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Is ‘Project X’ a scam?

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By Robert Malt –

(Part 1)

Project X, Buncombe County’s latest venture into the realm of economic development, looks like a done deal. All seven commissioners have signed off on it, and the final details are being put in place. So what is Project X? Last week’s Tribune featured an article by Leslee Kulba detailing the complicated plan to provide millions of dollars in economic incentives (read: tax dollars) to a private company in exchange for jobs. But is it worth the cost, or is this just another taxpayer scam?

There are four primary arguments against Project X. First is the moral argument. Is it morally justifiable to take money from taxpayers to give to a private enterprise, no matter the promise of future benefits? Second is the philosophical argument. Is this the proper role of government? Third is the necessity argument. Are the incentives even necessary? Would the company act the same way (i.e. make capital improvements, and create jobs) even if there were no economic incentives? Fourth is the cost/benefit argument. Is the benefit worth the cost? Are we getting a good deal?

Much has already been written about the first two arguments, so let us look at the third argument: is it necessary? Remember, the company behind Project X is already operating here in Buncombe County, according to county documents. This is not a situation where a company is deciding where to relocate or expand its operations. Supporters of Project X will tell you that if we don’t provide these incentives, the company will either leave entirely, or stay but not make new capital investments, and thus, not create 52 new jobs. But is this a realistic assumption? It is one thing to choose a location for a new manufacturing facility. It is quite another to close down an existing facility, and move it to another location. There are significant costs to relocating. The company behind Project X would have to purchase a new facility. It would also have to outfit the facility with new equipment, and find and train new workers to replace the ones who did not relocate with the company. All of this is very expensive…likely far more expensive than the incentives that would be offered by any other community. This is why manufacturing companies don’t relocate lock, stock, and barrel very often. So the idea that the entire company would relocate doesn’t hold water. This looks like a scare tactic, or the stick portion of a carrot and stick approach, with the 52 promised jobs being the carrot to bait the Buncombe County Commissioners into making this deal.

So is the company behind Project X simply gaming the system for cash? Is Project X a scam? And if it is a scam, are the County Commissioners dupes or willing accomplices? In Part 2, we’ll take a look at the numbers behind the hype. Is Project X a good deal for the taxpayer?

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