Amazon

Pennsylvania Governor Waited to Release Amazon HQ2 Bid Until After Winners Were Announced

Sure, the public deserves to know what Amazon was getting offered. But it deserved to know all along, too.

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Mike Segar/REUTERS/Newscom

On one hand, more states and localities should do what Pennsylvania did yesterday in the hours after Amazon announced that it would not be locating it's second headquarters there.

On the other, it's far from a shining example of transparency.

Gov. Tom Wolf on Tuesday released copies of letters the state sent to Amazon promising $4.5 billion in direct subsidies over 25 years if the online retailing giant had picked a Pennsylvania location (Philadelphia and Pittsburgh both made bids) for its new headquarters. The state also promised more than $100 million in infrastructure improvements around the proposed sites.

The grants would have been provided through a new state economic development grant program, the administration told the Associated Press' Marc Levy, and that program would have been open to other businesses as well—but, c'mon, you don't exactly see states scrambling to create new, multi-billion grant programs to subsidize pizza shops and toymakers.

Pennsylvania officials, like those in many of the other states chasing the Amazon HQ2, had refused to disclose how much of Amazon's tax burden they were willing to shift onto other taxpayers. When faced with public records requests for details of its bid, Pittsburgh claimed the documents were a "trade secret." The state Office of Open Records, which adjudicates disputes over right-to-know requests in Pennsylvania, laughed at that idea and told Pittsburgh to give up the goods, but the city and state successfully dragged the appeal process out until Amazon made a decision.

They weren't alone in trying that ridiculous tactic. In Connecticut, officials also claimed their Amazon HQ2 bid was a "trade secret." More ridiculously, the state's Freedom of Information Commission agreed, and allowed the bid to be kept secret.

Indeed, this sort of secrecy surrounding backroom deals to squander billions of taxpayer dollars is not limited to the Amazon HQ2 project. San Jose, California, for example, is currently fighting a lawsuit seeking the release of details about a proposed land sale to Google. City officials says they signed a nondisclosure agreement about the deal, raising some serious questions about whether they are working for the public or not.

Another common excuse is to claim—as Wolf did on Tuesday in explaining why Pennsylvania kept their bid secret for so long—that releasing information to the public would somehow create a disadvantage in a high-stakes competition. That's nonsense too. To believe it, you'd have to think that Pennsylvania saying it was offering $4.5 billion would somehow trigger other states to offer more. Except, well, other states did offer more. New Jersey plied Amazon with $8.5 billion, and Maryland promised $5 billion. If Amazon was merely going to pick the biggest pile of cash (which is not what it did, anyway), then how does keeping the public in the dark benefit Pennsylvania's bid in that scenario? Amazon is going to know all the bids anyway, regardless of how many others do.

Silly justifications for government secrecy are a dime a dozen, but such opacity surrounding billion-dollar economic development schemes is almost never in the public's best interest. Instead, it's usually about protecting the politicians. It's a way to prevent taxpayers from voicing meaningful opposition to such giveaways until the deal is done.

It also amounts to a tacit acknowledgment that the public will be opposed; if taxpayers would be on board with something like this, the details would never be kept secret. Indeed, they would probably be runing ads touting how much money they were spending on Amazon—or at least they would be posting the equivalent of "your tax dollars at work" signs—rather than constructing flimsy legal arguments and political rationalizations for keeping everything secret.

Wolf deserves a modicum of credit for 'fessing up about Pennsylvania's offer—but it would have meant considerably more to have come clean before the decision was made, and before this year's election. Now that he doesn't have to face the voters again (he's term-limited), this post hoc effort at transparency costs him nothing.

Still, other officials should follow the lead. Put all your cards on the table and let's see what Amazon was getting offered. The public deserves to know—and it deserved to know all along.

If states and cities are going to fritter away billions in grants, subsidies, and tax breaks, that competition should take place out in the open, like this:

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  1. Not so much of a trade secret after all, I guess.

  2. This is brilliant because it lets them show how hard they worked to woo Amazon while dismissing any criticism because the subsidies never came to pass.

  3. To believe it, you’d have to think that Pennsylvania saying it was offering $4.5 billion would somehow trigger other states to offer more.

    Why is that unbelievable? If another state was going to bid $4.4 billion, and learned PA’s bid, it could certainly decide to squeeze out another few hundred million. Or, knowing that its bid was going to be a little short, would have thus had notice that it should emphasize other intangibles that much more.

    I’m all for transparency in spending taxpayers’ money (or expected tax revenues), but there’s no denying that it’s at odds with basic competitive bidding strategy.

  4. 1) this ain’t you disclosing how much of your own money you are bidding on that residence you want to buy.
    2) bids have deadlines for submission; no problem with transparency once the bid deadline passes.

  5. that vid never gets old, Go Tigers! Amazon Tigers!

  6. Very bizarre decision for the HQ locations. Long Island? D.C.? Is the Washington D.C. HQ going to consist of 25,000 lobbyists? Amazon already experienced growth and congestion issues in Seattle, the NYC metro has to be worse.

  7. “Is the Washington D.C. HQ going to consist of 25,000 lobbyists?”

    No. For one, despite all of the rhetoric to the contrary, lobbying just really isn’t a very effective way to improve your business… Not much practical/pragmatic really rides on it, and accordingly, despite all the handwringing over “lobbying” by Statists (“corporations are not people!”) and theoretical handwringing by libertarians (“regulatory capture!”), Amazon spend a measly 13M on lobbying in the most recent year according to the Googs. That’s for a company with hundreds of billions of dollars in revenue, it’s a fraction of a fraction of a percent and a tiny amount of money in the tech world (13M would barely be a decent series A venture round for a tiny startup, say; it pays for about 50 Amazon employees, in a company with over 100,000).

    Secondly and I’ve made this claim before: I am 99% certain that if Jeff B could “push the libertarian button” and make the world libertarian and thus get rid of any government handouts etc, he would. While the system exists, sure he and the Amazon Board are going to play the game, but I think he’d change the rules in a second. He’d much rather focus on customer experiences, great products/services/prices, etc., then have to worry about regulations and IP law and all of the other baggage that comes with government.

    Disclosure: I do and have worked at Amazon for 12 years, though I don’t in any way speak in an official capacity. Just one guy’s opinion.

  8. Why is that unbelievable? If another state was going to bid $4.4 billion, and learned PA’s bid, it could certainly decide to squeeze out another few hundred million.
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  9. I love my Prime membership, but I have to really rethink doing business with Amazon any longer. Stossel says some capitalists are the worst enemies of capitalism, but it now looks like all capitalists are enemies of their fellow taxpayers when the opportunity appears. Can anyone give me a good reason for staying with Amazon after this scandal?

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