Gambling with other people's money

Along with the usual local aromas, I detected a hint of boondoggle in the air Sunday.

That's when Rick Smith's masterful unraveling of the AgSugar saga hit the front page. To make a great story short, AgSugar International was supposed to create 24 jobs in Cedar Rapids by making revolutionary ethanol processing components. Somewhere along the way, I guess after the “quantum” box failed to materialize, AgSugar became LED office lights.

The state pledged to provide AgSugar with $600,000 in incentives, backed by city leaders and development types. And those incentives remain in place, apparently, even though AgSugar is now Vertecra. At the very least, I think the state needs to take another good look.

But what's $600,000, anyway? The Des Moines Register reported Sunday that the top 50 recipients of state development incentives and tax breaks received $809 million between 2003 and 2010. That's $267 for every Iowan. A good chunk went to some very profitable enterprises, such as Rockwell Collins and Deere & Co.

I wish I was surprised by all this fine reporting. Unfortunately, no.

I covered state economic development efforts from the alphabet incentives of the first Branstad era to Gov. Tom Vilsack's Values Fund to the Big Lug's I-JOBS. At first, I admired development leaders jetting around, hunting for jobs, cutting deals. I figured this is how growth gets done.

But over time, it dawns on you that this is basically gambling, without nickel slots and secondhand smoke. And it's betting with other people's money. Sometimes we win, although victory can look much less impressive than advertised. Sometimes we lose, and get left holding the quantum box. Maybe you think all that econ-gambling has made Iowa a prosperous dynamo. I'm less sure.

I am sure that it will continue. Resources that might be better spent improving our fundamentals - tax reforms, education investments, energy needs, etc. - will continue to be steered toward businesses with hopes of attracting them, expanding them and keeping other states from stealing them. It's a jobs civil war between the states, they say, so we can't unilaterally disarm.

But there are signs of a change. House Speaker Kraig Paulsen, R-Hiawatha, told our editorial board Friday that House Republicans are uneasy with a proposed new $25 million “High Quality Jobs” incentives fund. Paulsen said he thinks the public is also tiring of the incentives race. Maybe, just maybe, a long chain of fantastic funds is ending.

Mayor Ron Corbett is catching some heck for investing in a firm with ties to AgSugar. But maybe that's pointing us in the right direction.

If our leaders and lawmakers think incentives are awesome, perhaps they should put up the money. They can buy shares in Iowa Economic Development Inc. Bet your public pay, pensions and legislative per-diem payments. I wish them the best of luck.