Sacramento City Financial Incentives for Targeted Industries



REASON FOR INVESTIGATION

The Grand Jury was concerned about the impact of economic development on local government and the taxpayer.

BACKGROUND

The City of Sacramento adopted guidelines related to financial incentives for targeted industries on June 1, 1993. The guidelines address incentives for industries who renovate, expand or construct new facilities in the City of Sacramento. The targeted industries include manufacturing, insurance and information services. The City policy requires coordinating efforts with other local agencies such as the County of Sacramento, the Sacramento Housing and Redevelopment Agency, the Sacramento Municipal Utility District and the State of California. The City incentives are limited in nature as the policy recognizes that "tax incentives" are not a high priority for corporations and that the City does not have enough resources to develop a large-scale incentive program. The City has identified special revenues that could be used for infrastructure improvements. The City Council has final approval on all proposals.

PROCEDURES FOLLOWED

The Grand Jury conducted interviews with city officials and staff, local business interests and reviewed documents, press reports and information available on the Internet.

FINDINGS

1. Many cities and counties in the United States offer "economic incentives."
2. The City of Sacramento has adopted a limited financial incentive program that does not use existing general fund revenues.
3. The policy allows participating companies a percentage of local revenue generated by their business activity over the initial three-year period.

4. The City of Sacramento works with other local and state agencies to promote economic development.

CONCLUSION

The policy adopted by the City is limited in its scope and does not reduce current general fund revenue.

RECOMMENDATIONS

The Grand Jury recommends that the City of Sacramento:

1. Keep its economic incentive program.
2. Not use existing general fund revenues for incentives.

RESPONSES REQUIRED

The Penal Code requires response to the recommendations contained in its report be submitted to the Presiding Judge of the Sacramento Superior Court and Municipal Courts by September 30, 1997, from:

The City of Sacramento