Kudos to Glen Falls Post Star columnist Will Doolittle for his tart September 22 column exposing that “Water stinks… as expected” coming from a pipeline built for a microchip fabrication plant in Saratoga County, upstate New York.

This is the notorious GlobalFoundries plant that received $1.2 billion in subsidies for about 1,200 jobs – a cool $1 million per job, with no Job Quality Standards attached! (See our 2010 study on high-tech deals that includes a case study on it.)

The costly water line was built for the factory but three cities tapped into it, as “a token public face on the line’s real corporate purpose,” writes Doolittle. But they need so little that “the chlorine in the water breaks down in the pipe, making it smell like a swamp,” he explains.

Meanwhile: “The establishment of a huge plant and influx of more than 1,000 workers to staff it carries costs as well as benefits, which is why businesses and individuals pay taxes – to cover the public services they receive. But by granting GlobalFoundries enormous tax breaks, we’ve tilted the balance. Everyone else must pay more so the company can benefit,” concludes Doolittle. “Since the GlobalFoundries deal reeks it makes sense the water in the line built to supply it stinks.”

AMC Entertainment Inc. recently announced it will take a subsidy package from Kansas worth more than $40 million to run away with 450 headquarters jobs from downtown Kansas City, Missouri to the affluent Kansas suburb of Leawood (median income almost two and a half times the state average and home values more than three times the state average) in hyper-growth Johnson County.

It’s the latest episode of subsidized sprawl (the Kansas City Star did a great series on that issue 16 years ago!) and of subsidized interstate job flight across the Missouri-Kansas state line that was decried by 17 prominent business leaders there just last April.

The AMC drama has played out for a year and a half and is one of the reasons the Missouri state legislature is now holding a special session on economic development.

Who has the best title for a movie about subsidized corporate job flight from distressed cities at your local AMC theater?

In an extraordinary investigative report this week, The [Memphis] Commercial Appeal discovered that the state of Tennessee promised Electrolux much more in subsides than it officially announced and that the offer came with an explicit “no clawback or recapture” provision.  The newspaper reports that in addition to the officially announced $153.6 million subsidy package, property tax breaks and local grants and loans increased the total to $188.3 million. With 1,240 projected jobs, that’s almost $152,000 per job.

Daniel Connolly and Amos Maki, The Commercial Appeal reporters, made impressive use FOIA to obtain internal emails, contracts, and public documents that revealed many of the hidden subsides and decisions made “by a handful of people working in secret.”

With the clawback-free agreement, Electrolux is free to fall short on jobs or leave town. And Tennessee swims against the tide: Good Jobs First is not seeing a trend towards more clawback-free deals. (We will be releasing a new 50-state survey on clawbacks late this year.)

Should federal economic development dollars be used to subsidize the flight of jobs from one labor market (or state) to another?

Of course not! But members of the International Brotherhood of Teamsters (IBT) in Brisbane, California are blowing the whistle on just such a scandal.

A total of 183 workers at VWR International are facing permanent job loss as the company plans to relocate its facility from Brisbane (just south of San Francisco) about 230 miles to Visalia, California – into an industrial park subsidized by $2 million in U.S. Department of Commerce Economic Development Administration (EDA) funds. Teamsters in Brisbane have had a contract with the company for more than 50 years, but VWR is denying them the right to follow their work.

In a September 8 letter to the Commerce Department protesting the deal, IBT General President James Hoffa is urging that it rescind the EDA grant to Visalia. Suspiciously, Hoffa’s letter points out, when Visalia applied to the EDA for the funds, it omitted the name of VWR from the list of beneficiaries—even though VWR is almost three times larger than any other listed park tenant.

In Highway Robbery: The Road from Brisbane to Visalia, How VWR is Using Taxpayer Funds to Destroy Jobs, the Environment and Communities, the report of a special investigation co-chaired by Congresswoman Jackie Speier and California State Treasurer Bill Lockyer, experts estimate the total job loss in Brisbane/San Mateo County at 266 jobs. The shutdown would also cost the City of Brisbane almost a fifth of its general fund revenue.

Reform Triggered by Stimulus Controversy May Aid VWR Workers

In a related revelation this week, Good Jobs First has learned from the Teamsters that Acting Commerce Secretary Rebecca Blank is taking the Teamsters’ complaint seriously, citing an EDA policy against subsidizing job flight from one labor market to another.

Further research reveals that this EDA policy dates to the summer of 2009, when EDA got caught in a dispute involving federal stimulus dollars (funneled through EDA) for interstate job flight.

Although the EDA policy memo doesn’t name names, avid readers of Clawback will recall that in June 2009, we cited the case of NCR relocating jobs from both Ohio and South Carolina into facilities near Atlanta, Georgia. One of those relocations, involving the manufacture of ATMs, was originally slated to be subsidized by about $5 million in stimulus monies via EDA. When public officials in Ohio protested the move (although jobs from South Carolina were actually moving into the EDA-backed facility, Ohio was losing a big corporate headquarters that had been in Dayton 125 years), the White House quickly removed the stimulus funds from the deal.

Now we learn, from the EDA policy memo that opens by referring to a summer 2009 “Recovery Act grant application that resulted in significant adverse publicity because of an accusation that funding would have facilitated the relocation of jobs from one community to another,” that in response to the NCR controversy, the EDA developed a “four-pronged nonrelocation policy.” Although the policy can be waived under certain circumstances, it would appear to disqualify runaways like VWR in Visalia (caveat: I am not a lawyer).

By adopting this policy, the EDA actually rejoins the ranks of virtually all of the major federal economic development subsidy programs with anti-piracy safeguards. Indeed, an alleged violation of EDA’s former anti-relocation policy was part of a plant-closing lawsuit I worked on 20 years ago that won $24 million for dislocated workers. And the existence of anti-piracy rules in numerous federal subsidy programs convinced the U.S. Solicitor General to not intervene for the defendants in the case of Cuno v. DaimlerChrysler that the U.S. Supreme Court considered in 2005-2006.

The existence of these federal anti-piracy rules (like state and local clawback laws) are the bitter residue of numerous plant closings blowing up in the faces of public officials over the decades, revealing the abuse of taxpayer dollars. Determined to go down swinging, workers like those at Briggs & Stratton in Milwaukee (who won anti-piracy rules for HUD Community Development Block Grants by protesting runaway shops in 1994-1995) have won rules that protect us all today.

I hope that the EDA’s nonrelocation policy does indeed apply to this Visalia case and that VWR International will stay in Brisbane, where it has operated profitably for so many decades with its highly skilled workforce.

And if you suspect federal monies are subsidizing job flight, call Good Jobs First.

During a special session this week, the Missouri legislature is expected to approve $360 million in tax credit subsidies for “Aerotropolis,” a project that would create a cargo hub at Lambert–St. Louis International Airport to lure Chinese air carriers. Yet, the project faces some serious questions. In its report Aerotropolis: If You Build It, Will They Come?  the Missouri Budget Project (MBP) makes the case that the legislature should think twice before approving the subsidy.

The report points to some important issues overlooked by the legislature. Based on a review of Airports Council International market data, MBP argues that the U.S. has been experiencing a decrease in air cargo transportation and already has “excessive unused existing capacity for international cargo movement throughout the entire Midwest.” Chicago‘s O’Hare Airport, one of the nation’s biggest cargo hubs, has unused capacity even as it undergoes an expansion.  MBP notes that Lambert, where traffic is down 20 percent since 2000, also has extra capacity.

Another concern, according to MBP, is that the project lacks an enforceable commitment from a major international freight forwarder, a company that manages cargo movement. MBP cites an independent analysis that evaluated a similar project in Hazelton, Pennsylvania. The Hazelton analysis, noting that no cargo airport has ever succeeded in the United States without a major tenant such as FedEx, UPS, or DHL, argued that the project should not proceed without a committed anchor tenant. MBP also notes that Aerotropolis has not been subjected to an independently performed cost-benefit analysis.

While voting on the big Aerotropolis giveaway, the special session will also, ironically, consider proposals to reform the state’s entire system of tax credits. While some of those credits definitely need reform, the plan to eliminate others could have a harmful effect on low-income residents. One of the most controversial proposals is to phase out tax credits for low-income seniors and disabled renters (MBP’s reports on the issue are available on its website).

As MBP argues, it is foolish of the Missouri Legislature to rush through the Aerotropolis subsidy deal with no strings attached. Before committing any public money, the legislature should commission an independent study that would evaluate the costs and benefits of Aerotropolis, and secure an enforceable commitment from a major international freight forwarder.

September 21 update:

As of this week, the Missouri legislature is still debating the Aerotropolis proposal, but with significant changes. In the new version of the bill, the Missouri Senate took out the $300 million tax credit for warehouses at the future hub and created the Compete Missouri program. The new $141 million fund would combine six economic development programs and would give the Governor power to control who gets the subsidies. Warehouses at Aerotropolis would be able to apply for subsidies under the new program. Unhappy with the changes, the House threatened to kill the bill if consensus between both chambers is not reached by Friday.