States' raiding neighbors for jobs not likely to stop, despite popularity of peace talks

December 12, 2004|By JAY HANCOCK

YOU CAN tell who's losing the Pennsylvania-Delaware-New Jersey jobs war: the one yelling loudest for a truce.

"One of the biggest problems we have is that we have competed against each other for jobs," Pennsylvania Gov. Edward G. Rendell told his neighboring governors at an extraordinary, tri-state economic summit a few days ago, according to news accounts.

Rendell, nudged by the Greater Philadelphia Chamber of Commerce, wants the three states to formally agree not to raid one another for companies by waving tax discounts and other bribes.

Hope springs eternal in the breasts of beleaguered governors. But hope and lip service are all Rendell is going to get.

Maryland knows this. This state sought an armistice in the 1990s when it was getting its clock cleaned by Virginia, whose incentives and overall lower taxes were luring Maryland technology companies. The General Assembly even passed legislation requiring the governor and economic development secretary to seek a peace with its southern rival. Nothing happened - except continued job flight across the Potomac.

Maryland now has one of the best state job-growth rates in the nation. But perhaps the brightest economic indicator is that state officials are done pleading for mercy and have no qualms about missing the Pennsylvania-Delaware-New Jersey peace talks.

"I'm delighted that Ed Rendell and his economic chief, Dennis Yablonsky, left me out of that," says Aris Melissaratos, Maryland's secretary of business and economic development. "We're beating the socks off those people. ... I'm not competing with Pennsylvania. I don't care. My unemployment rate is 3.8 percent."

Just as well, because even when cease-fires are struck, they don't last.

In the early 1990s, New Jersey, New York and Connecticut agreed to stop swiping each other's employers. New Jersey responded by trying to poach several financial exchanges from lower Manhattan. Keeping the Coffee, Sugar and Cocoa Exchange cost New York $90 million.

The people who organized this month's summit are well aware of this. "We're not delusional," says Mark Schweiker, former Pennsylvania governor and CEO of the Philadelphia chamber. "It's a spotty record, and we all acknowledge that."

But you can't blame them for trying.

By Rendell's reckoning, keeping Pennsylvania companies from moving to New Jersey or Delaware has cost the state $45 million in loans, grants and tax credits in the past two years. Cigna Corp. accounted for almost $10 million of that after New Jersey's McGreevey administration tried to induce the insurer and 1,500 jobs across the Delaware River into Camden.

"It's counter-productive as a region," Rendell said in remarks prepared for the summit. "It makes no sense at all."

Well, maybe if you're Rendell. Or most other rational humans. Pennsylvania is out $45 million, the companies are up $45 million, and the tri-state region as a whole is no better off.

But trying to nab employers across state lines seemed to make plenty of sense for James E. McGreevey, who recently resigned the governorship after a sex scandal and was replaced at the summit by acting Gov. Richard J. Codey.

And it seems to make sense to Delaware Gov. Ruth Ann Minner, despite her attendance at the truce talks.

Early this year she dangled $6 million before the American Automobile Association to get it to move 750 jobs, some from Maryland but mainly from Philadelphia, to Delaware.

"We worked very hard to convince AAA Mid-Atlantic of the benefits of locating in Delaware and were persistent in our pursuit of the total package," Minner said at the time. "And we couldn't be happier that they agreed."

Great press for the governor. Big articles in the local papers. And all with somebody else's $6 million. But now, at this month's economic conference, she's saying, "Regionalism can make the difference."

Maryland is wisely avoiding this sort of doubletalk. It's playing to its defense and health care strengths, judiciously competing in incentives bake-offs when necessary and putting resources into education and work force development.

"I couldn't be happier about our competitive position," says Melissaratos. "We're taking the high road."

At the moment, they can afford to.

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