. After all, workforce and small business are the chief economic growth drivers of local economies.