Incentives are part of a process, not just a point in time transaction. We can use data and analytical techniques throughout the process to make sure we are using incentives effectively and responsibly.
Compliance is one of the four key elements of the incentive process in our 4×4 framework. It is an essential part of good incentive management. It’s where you see results and it’s how you provide transparency and accountability.
Incentive compliance is important for three reasons. First, it enables incentivized companies to understand expectations and for economic development organizations to show that the companies are meeting the terms of their agreements. Second, it provides the information to determine if incentives are generating the expected outcomes for the state. And third, it allows economic development leaders to demonstrate that they are using incentives effectively and responsibly on behalf of the taxpayers, not just the company.
We know from our work across the country that there are real technical challenges associated with answering questions about how well incentive programs perform. We also know that it can be a struggle to create the systems that enable staff to collect, manage, and report data across their incentive portfolio.
That is why Smart Incentives is working with the Center for Regional Economic Competitiveness and the State Economic Development Executives network to support an incentives compliance professionals network, with support from The Pew Charitable Trusts. This network provides an opportunity to meet incentive compliance colleagues from other states to discuss ways to improve data collection, analysis, and reporting on incentive use.
Professionals who manage incentive compliance are striving to be good stewards of taxpayer dollars for their states or communities. They are critical to smart incentive use, and we are proud to support the important work they do.