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
This article appears in Feb 28 – Mar 6, 2007.
thanks as always Tara.
One factor that always gripes me as a Meck tax payer (and I do pay my share of tax for biz done in CLT)is no one tells us about the giveaway factors. Sure we hear about some of Bob Johnson’s able negotiations..but other firms get tremendous incentives, stil others are allowed to migrate and leave behind huge box store buildings that are seldome filled by comparable tennants after the fact. Our leaders toss obscene $ at their pet projects and concessions for high profile rich folk, but have let slip the road maintenance cycle from 12years to around 22yrs now at last look. So not only have they increased taxes, but they have “robbed” the til by finding ways to not spend that money on our roads and utilities and security. Smaller towns like Lancaster, desperate for business, make even greater concessions so it’d not a charlotte only thing. But I just charge that our leaders need to do some basic math on what they give away vs what will truly be generated..and strike a contract like any business would..if we don’t see the anticipated return, then a prorated adjustment in concessionary taxation would be considered..At least I’d feel like someone is driving the bus…oh the bus…CATS..there’s a great fiscal policy !
I have no clue how the same idiotic bureaucrats keep on getting re-elected, except that Jim Black cannot be the only politician on the “take.”
How taxpayers can vote for the same idiots time and again is beyond logic.
I just wonder how the BOE is structured, because citizens who actually pay money into government simply cannot ignore how it is being wasted or can they? There is a disconnect somewhere.
I can see some of your points, but the chamber outright admits that their numbers are no exact science. And new business licenses don’t tell the whole story, or at least the negative story you are trying to paint. Have you looked at the NC Employment Security figures? They do group employment by regions and regular counties. You will see that the number of employed people consistently increases in our region–that is a GOOD thing. You tend to neglect the companies that are not necessarily new, but expanding. A company that is growing here in the county is not only doing something right, but also apparently doesn’t mind doing it in Mecklenburg County!
Thanks Tara this is a great and truthful article. This would definitely explain all the commercial real estate for lease signs we see every where. Up until this year the Charlotte Chamber posted reports and spread sheets concerning business diversity and real estate break down numbers by quarter. Since the chamber website changed the reports have disappeared and a facade page with very general info has taken the place of good info. I guess this makes the Chamber personnel less liable when the truth comes out.
“Say…your dentist…hires a new dentist and needs extra space, so it shuts down and moves to a new…location…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.
This article is nothing more than an inflammatory attempt to sell papers. I offer the statement above as an example. Quoted above is one of the most ridiculous evaluations I’ve ever read. In the analogy above, the dentist office didn’t “close”. It “moved” to a new location and expanded. It’s paying more in property taxes and has added an employee who will also add to the tax base. This article is criticizing how many “new” businesses Charlotte is “not” adding, and offers no comparison to any other cities of like size to suggest there really is something wrong. Fact is, unlike many cities, our net gain in new business remains “positive”, and is forecasted to stay that way for some time. Tara has absolutely no business acumen whatsoever. She’s a closet liberal who figured out she could make more money pretending to be a conservative.