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


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.