Corporate Welfare

When You Lie Down With Fill-in-the-Blanks, You Wake Up With Fill-in-the-Blanks

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Via Hit & Run commenter brotherben comes this Associated Press story about local government officials and big-box corporate types waking up the morning after with regret:

Cash-strapped communities have a message for corporations that promised jobs in return for tax breaks: A deal's a deal.

As the recession drags on, municipalities struggling to fix roads, fund schools and pay bills increasingly are rescinding tax abatements to companies that don't hire enough workers, lay them off or close up shop. At the same time, they're sharpening new incentive deals, leaving no doubt what is expected of companies and what will happen if they don't deliver.

Sex is violins

"We will roll out the red carpet as much as we can (but) they are going to honor the contract," said Brendon Gallagher, an alderman in DeKalb, Ill., where Target Corp. got abatements from the city, county, school district and other taxing bodies after promising at least 500 jobs at a local distribution center.

So when the company came up 66 workers short in 2009, Target got word its next tax bill would be jumping almost $600,000—more than half of which go to the local school district, where teachers and programs have been cut as coffers dried up. […]

What's more, the recession has communities thinking about how the tax breaks they dole out will play with residents who have grown increasingly angry at the thought of anything that hints of corporate welfare.

"The public is a lot more aware of tax abatements and there's a climate of skepticism about what can be perceived as corporate handouts," said Geoff McKimm, a member of the Monroe County Council in Indiana.

Love that "what can be perceived as" stuff.

In some ways this is the most heartening news I've read all day. City councils spend their lives making "deals" with developers (particularly though not only massive retailers) to "create jobs" by waiving any and all sorts of fees and regulations, or sometimes providing some or all of the financing themselves, or sometimes (if the corporation is more Evil) doing the inverse by adding a bunch of bizarre requirements to build workfare housing, add a green roof, or promise to fund X groovy nonprofit. Rarely if ever during this incredibly time-wasting, winner-picking process do local politicos sit back and imagine a universe in which the rules are minimal, simple, and universal, and City Council instead spends its time focused on providing services to its constituents. Breaking that cycle might be a longshot, but this is shaping up to be a weird political year.

Read Reason's Corporate Welfare page here, including my 2008 column about D.C.'s famous rats, and this great 2006 feature on tax increment financing from Daniel McGraw.

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  1. Love that “what can be perceived as” stuff.

    Not me. It should be “There are those who perceive that …”

  2. City councils spend their lives making “deals” with developers

    All democratically elected politicians spend their lives making these kinds of rotten deals. It’s the nature of the beast.

  3. The municipality I formerly worked for is kicking itself for not even trying to get a wally world and a Lowes to move into an abandon strip mall and open lot. Even with the abatements and ass kissing deals they would be making more than they are now. On a half full strip mall of mom and pop shops that fail on a monthly basis and an empty lot.

  4. OT, but I have a question for Welch:

    Yo Matt, you going to let this dude call you a warblogger without smacking him down?

    1. Welch knows better than to mess with a blog that has ultra-witty commenters like Riggsveda:

      Oh, Happy New Year, all. Rush Limbaugh is still fat.

      1. But that blog also contains proof that despite great differences in political orientation, wit, intellect and commitment to coherence, there is one thing that all comment sections have in common: hatred of new commenting systems.

        1. Remember. It’s the silent majority that love the new system and thus the reason it is not changed back to the original.

    2. I responded to the Village Voice article over at mattwelch.com/warblog.html.

    3. So many blogs so little time to go through them.

  5. Of course it’s useful to remember that liberal have decidedly peculiar (i.e absurd) notions of what the definition of “corporate welfare”.

    For example, I’ve heard it claimed more than once, by leftists on NPR and elsewhere that Wal-Mart is getting “welfare” or being “subsidized” due to some of it’s employees being on some form of public assistance/welfare.

    Of course it was polticians who created the welfare programs in the first place and it is the individual on welfare who is being subsidized by the taxpayers.

    Wal-Mart has nothing to do with it.

    1. Well, that’s leftist logic for you, Gilbert.

  6. When You Lie Down With Warty, You Wake Up With numerous fluids that you can’t identify.

  7. Its a bait and switch:
    “Sure, we’ll give you a tax discount if you build your fucking warehouse here.”
    Next year: “Not!”

    Serves the companies right for getting cozy with government while ignoring that they often rescind on promises without consequences.

  8. Happy Anniversary, Nancy!

    On January 4th, 2007 Nancy Pelosi was elected the first female Speaker of the House in US History.

    1. Wow! Only one year left!

      1. Are you serious?

        1. Hey, have you gotten around to fulfilling your “first 100 days” promises yet?

        2. Hey, have you gotten around to fulfilling your “first 100 days” promises yet?

    2. Suck a fat one.

  9. What is this, Match Game?

    The TSA pulls a wet (blank) out of your (blank).

  10. Target should forward that $600K bill to Obama, as it is his administration that has caused job losses over the past year.

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