Editor’s Note: These comments were offered to the City Council Thursday evening by LEDA Chairman Mike McDougal.
Two issues have come up in recent council discussions regarding economic development programs of the City of Lubbock: (1) Reducing economic development grant funding formulas dating back to 1996, and (2) Separating Market Lubbock, Inc. (“MLI”) and Lubbock Economic Development Alliance (“LEDA”) Boards of Directors. Following are reasons both these actions are bad for Lubbock.
1. It will increase debt. For two years, we’ve been hearing Council’s concern about the more than $1 Billion in City Debt. We share that concern! Economic Development Grant Funding to MLI is used to build public infrastructure (streets, utilities, etc.) primarily in the Lubbock Business Park. Without this funding, LEDA would be forced to borrow a projected $37 million for capital improvements within the next 6 years.
2. LEDA is currently debt free. That has taken 7 years, lots of hard work, planning, and wise resource allocation. 2013-2014 proposed operating budget for MLI and LEDA is now “pay as you go.” Changing current economic development funding formulas will put LEDA on a path of incurring debt.
3. It diverts money from economic development to administration. MLI and LEDA currently share key staff and other administrative services. If the two organizations have separate boards, this would not be possible. Duplication of services would result at an annual cost of $500,000 to the taxpayers.
4. Lubbock competes for new businesses with one-half the budget of other competing cities. LEDA operates on 1/8 of 1 cent sales tax. Virtually all other cities EDC’s operate on ½ cent. When combined with MLI’s economic development grant, LEDA has the equivalent to ¼ of 1 cent, fully ½ what our competitors have. Cutting economic development funding even further will hurt our economic development competitiveness.
Amarillo EDC’s current annual revenue exceeds $17 million.
5. Hidden transfers are not transparent. Despite this council’s call to end fund transfers that mask the real cost of government services ($29.8 million in the 2013-2014 proposed budget), recent budget work sessions have seen expressed desires to do MORE OF THE SAME — take economic development funds and use them for other things.
6. Council members say they want to develop already annexed but underserved areas of the City. That is exactly what MLI and LEDA are doing in the Lubbock Business Park and Lubbock Railport. Diverting economic development funding to other departments and adding administrative costs will hurt efforts to try to accomplish Council’s stated goals.
7. Economic Development is a net income producer. MLI/LEDA assist companies in creating jobs and adding value to the city’s tax base. Since 1996, 12,352 jobs have been created through these efforts PLUS $587 million in capital investment. That’s an average of over 700 jobs and $34.5 million in capital investment per year. MLI’s $3.7 million budget is returning net dividends at a pretty extraordinary rate.
I encourage the council to keep working and consider what other alternatives are available to balance the budget.
—Mike McDougal, Chairman, Lubbock Economic Development Alliance