Move over, feds, as locals try stimulus too - The Elkhart Project- msnbc.com »

In hard-hit Elkhart, Ind., there are glimmers of economic hope as some recreational vehicle makers and other companies have begun hiring again after a long downturn.

But with the county jobless rate still well above the national average at 15 percent, state, county and local officials are pulling out all the stops to bring in more jobs, aggressively offering tax incentives to bring in new business or get existing businesses to expand.

And they are leveraging Elkhart’s national reputation for joblessness as a great reason for businesses to move here.

"When the president of the United States comes to your county twice in a short period of time, you are right up at the top,” economist Morton Marcus said recently at an Elkhart-area business luncheon. “You couldn’t have gone out and bought advertising like that ... We have seen this county really highlighted in the country, and as a result, people say, ‘Well, maybe that’s the place I want to go.’ Take advantage of that.”

Local officials are trying to do just that, stressing the area’s assets: highly skilled workers, seven million square feet of available factory space and a basically union-free environment where the average hourly rate for most factory jobs is under $20 an hour.

And they have been aggressive in the use of tax abatements or phase-ins — essentially giving job-creating businesses a reduced tax assessment on upgraded property and equipment for up to 10 years. A typical arrangement in a five-year abatement is no tax the first year, followed by 20 percent of the normal tax the second year, and so on.

The idea is that the projected tax revenue from the new jobs will quickly offset the reduced business tax revenue.

“Under better times I would not be there at all,” says Elkhart Mayor Dick Moore. “But with 20 percent unemployment in the city we thought we had to make an exception. We needed to do something if we could without breaking the bank.”

Such incentives are used across the country by communities in similar straits — a strategy that some experts warn could backfire if not crafted and monitored properly.

“Jurisdictions in Indiana and throughout the U.S. have been burned by companies unable to live up to their promises,” notes Kurt Zorn, an economist and professor of public and environmental affairs at Indiana University.

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