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States Show Their Claws

Companies face pressure to return economic-development incentives, but there is always room to negotiate.

Marielle Segarra, CFO Magazine
May 1, 2011

More to The Story

As someone who has written clawback provisions into the law, it is clear that their main purpose is "cosmetic". They are there to show the public that their government is not going to pay something for nothing. But their real value is that they force companies to come back when they are having problems meeting commitments. The government usually comes up with a "work-out agreement" that demonstrates they can be a true "partner" with the business, seeing them through the good times and the bad. Of course, its always easier if the work-out is agreed before the media gets ahold of the issue.

Posted by Michael Press | May 17, 2011 02:49 pm

Other Considerations

Although the appeal of economic-development incentives are very appealing to companies, additional consideration of the states leadership should be equally considered. As we know, 44 states have deficits, is leadership being honest with the public? Do they have an effective plan in place to address their deficit? The deficit issue the Federal and State governments are facing is one of the biggest variables in our ability to have a sustainable recovery ( if any). The states who are honest with their people ( we all need to make sacrifices - spending cuts and tax increases - yes, both in many cases) and have an effective ( bi-partisan) plan will provide companies with confidence. Confidence in the future of their state should weigh equally to economic development incentives.

Posted by Jim Wong | May 11, 2011 11:35 am

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