Good government and free market policies — and not government programs that hand out incentives using taxpayer dollars — are the best way to help Tennessee’s rural communities get ahead.
This, according to a new report the Nashville-based Beacon Center of Tennessee released Monday.
Beacon is a free market think tank.
“While most Tennessee counties are close to full employment, there is the sense that the urban areas are growing and thriving, while the state’s rural areas are surviving,” said study author Ron Shultis, Beacon’s director of Policy and Research (pictured above).
In the report, Reviving Rural Tennessee: A Prescription for Rural Resurgence, Shultis said incentives with taxpayer money “are expensive and ineffective, with most rural areas lacking the necessary skilled labor force to attract large or high-tech firms.”
“Meanwhile, traditional methods of economic development, such as tax breaks, tax incentives, or loan programs have been costly at best and ineffective at worst,” Shultis wrote.
“If rural areas are to experience a resurgence, state and local policymakers should create an environment that will organically encourage more entrepreneurial activity and economic dynamism in rural areas. Over time, this will create the economic engines necessary to create opportunities to incentivize more people to stay or move back to rural areas.”
Shultis goes on to suggest fixing disparities in Tennessee’s corporate welfare programs, especially because large companies in already growing urban areas receiving 80 to 96 percent of incentives.
Shultis also said occupational licensing is a barrier to people who wish to move to Tennessee.
“In recent decades, licensing has exploded to where close to 30 percent of Americans need the government’s permission to work, compared to just one in 20 workers in 1950,” Shultis wrote.
“According to the Institute for Justice, Tennessee is the 13th most broadly licensed state, requiring a license for 71 lower-income occupations. This includes some occupations that few other states license such as dental assistants, bartenders, and locksmiths.Licensing requirements are estimated to have cost the state more than 46,000 jobs, many of which would be in rural areas, depriving rural workers of these opportunities.”
Among only some of Shultis’ recommendations for Tennessee officials:
• Prohibit FastTrack Economic Development funds, Tennessee’s main grant economic development incentive, from being used for intra-state company relocations.
• Grant universal reciprocity to out of state holders of an occupational license.
• Prioritize Tennessee Broadband Accessibility Act funds for local library Internet hotspot lending programs and educational efforts over expansion grants and tax credits.
• Eliminate sales taxes on equipment purchases for broadband deployment and cease providing grants and credits to only certain providers.
• Create a “business-friendly community” designation for communities that streamline and remove regulatory burdens for business formation and investment.
• Work with local officials across the state to identify and reform harmful zoning policies to business formation.
• Implement a statewide property tax cap to limit long-term cost increases for businesses.
Shultis also suggested eliminating what he called unnecessary state regulations on financial institutions. He also suggested streamlining the process for state-chartered community credit unions to expand field of memberships to distressed rural areas.
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Chris Butler is a reporter at The Tennessee Star.