If a community wants jobs and wants economic development, it must play the game.
And the name of that game is corporate incentives ... or is it corporate welfare?
Behind the headlines of ballyhooed announcements by job-rich industries there is nearly always a deal between company and community - tax breaks, inducement bonds and discounted or even free infrastructure, land or buildings.
When BMW went to South Carolina in 1992, it raked in incentives totaling about $130 million, including state-financed land, preparation of the 1,039-acre site, tax incentives, infrastructure and highway improvements.
The carmaker employs about 1,800 people at the Greer, S.C., location, and made capital investments totaling about $600 million. Another expansion of the plant is valued at $200 million.
It was a major catch, and sometimes cited as a good example of what incentives can do. And BMW pointed out that some incentives, highways for example, also benefit the community at large.
But when Mercedes launched a new operation in Alabama, the company got nearly $300 million in incentives - about what it would cost to build the plant including land and equipment, said J. Mac Holladay, chief operating officer of the Governor's Development Council in Georgia.
"That seems to be the benchmark these days of what not to do," said Al Hodge, Metro Augusta Chamber of Commerce president. "Incentives are investments, not expenses."
But economic development crusaders admit they are stuck with offering companies attractive packages ... or losing the big catch to another fisher.
"We basically have no choice, acknowledged Aiken County Commission Vice Chairman Jim Baggott.
"Either play the game or sit on the sideline."
That competition has sparked an economic battle between the states - and resources are being shoved at companies that states and communities could use for other purposes.
"Basically, we are putting cities, counties and states in competition with each other to see who can have the most lax environmental standards, throw the most money at companies in the form of tax breaks, and neglect education, child nutrition, crime prevention, .°.°. public transportation," said said Omar Jabara, spokesman for U.S. Rep. Cynthia McKinney, D-Ga.
"It's the race to the bottom."
Some have called for a nationwide moratorium on such incentives, saying the money could be saved for other purposes. But insiders said that's not practical.
"If it were a perfect world, I'd say let's not do anything. But we can't," Mr. Holladay said.
Companies also might not move or expand anywhere without at least some incentives.
In Georgia, companies get a standard package from the state. Each county is lumped into one of three tiers, for which the incentive a company gets is based on how bad the county needs development. A complex set of rules lets the company deduct a certain amount from taxes for every job, based on the scale of investment.
In South Carolina, companies can get money from the state, and can negotiate reduced taxes. In certain zones, companies can also get more generous offers.
And in both states, local governments can help by providing speculative buildings, helping the company get tax-free bonds, or building infrastructure like roads, railway spurs or sewer and water connections.
But Georgia's neighbors are more generous with incentives - some think South Carolina is giving away the store.
"There's no question about it," Mr. Holladay said. "Under what they've now put in place under their enterprise zone law, what would have gone straight to the state general fund is going back to the company.
"You've got some real crazy things going on. You really do," he added.
Georgia instead concentrates on long-term development of its work force - something he said states should be careful not to compromise with big giveaways just to attract companies.
"There is a philosophical difference in the way Georgia has looked at this and the way some neighboring states have looked at it. ... We need to be fiscally responsible, careful about what we're doing, and be sure it doesn't hurt the future competitiveness of the state."
"You've got to be very careful," agreed Mr. Jabara. "Tax incentives don't always work, because that's not what companies are always looking for. That's Reaganomics - give companies everything, even the kitchen sink, and it will trickle down. That doesn't happen, so the company's got to give something back."
Incentives should balance direct incentives against work force development - such things as training and education, Mr. Holladay said.
"Everything (incentives) we have on the books are all revenue-neutral or revenue-positive credits. But if we didn't have them on the books, we would be eliminated from some projects early on, and we can't afford to do that."