http://www.goodjobsfirst.org/news/article.cfm?id=123
Good Jobs First is affiliated with Good Jobs New York, which is supported by the Fiscal Policy Institute, which is supported by the union I work for and is headed by Frank Mauro, who used to be my boss when we both worked for the Nelson A. Rockefeller Institute of Government.
http://www.fiscalpolicy.org/99Percen...orkersLose.pdf
http://www.rockinst.org/
BearingPoint takes subsidy to move from one part of Manhattan to another
The financial district of lower Manhattan is so prosperous these days that luxury retailers such as Tiffany & Co. are for the first time opening new outlets so that bankers and brokers can purchase big-ticket items without going up to Fifth Avenue. City and state officials, however, seem to think it is still necessary to gives subsidies to companies to move to the area. Recently, management consulting firm BearingPoint Inc. accepted a $2.4 million grant under the Job Creation and Retention Program to move its financial services group from Midtown Manhattan to Three World Financial Center downtown. The company, which used to be a division of accounting firm KPMG, is also seeking other subsidies worth at least $700,000 available to firms moving to Lower Manhattan.
According to Bettina Damiani, director of Good Jobs New York, "the incentive package for BearingPoint is yet another wasteful example of how 9/11 resources are benefiting well-established and rich Manhattan firms."
Southeastern Indiana wins competition for Honda plant
Honda Motor Co., which set off a scramble among at least five states when it announced plans to build a new assembly plant somewhere in the Midwest, chose a site in southeastern Indiana for the $550 million project. In making public the choice, Koichi Kondo, president of American Honda, said: "We believe that the great state of Indiana has what we need to continue [our] success: an outstanding community of people, excellent transportation systems and the necessary infrastructure to support industry."
Kondo did not cite a $141.5 million subsidy package provided by the state, including tax credits, abatements, training assistance and infrastructure improvements, with the latter making up more than two-thirds of the total. It is not known how the size of the package compares to what all the other states were offering, but another Honda official insisted that subsidies were not central: "It wasn't a matter of incentives offered; that was never a consideration," said Larry Jutte, American Honda's senior vice president of manufacturing. "It was a matter of logistics, the human factor, the infrastructure and the location."
Honda's decision was particularly surprising for the many observers who assumed that the Japanese company would go with a site in Ohio, where it already has some 16,000 employees and a large network of suppliers. Ohio officials said the company had concerns that the new plant, which will employ at least 1,500, would end up competing with those suppliers for workers.
Target changes the target in Minnesota
Officials in Brooklyn Park have approved a development agreement for a $1.75 billion retail, office, residential and entertainment complex being planned by Target Corporation in the Minneapolis suburb. Target is being given a 30-year, $20 million property tax abatement for the project, which the company extravagantly claims could eventually create 30,000 jobs. City policy would normally require that most of the jobs created in a subsidized project be permanent, full-time positions paying three times the federal minimum wage, or $15.45 an hour. Target, however, has been granted waivers from these requirements that will allow it to count more part-time and contract jobs toward meeting its job-creation goal, which is set at only 500 new positions by 2010 (beyond the 900 existing ones). Instead of meeting a wage requirement for each job, Target pledges that the average wage of all new positions--including high-paying corporate positions--will be $50,000.
The city apparently did not put up much resistance to the demand for the waivers. According to the Star Tribune, the waiver issue generated little discussion as the city council prepared to vote on the agreement. But the paper noted the objections of United Food and Commercial Workers Local 789, whose special projects director Bernie Hess said: "Because Target's homegrown, they get a free pass."
Bidding war heats up for next-generation power plant
Seven states are engaged in an intense bidding war to land a billion-dollar utility project that is being called the power plant of tomorrow. Tax abatements, low-interest loans, free land and job training funds are among the types of subsidies being offered to an initiative called FutureGen, an alliance of coal-mining and electric utility companies that will build a prototype generating plant for electricity and hydrogen using what is touted as zero-emission technology. The companies plan to invest more than $250 million, and another $700 million is coming from the federal government.
One of the more aggressive states in the running is Illinois, which has four proposed sites and has offered a package worth about $82 million, including a $17 million grant, $15 million in tax exemptions and $50 million in low-cost loans. Kentucky recently topped that with an offer of sales tax exemptions on construction materials that could be worth up to $90 million. Yet both those packages are dwarfed by Ohio's inducements, which are said to be worth $140-$160 million. They include grants, infrastructure aid and low-cost financing. Texas is taking another approach: in addition to about $20 million in subsidies, it has agreed to take responsibility for any damage awards that might result from litigation against the plant.
Five finalists among the dozen contending sites will be chosen next month, and a grand winner will be selected next year.
West Virginia tax credit data distributed by building-trades group
Thanks to the ACT Foundation, a division of the West Virginia State Building and Construction Trades Council, the public now has ready access to data on business tax credits awarded by the state. The West Virginia Tax Department had quietly released the information, covering awards in 2001, back in April but did not disseminate it widely, or even put it on its website. The Act Foundation has posted a 163-page printout of the data, reflecting more than $92 million in credits from 11 different programs, on its website.
Steve White, director of ACT (and a member of the Good Jobs First board), complained that the state took so long to release what are now five-year-old data. He also noted that the credit amounts for each company are listed only in ranges. For example, the top recipients of the Business Investment and Jobs Expansion Tax Credit, including Arch Coal and Toyota Motor Sales, got anywhere between $500,000 and $1 million. Two credits received by Mylan Pharmaceuticals were described only as being worth "more than $1,000,000."
Despite the lack of detail, White said it was clear from the data that the lion's share of the credits went to companies engaged in natural resource extraction. "Do we really need to give tax breaks to coal companies?" he asked.
Dueling reports on California's enterprise zone program
Earlier this year, the California Budget Project released a scathing critique of the state's enterprise zone program, one of the main tools used by economic development officials in a state that does not lean toward large subsidy packages. The report found that "the cost of the program has skyrocketed, yet the effectiveness of the tax breaks is tenuous at best, and companies claim tax breaks without demonstrating that they create new jobs." It went on to call for reducing the size of the program, tightening its requirements and limiting it to the most economically distressed communities.
Recently, the business community fired back. The Coalition to Preserve Enterprise Zones--among whose members are the California Bankers Association and the California Chamber of Commerce--released a report that explicitly challenges the conclusions reached by the California Budget Project study. Written by Ted Bradshaw of UC-Davis, it depicts EZs as the savior of the state's economy. The debate has already spread to the legislature, which is considering reforms in the program.
New Mexico pays to go Hollywood
The New Mexico city of Rio Rancho, site of two heavily subsidized Intel semiconductor fabrication plants, is branching out into film production--and is also using public funds to do so. Recently, the Rio Rancho city council approved more than $2 million in subsidies for Lions Gate Entertainment, which plans to build a $15 million studio in the city. Lions Gate is already filming the television series "Wildfire" in Rio Rancho.
The project will also be aided by a $7 million loan from the State Investment Council. This is not the first time Lions Gate and other studios have received help from the Council. Since 2002 the state has lent more than $140 million to film and TV production companies--interest free. So far, very little of that money is being repaid. In an investigation of the program published in May, the Albuquerque Journal found that only two of the 14 loans had been repaid and that none of the movie projects had reported making a profit, from which the state is supposed to receive a share.
Controversy brews over subsidies for Pennsylvania pub
The Morning Call, Allentown, Pennsylvania's daily newspaper, has become a forum for debate over the legitimacy of subsidizing private enterprise. A series of conflicting op-eds have focused on a plan to use some $7.7 million in local, state and federal funds to underwrite the cost of converting a former furniture store into the Allentown Brew Works. The chair of the local Republican Committee invoked Thomas Jefferson in opposing the plan, while an economics professor referred to the "multiplier effect" and "public-private equity" in supporting it. Perhaps the two sides should try to drink one another under the table.
Linear Mode
