Prince George’s County Efforts to Attract New Businesses Must Create More Opportunity for Residents

Prince George’s County has seen steady economic growth over the last five years as county leaders have made a concerted effort to attract new businesses. The county has added thousands of jobs, reduced unemployment and seen home prices jump nearly 50 percent.

Over the past year, 17 businesses from other parts of the region have decided to relocate or expand to Prince George’s County, in part to take advantage of the tax credits, grants for training employees, and loans that the county is offering in hopes of creating better job opportunities for its residents. The County Council and County Executive set aside millions for its business loan program, streamlined the permitting process, and greenlighted major projects, such as the MGM National Harbor casino and a new hospital.

County leaders must keep in mind that taxpayers are often footing the bill for these incentives. Money invested in tax breaks for businesses is money that isn’t available to improve the county schools or make its communities safer – things that are also essential to a strong economy.

With nearly 1 in 10 county residents still living in poverty – more than anywhere else in the Washington, D.C., region except the District of Columbia – struggling public schools, and rates of violent crime that remain far higher than those in nearby counties, it is essential that the $6 billion worth of projects currently in the works result in real economic opportunity for residents.

Prince George’s leaders have been using some creative approaches to attract good-paying jobs. For example, companies moving to the county can take advantage of a program that uses federal grant money to reimburse the cost of salary or training for new hires, provided that companies give jobless residents a chance. The jobs created must be full time and pay between $14 and $25 an hour, and the county will reimburse up to $12,000 per participant.

In addition to providing tax incentives and other financial assistance, the county has plenty of assets it can use to attract businesses: proximity to the nation’s capital, 15 Metro stations, nearly 1 million residents, eight colleges and universities, 14 federal agencies, and more than $50 billion in contracting opportunities.

This has enabled the county to make a strong case to businesses in the District and Northern Virginia with expiring leases as they weigh their options of what the best location for their company will be going forward.

However, county leaders should exercise caution in negotiating these deals. Agreements between a government and companies for the specific purpose of spurring economic development, commonly known as tax abatement deals, can have costly unintended consequences. Nationally, such deals are now costing the U.S. taxpayers an estimated $70 billion per year, with little in return.

Tax abatements reduce or eliminate the taxes a specific business pays, which can create new economic burdens and challenges when not all businesses are paying their fair share. For example, many local governments will exempt businesses from paying property taxes on multimillion dollar pieces of real estate for years, and in some cases decades. This costs school districts and municipalities millions, robbing residents of essential services that would have been paid for with the money that businesses should have paid in taxes.

Despite the county’s success so far, its leaders shouldn’t be so eager to attract businesses that they enter into unfavorable tax deals. Instead, the focus should remain on creating quality opportunities for workers, improving schools, and enhancing the overall standard of living for residents.