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Smoke and mirrors 

The Charlotte Chamber's economic stats distort reality

Every year, it's the same damn thing. The Charlotte Chamber releases its economic stats and the powers that be pick and choose the ones they like and marvel over them. Then I come behind them and set their confetti on fire.

Once again, it's time to fire up the blow torch.

The truly fabulous news this year is that businesses here announced plans to invest $4.1 billion into the local economy, an all-time high that eclipses the previous record of $2.2 billion in 1998. The amount of new square footage businesses announced was a third higher than the year before.

But the 12,087 new jobs businesses added was 10 percent lower than last year and the number of new and expanded businesses declined for the third year in a row. Let me translate that for you: this ain't good.

The new and expanded business number the Chamber uses is a tricky statistic that has helped mask the true state of affairs here for years by lumping new business and expanded business together.

Say, for instance, that your dentist's office hires a new dentist and needs extra space, so it shuts down and moves to a new, bigger location and sends the Charlotte Chamber a press release to let everyone know. The new office is counted in the Chamber's "expanded" business numbers, but the office that closed down isn't.

That's why new business numbers are a better indication of what's going on here. There was genuine shock and puzzlement among politicians last year when politicians got a look at the new business numbers alone after they were published in Mecklenburg County's annual report, which indicated that the number of new businesses that moved or opened here in 2004 had fallen 27 percent. In 2005, the number declined by another 11 percent.

What most of the public doesn't know is that annual new business numbers peaked here in 1994, when the county added a whopping 1,052 new firms in a single year. That number has steadily and dramatically declined ever since. In 2005, the number of new businesses locating here was roughly half that, at 562.

This year, we got lucky, and held off the plunge by adding 586 new firms, 24 more than last year. But the last two years were the lowest for new business recruitment in at least 15 years.

Don't get me wrong. Most mid-sized cities would still kill to pick up 586 new businesses in a single year. So the Queen City isn't exactly in a downward spiral. But you couldn't exactly characterize this as upward momentum, either.

UNC Charlotte economist John Connaughton recently told Creative Loafing that he thinks new businesses are still moving to the area, but that they are increasingly locating outside Mecklenburg County. There's no regional body that measures the trend for the surrounding area, he says, so there are no exact figures.

It makes sense. For the last six years in a row, Charlotte ranked first in the state in taxes and fees per person, and number one for local government costs, according to a John Locke Foundation study.

The Chamber likes to brush off this study every year with claims that taxes here are "fair," ignoring the fact that the Chamber's own survey of business owners indicated that taxes are their number one concern.

I've long said that company executives will pay higher taxes for better government. Here, they are paying higher taxes for faltering government services.

The reality is that Charlotte becomes less and less competitive in the state and among other Southern cities each year in the battle to attract new business. Why should business people pay the state's exorbitant personal income taxes and the city and county's ballooning property taxes, which are also levied on business property and seem to go up by double digits every few years, when they can locate right across the county line in South Carolina and pay far less for better schools and less congested roads? Why pay extra to live in the 8th most violent city in the nation?

Meanwhile, the city's economic development office used more of your tax dollars to launch a public relations program to stop the new business hemorrhage by marketing the city's "problem solving capabilities." (This would be the same city government that couldn't get the damn leaves picked up off the side of the road for two months after a huge tax hike last year.)

The general theme of the program, as usual, is that the problem isn't that we actually have problems, but that misinformed business owners mistakenly believe that we do.

The report assures business owners that everything is great here by addressing almost all of the concerns that they listed in a recent survey -- except taxes.

Typical.

NEW BUSINESSES IN CHARLOTTE BY YEAR:

1996...1,021

1997...973

1998...979

1999...824

2000...855

2001...676

2002...692

2003...862

2004...632

2005...562

2006...586

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