Archive for August, 2011

Subsidy Tracker Reaches Six-Figure Milestone

August 31, 2011

Subsidy Tracker, our database of company-specific info on state corporate tax breaks and other forms of financial assistance given to business in the name of economic development, has reached a milestone: its inventory of subsidy awards now surpasses 100,000.

This represents a 25 percent jump over the past six weeks. A big part of the increase was due to the help of ALIGN: The Alliance for a Greater New York (formerly New York Jobs with Justice and Urban Agenda), which shared with us five years of unpublished data on NY’s Industrial Development Agencies program they had obtained from state officials.

In recent weeks we have also added thousands of new entries from published data sources that we continue to hunt down and capture for use in Tracker. During August we added 15 new programs from six states (see the list below). One of those states is Georgia, which makes its first appearance in the database. This brings the total number of states represented to 40, and the total number of programs to 231.

We’ve also been tinkering with the search engine to make it more useful. Users now have several options when entering a company name to search, and it is now possible to restrict the results to subsidies of a certain size (use plain digits without dollar sign or comma when entering an amount). We are also working with our web consultants at Rad Campaign to create dropdown menus with state-specific lists for fields such as City, County and Subsidy Program.

New programs added

Florida
Urban Jobs Tax Credit

Georgia
Economic Development, Growth and Expansion (EDGE) Fund
Entrepreneur and Small Business Development Loan Guarantee Program

Maryland
MEDAAF-1 Significant Strategic Economic Development Opportunities
MEDAAF-2 Local Economic Development Opportunities

Michigan
Film and Digital Media Tax Credit

Montana
Big Sky Development Trust Fund

Washington
Aerospace FAR Parts 145 Repair Station Preferential Tax Rate
Aerospace Manufacturer Preferential Tax Rate
Aerospace Non-Manufacturing Preferential Tax Rate
Aluminum Smelter Tax Incentives
Electrolytic Processing Industry Tax Incentive
Newspaper Industry Incentive
Semiconductor Cluster Incentives
Solar Energy Systems Manufacturers Preferential Tax Rate

Additional years added

California
Employment Training Panel

Connecticut
Job Creation Tax Credit
Manufacturing Assistance Act
Urban Action Grant
Urban and Industrial Site Reinvestment Tax Credit

Iowa
Research Activities Credit

Maine
Business Equipment Tax Reimbursement (BETR)
Governor’s Training Initiative

Maryland
Sunny Day Fund

Missouri
various tax credits

Montana
Primary Sector Workforce Training Grant Program

New Jersey
Business Employment Incentive Program (BEIP)

New York
Brownfield Cleanup Program Tax Credit
Industrial Development Agencies

Oklahoma
Quality Jobs

Texas Gov. Rick Perry’s Subsidy Slush Funds Highlight Apparent Pay-To-Play Problem

August 26, 2011

Now that Texas Gov. Rick Perry has entered the 2012 presidential race, several newspapers have compiled compelling evidence suggesting Perry is an aggressive “pay-to-play” politician, doling out government appointments, contracts, and economic development subsidies in exchange for campaign cash.

The New York Times confirmed Texans for Public Justice’s previous findings (See TPJ’s Rick Perry Primer): “A review of Mr. Perry’s years in office reveals that one of his most potent fund-raising tools is the very government he heads. Over three terms in office, Mr. Perry’s administration has doled out grants, tax breaks, contracts and appointments to hundreds of his most generous supporters and their businesses.” The Times highlighted two programs, the Texas Enterprise Fund and the Emerging Technology Fund, which we at Good Jobs First have criticized in three recent reports. This apparent cronyism has not paid off for the state: the Texas Enterprise Fund has been called the “Phantom Jobs Fund” because of its failure to create jobs.

A recent Wall Street Journal op-ed called Perry’s use of Texas economic development funds akin to reverse Robin Hood: “taking from the average taxpayer and giving to someone [with connections].” Tea-party-backed politicians in Texas have called Perry’s use of the funds, “fundamentally immoral and arrogant.” We find it surprising that nobody has yet pointed out that the Emerging Technology Fund can actually take an equity stake in companies it subsidizes. Government ownership of private enterprise would seem counter-intuitive for a self-proclaimed free-marketeer.

We know that Texas is an egregious example of subsidies gone awry, but it isn’t alone. Northrop Grumman executives contributed to Virginia Gov. Bob McDonnell’s inaugural committee, for example, before landing $3 million from Virginia’s Governor’s Opportunity Fund in addition to other subsidies.

With many states still hiding basic information from taxpayers about who gets subsidies, it is time for all states to beef up their transparency systems and come clean. The corrupting potential of campaign cash needs to be incorporated into economic development safeguards just as it has for contracting in a handful of cities and states.

Sears and “Job Blackmail:” an Early Warning Sign of Job Loss?

August 26, 2011

What does it say when a faltering company asks for a huge taxpayer subsidy?

Sears Holdings Corporation (the successor of Sears, Roebuck & Co. that includes Kmart and Lands’ End) is playing “job blackmail,” threatening to relocate its corporate headquarters and 6,000 jobs from a Chicago suburb to Virginia or Massachusetts. (Three large companies have extracted subsidies of $100 million or more this year by threatening to leave New Jersey, Ohio and Illinois.)

The problem is, Sears—a troubled company that is majority-owned by a hedge fund investor—has already been to the taxpayer trough, leaving a terrible economic development legacy. Twenty-two years ago, it threatened to relocate from its famous Sears Tower in Chicago’s Loop to Texas or North Carolina. Instead, as a retention payoff, it got a subsidy package worth an estimated $178 million to relocate 29 miles northwest to the distant, affluent suburb Hoffman Estates. In a 2003 report, we labeled the move state-subsidized sprawl.

To qualify Sears for the deal, the Illinois legislature had to pervert the state’s tax increment financing (TIF) law to allow for “greenfield” TIFs, since Hoffman Estates was far from “blighted.” When states loosen the rules for programs such as TIF and enterprise zones, Good Jobs First has documented, they often become drivers of suburban sprawl, undermining the inner cities and older suburbs they were originally intended to revitalize. Many of Illinois’ subsequent problems with its 800+ TIF districts trace back to that dark event.

And get this: Illinois TIF districts last 23 years. That means Sears’ deal expires in 2012, so here is the company demanding a new deal.

In my opinion, Sears should quit threatening to abandon Illinois and quit demanding massive tax breaks from Illinois, Virginia, Massachusetts or any other state.

I think Sears owes it to Illinois taxpayers—and to every other Illinois business—to gratefully honor its 23-year, $178 million subsidy and stay put. By threatening to leave just as its subsidy expires, Sears apparently feels entitled to permanent special treatment, above everyone else paying their fair share to sustain vital public services.

Virginia Gov. McDonnell and Massachusetts Gov. Patrick should shun Sears and tell it to stay in Illinois. The prospect of a corporate headquarters and thousands of “new” jobs may be alluring, but chasing footloose companies is perilous business: any state that rewards Sears’ behavior will anger its longstanding, loyal employers and encourage companies to threaten to leave.

If Illinois were to lose its Sears tax base and another state were to forego its Sears tax base, the only winner would be Sears Holdings Corporation.

As an old plant-closing expert who trained all 50 states’ Dislocated Worker Units on how to spot the early warning signs of corporate disinvestment prior to layoffs, my antennae go way up when I see a company seeking tax breaks while botching the business basics. Sears has been losing market share for several years: it should keep its headquarters staff intact, forget about quick-fix tax breaks and—while it still can—repair its business model, reinvest in its stores, and secure the jobs of its incumbent workforce.


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