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GOVERNMENT POLICY/INCENTIVES
The Nature of Incentives Compliance in the Age of the Coronavirus Although compliance may not be top of mind for business during the pandemic, renegotiation may be possible, and incentives could be more important now than ever before. By Larry Gigerich, Executive Managing Director; Susan Jarvis, Senior Client Advisor; and Gerald Frazier, Principal; Ginovus
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conomic development compliance is historically a long process, one that is typically managed over a multi-year time frame. Companies have negotiated incentives to help offset costs associated with growth and expansion and count on the economic benefits as part of their strategic growth plan — specifically, their plan for building the future of their business and their teams. What no one counted on was a global pandemic bringing life as we know it to a standstill. The dramatic slowdown of the economy has caused business leaders to take a close look at all aspects of their business, which should absolutely include compliance reporting associated with economic incentive agreements.
What does compliance look like in the middle of a pandemic? Despite these unprecedented times, not everything has — or should — come to a screeching halt. Business must continue processing payroll, maintaining employee health benefits, and fulfilling production orders. For those businesses that have recently experienced growth and expansion and have been awarded economic development incentives, quarterly or annual compli-
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ance reporting must be maintained. Most state and local compliance reports are due within the first quarter of each year, and in 2020, this was also the time that COVID-19 reared its ugly head in the United States. Companies had to immediately shift focus to having their employees work remotely, ensuring that networking and computer systems were safe and secure, and maintaining business continuity to the greatest extent possible. With this shift in attention, maintaining compliance with incentives has likely not been the priority.
Keeping up with compliance will be crucial in a recession. Economic development incentives continue to be an important
component of the strategic plan for companies experiencing growth. Past data has shown that many companies awarded incentives fail to realize the benefits because of the compliance requirements. This could be for a variety of reasons, including burdensome paperwork and/or the fact that responsibility for compliance failed to reach the appropriate company contact. In 2020, maintaining compliance may be even more complicated as workers adjust to remote work environments, and teams are operating in fluctuating circumstances. However, as companies experience an economic downturn as a result of the pandemic crisis, the value of receiving the financial benefit from
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5/26/20 11:29 AM
