The following op-ed was drafted too late for publication before Election Day this year, but we thought it might have some future value for anyone else whose municipality is considering changing from a council-manager system to a strong-mayor model, or vice versa.
(Clearwater’s voters rejected the referenced ballot proposal, and the city remains under its previous council-manager model.)
Would a Strong Clearwater Mayor Politicize Economic Development?
By John C. Mozena
When Clearwater’s voters go to the polls on Election Day and decide whether the city should keep its current government structure or move to a “strong mayor” form of government, one factor they should consider is how that change could lead to more misuse of the city’s economic development programs for political purposes. Regardless of the vote’s outcome, any change in government structure should be accompanied by strong transparency and accountability requirements for deals that claim to benefit the entire community.
For those of us across the country who follow economic development and try to promote healthy and inclusive economic growth, Clearwater presents an interesting case. It’s in a state where developers have long been considered to have outsized political power, but also where in recent years some prominent government officials – such as outgoing Speaker of the House Richard Corcoran – have taken high-profile attempts at rolling back corporate welfare programs. Clearwater’s fiscal and development challenges arising from the large tax-exempt footprint of Scientology-affiliated organizations in its downtown are also well-known outside the city and state.
These are among the reasons why it’s especially important for Clearwater voters to understand how the structure of their city government might impact the size, scope and strategy of economic development subsidies in the city: Mayors tend to make economic development decisions differently than councils and managers would, because they can manage those programs to benefit themselves politically.
Earlier this year, professors Nathan Jensen at the University of Texas and Edmund Malesky at Duke University published the results of groundbreaking research on this topic. They found on the whole that cities with strong mayors offer more generous incentives than manager-council cities. Strong-mayor cities are also less likely to impose strict conditions on companies to qualify for incentives, and Jensen and Malesky note mayors “often fail to require even a simple cost-benefit analysis of incentives.”
Why does the form of municipal government change the size, scope and cost of development incentives when it should have no impact on the actual project being subsidized? The answer is also hinted at by another research finding: Strong-mayor cities boost their incentive programs during mayoral election years. In short, a mayor is more likely to try to run an economic development program for personal political gain by claiming they “created jobs” than a city council and manager are to collectively try to take credit with voters.
So why should Clearwater residents care? Because these development incentive deals have real costs to schools, police, fire, roads and other critical government services. Simply put, money either given in a subsidy or not collected because of a tax credit isn’t in the city’s bank account to pay or equip local teachers, police officers, fire fighters or other public employees. You generally won’t hear this from elected officials and subsidized corporations, who prefer to spend their time talking about benefits.
Also, getting these deals wrong can be catastrophic in a worst-case scenario. For instance, many economic development observers agree that a municipal budget crisis caused by unsuccessful development incentive deals in Ferguson, Missouri caused that city’s leaders to lean heavily on their police and courts to generate revenues through fees and fines. This failed effort to fill the budget holes left by subsidies gone wrong poisoned the relationship between Ferguson’s government and many of its citizens, which became a matter of national interest during the mass unrest there after the police shooting of Michael Brown in 2014.
There may be plenty of good reasons to switch the structure of Clearwater’s government and that’s up for the voters to decide. But if Clearwater makes that decision, then one of the first priorities of the intervening administration should be ensuring future mayors are held accountable for making decisions that are best for everyone in Clearwater, regardless of the development politics in play.