Using tax incentives to bring in job creating businesses is popular with Jacksonville city government.  From September 1998 to August 2009, the Jacksonville Economic Development Commission (JEDC) claims that it created 6,444 new jobs according to a list of JEDC “job generating projects” provided to the Concerned Taxpayers of Duval County.  Well, that sounds impressive, right?  Sure, you could point out that it is not clear whether these jobs would have been generated anyway without  incentives.   But if the JEDC had anything to do with the new jobs, then tax incentives for job creation sounds like a great deal!

Not so fast! A recent study appearing in the Harvard Business Review suggests that the secret to job growth is not in doling out tax breaks to big employers in an attempt to entice them to move to your city. If anything, cities with a lot of smaller firms tend to have higher job growth than cities with only a few large firms. Having a business environment that promotes entrepreneurship by reducing business startup and other small business costs imposed by the government is a far better way to improve the job situation in a city than tax incentives to larger established firms.

The benefits are not only in job creation, but also in product innovation. In the book From Poverty to Prosperity written by Arnold Kling and Nick Shulz, the authors argue that innovation does not tend to originate from established firms, but from entrepreneurs risking everything on a novel idea.  Established firms tend to be more conservative in their risk taking than entrepreneurs, but risk taking is essential for innovation.  So lots of entrepreneurs with big dreams lead to a lot more great ideas for goods and services that improve our lives.

I am sure that some government official is reading this and saying to himself “Maybe, we should increase the corporate welfare that is going to small businesses and entrepreneurs!”.  And he would be missing the point!  The best thing that the government can do is to provide the essential government services that cannot be provided by the free market and then get out of the way!

Here is one way for government to get out of the way of entrepreneurs.  When monks tried to sell simple coffins in Louisiana, the State Board of Embalmers and Funeral Directors threatened them with fines and jail time.  Their crime?  Not being part of the funeral parlor cartel that uses the government to protect itself from competition.  The free market does not need government help to weed out the entrepreneurs who do not provide anything of value to their customers that they cannot already find cheaper and better elsewhere.

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The Board of the Concerned Taxpayers of Duval County passed the following resolution at its June 14th meeting.

A RESOLUTION OF THE CONCERNED TAXPAYERS OF DUVAL COUNTY CONCERNING THE CITY OF JACKSONVILLE DEFINED BENEFIT PENSION PLANS.

WHEREAS, the City of Jacksonville and associated governmental entities fund more than 2/3 of the cost of three defined benefit pension plans for public employees; and
WHEREAS, these 3 plans have funding deficits of more than $1.4 billion (as of 10/1/09), and these deficits are likely to increase; and
WHEREAS, these deficits are over $1,600 per Jacksonville resident and almost $5,000 per Jacksonville household, and are a drag on property values and new business; and
WHEREAS, the cost of funding these 3 plans is more than $110 million per year currently – about 7% of the City budget, and these figures and percentages are likely to increase, if no corrective action is taken;and
WHEREAS, these 3 plans, as they now exist, and far too costly to the City, and will cause the City to raise taxes in the future, if the plans are not eliminated or scaled back; and
WHEREAS, these plans are very costly to administer (about $14 million per year), and pay out over $215 million per year in benefits, and yet the City does not in fact have clear control of the administration of these plans; and
WHEREAS, private employers have largely stopped using defined benefit plans, and instead use defined contribution plans to provide retirement benefits for their employees; and
WHEREAS, proposals have been made to the Charter Revision Commission to give the City such clear control, and to bar future accruals of benefits under said plans after 2013; and
WHEREAS, the City’s currently outstanding collective bargaining proposals, even if adopted, will not prevent such future tax increases, or resolve the problem of lack of City control;
it is hereby RESOLVED, that the City Charter should be amended as described above, the City should revamp its current collective bargaining strategy so as to demand greater employee concessions, and the Mayor and City Council should take all other necessary and appropriate actions to scale back and eventually eliminate
these 3 plans, and replace them with defined contribution plans.

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The Concerned Taxpayers of Duval County, Inc. (CTDC) and a group of individual citizens announced today that they have filed new counts in their ongoing lawsuit challenging the right of the Jacksonville government to enter into a 19 to 25 year, multi-hundred million dollar, no-bid contract extension with Waste Management to operate the City’s Trail Ridge landfill and future waste disposal technology.

Specifically, they have amended the complaint filed last year against the City of Jacksonville and the City Council to request that the Court declare the passage of Ordinance 2010-217 to be both illegal and void. The several grounds asserted include multiple City and Council violations of Florida’s open government meeting (“Sunshine”) law.

The lawsuit further seeks to protect the public interest by asking the Court to force the City to correct violations of the public records law, which require government and officials to make records available to every citizen for review and copying. The City has failed to create and provide minutes of a public meeting (related to Trail Ridge), and refused to make a Council member’s records of the official business use of his cell phone available to the public.

A press conference will be held at 12:00 noon on Thursday, June 3, 2010, in front of the Jacksonville City Hall, 117 West Duval Street, Jacksonville, Florida, by Victor Wilhelm, President of the CTDC, and John Winkler, lead attorney for the Plaintiffs.

The Concerned Taxpayers of Duval County, Inc. is a not for profit corporation and nonpartisan political committee dedicated to serving the community as a watchdog group, using public information to oppose corruption, waste, and “Sunshine Law” violations in government. Additional information is available from the author of this press release, immediate past president John Winkler, who can be reached at 904-384-9918.
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Recently, Councilwoman Denise Lee opined that “she would rather see the city use more reserves if it could keep people from losing work during this recession”. Our question to Councilwoman Lee is since when did the Jacksonville city government become a jobs program? The last time that we checked, city government was supposed to provide essential services to Jacksonville taxpayers, not create jobs for city government employees. Considering the pension costs associated with these employees, maybe a few layoffs could save us a lot of money now and in the future.

If you do not agree, consider the Florida Times Union story on the Equal Business Opportunity office. Apparently, productivity for this office was measured in number of websites viewed per hour by its employees rather than in anything useful to the taxpayers who are footing its bill. Not surprisingly, a sharp reduction in staff who seemed to not having anything better to do with their time was recommended by the Inspector General’s office. We couldn’t agree more.

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We have reached round two of the dogfight between the city of Jacksonville and Waste Management.  The Jacksonville City Council held a committee-as-a-whole meeting on April 19th and narrowly voted down the proposed settlement of the Waste Management lawsuit against the city of Jacksonville by a vote of 9-8. We are not completely out of the woods yet. This vote has to be confirmed by the full City Council on April 27th. A change of heart by a member of the City Council and the April 19th vote could be reversed.

Here are some interesting news items concerning the landfill contract controversy. Clay County is doing what Jacksonville should do – bidding the landfill contract!  I guess that Waste Management did not have previous contracts with Clay County government that it could twist to its advantage and keep its competitors at bay.

The Florida Times Union editorial board complained that the committee-as-a-whole meeting mentioned above did not provide adequate time for discussion concerning the proposed settlement. We could hardly disagree with the Florida Times Union’s assertion that a contract worth more than $400 million over 26 years merits more than two hours of discussion. Let’s hope that Council President Richard Clark listens to this wise advice.

Finally, Concerned Taxpayers of Duval County (CTDC) President Victor Wilhelm had a letter to the editor concerning the landfill contract controversy published in the Florida Times Union. The CTDC has never wavered from its initial position that the contract must be bid and Wilhelm’s letter reflects this position.

What can you do? Let your City Councilperson know that competitive bidding of this contract not only makes good economic sense but assures an open and transparent process free of corruption.

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Due to court ordered mediation, a proposed new deal between Waste Management Inc. and the city of Jacksonville provides Mayor Peyton another opportunity to settle the dispute over the Trail Ridge landfill. The legislation implementing this tentative agreement has been introduced as City Council bill 2010-0217. The Concerned Taxpayers of Duval County continues to oppose any agreement between the two parties that circumvents competitive bidding and there is nothing in this new agreement that indicates that the Mayor’s Office is any more committed to competitively bidding the garbage landfill contract than it was when its first negotiated agreement with Waste Management was rejected by Jacksonville City Council.

See below past President John Winkler’s commentary on the landfill question.

It doesn’t take knowledge of rocket science to operate a landfill. Whatever Waste Management (WM), Republic/Southland, or anyone else in the garbage disposal industry may want the people of Jacksonville and their City Council to believe, spreading out household trash and covering it with dirt really is something that anyone able to operate a dump truck and bulldozer can do. While it may or may not be the kind of civic duty Jacksonville cares to perform using its own employees, there is nothing so special about the creation of a thousand-layer trash pile that it can only be done by giving exclusive rights to do so to one outfit, without competitive bidding, for the next thirty-five years.

Wait, you say, is this a rerun column? The whole “bid the landfill” vs. “Waste Management Forever” debate was fought out last year, you remember, and won by the forces of light when City Council rejected the Mayor’s no-bid, 35 year, $750 million contract extension on running the Trail Ridge dump, right? Didn’t the City then leap at the chance to litigate with Waste Management if need be in order to establish our right to either build our own trash mound or have the low bidder do it? Yes, that happened, but suddenly there’s a new deal proposed by the Jacksonville General Counsel that is a whole lot like the Mayor’s old deal. Call it landfill redux, deja vu all over again, or lipstick on a pig – no matter how you slice the new proposed landfill contract, it’s still (at best) last year’s baloney. Unlike last year, however, there is no time for a deliberative process at City Council. The new proposed contract (Ordinance 2010-217) demands City Council accept it by April 30, 2010, as presented, with no changes allowed.

When a group of us at the Concerned Taxpayers of Duval County (www.jaxtaxpayers.org) sued the City last year to get a ruling that Jacksonville had to either bid out a contract this huge or do the work themselves, we pointed out several legal problems in the Mayor’s tentative agreement. One provision of that proposal (still available for review at www.coj.net under Ordinance 2008-538) was an illegal clause which could have, under certain circumstances, forced the sale of the entire thousand acre Trail Ridge landfill site, and an adjacent “borrow pit” (dirt mine) site, from the City to Waste Management without any competition. Another illegal aspect of the earlier version of the no-bid contract under state law was that it could have gone on for an indefinite period of years, since it defined WM’s right to spread garbage in terms of tons (42 million) rather than time. Interestingly, the proposed contract now thrown in front of City Council avoids these two problems by leaving out the bargain land sale provision and defining a maximum number of years that Waste Management will have the exclusive right to run the City’s landfill(s). The new proposal essentially allows no more than ten years as the period WM would have been running the existing landfill before it would have been full, another 19 years for WM to operate any expansions or new landfill, with another possible six year extension “upon mutual agreement.” Not, in my opinion, coincidentally, this potentially 35 year agreement is the same length of time as the estimates on how long the Mayor’s earlier proposal would have run.
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Jacksonville City Council members want to hear from you during the following town hall meetings! Let them know that you want no more taxes!

City Council Town Hall Meeting – Districts 7, 9 and 10
Tuesday, March 30, 2010 6:00 p.m. – 8:00 p.m.
FSCJ Downtown Campus – 401 W. State Street, Jacksonville Florida

City Council Town Hall Meeting – Districts 12 and 14
Thursday, April 08, 2010  6:00 p.m. – 8:00 p.m.
FSCJ Kent Campus, 3939 Roosevelt Boulevard, Jacksonville Florida

City Council Town Hall Meeting – Districts 8 and 11
Thursday, April 22, 2010  6:00 p.m. – 8:00 p.m.
FSCJ North Campus, 4501 Capper Road, Jacksonville Florida

City Council Town Hall Meeting – Districts 1, 2, 3 and 13
Thursday, May 06, 2010 6:00 p.m. – 8:00 p.m.
FSCJ South Campus, 11901 Beach Boulevard, Jacksonville Florida

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2010 will be a tough year for Jacksonville city government.  With revenues down, hard choices will need to be made on the spending priorities of city government.  Of course, it would be easier for the politicians to avoid these tough decisions by raising your taxes.  If you do not want to pay more taxes, here is your opportunity to let them know that they will be held accountable if they avoid the difficult decisions that they were elected to make.   Don’t let them take the easy way out by raising your taxes.  For more information about the upcoming  budget workshops, see the city budget website.

Upcoming Budget Workshops

Thurs., 2/11/10 – 6-8 p.m.
CPAC District 2 Budget Workshop
Blue Cypress Community Center
4012 University Blvd. N.

Sat., 2/27/10 – 9:30-11:30 a.m.
CPAC District 4 Budget Workshop
Cecil Community Center
13531 Lake Newman Drive

Sat., 3/06/10 – 9:30-11:30 a.m.
CPAC District 1 Budget Workshop
Jacksonville Children’s Commission
1095 A. Philip Randolph Blvd.

Thurs., 3/25/10 – 6-8 p.m.
CPAC District 5 Budget Workshop
Clanzel T. Brown Community Center
4545 Moncrief Road

Sat., 4/17/10 – 9:30-11:30 a.m.
CPAC District 3 Budget Workshop
Balis Community Center
1513 LaSalle Street

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“As mayor, I can’t sit idly by. It is my job to help lay the foundation for Jacksonville’s strong post-recession recovery, by creating new job opportunities and a stronger financial foundation, improving our city’s quality of life and ensuring the safety of our citizens.” -  Speech given by Mayor John Peyton at Snyder Memorial Church on Jan. 20, 2010.

When you read the above excerpt from Mayor John Peyton’s speech, you get the sense that Peyton has a rather ambitious view of his role as Mayor.  Rather than running an efficient government that provides an essential but limited set of services to local taxpayers, Peyton instead want to be the savior of Jacksonville dispensing  job opportunities and improved quality of life to everyone like Santa Claus on Christmas day.  While this may seem noble to many, you have to question whether Peyton has the godlike powers to make this happen.  Cities are complex social organizations that defy top down control by politicians no matter how sincere or self confident they may be.  The reason that free markets work is that they do not presume that one person or even a committee of people have the knowledge and available tools to manage the complex web of personal and economic relationships that take place within Jacksonville.  Free markets rely on the decentralized decision making by entrepreneurs trying to discover what their customers need and then meeting that need before their competitors beat them to the punch.

Recently, the Jacksonville Charter Revision Commission proposed that the mayor develop a four year strategic plan that includes a “vision statement, mission statement, financial plan, goals and measurements for annual performance reviews”.   While strategic planning is important for any organization including city government, we need to be careful to identify what the goal of this foray into strategic planning should be and should not be.  It should not be a strategic plan for Jacksonville.  Instead, it should be a strategic plan for Jacksonville city government.  There is a difference.  The former assumes a godlike remolding of a city of 800,000+ people while the latter is more realistic in its desire to do just a few essential things and do them well.

A savior mentality seems to be inherent within the politician psyche.  Efficiently provide a limited set of services that the free market finds difficult to duplicate is way too mundane for politicians like Peyton.  It is more fun for Peyton to throw around taxpayer money in a vain attempt to transform Jacksonville into his vision of what he thinks that it should be regardless of whether Jacksonville residents want to go along for the ride.  My advice to Mayor Peyton is to get the city budget under control without another tax increase, reform the city pension system and leave the quality of life issue to the private sector which is more responsive to its customers than governments tend to be.

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At the January 11th board meeting, the Concerned Taxpayers of Duval County adopted the following resolution:

A RESOLUTION OF THE CONCERNED TAXPAYERS OF DUVAL COUNTY IN OPPOSITION TO CITY COUNCIL BILL 2009-0940

Whereas City Council Bill 2009-0940 exempts the Gerdau Ameristeel steel plant located near Baldwin from paying the public service tax on electricity for five years; and

Whereas the Concerned Taxpayers of Duval County supports low taxes but only when they are applied equally to all businesses and individuals subject to the tax; and

Whereas the Concerned Taxpayers of Duval County opposes City Council legislation that is clearly tailored to providing a benefit to an individual business thereby ensuring city government a role in determining the winners and losers in the local economy;

Now therefore be it resolved that the Concerned Taxpayers of Duval County opposes City Council Bill 2009-0940.

The resolution was read to City Council members at their January 12th meeting.

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