Massive Corporate Subsidies Take No Summer Breaks

29/07/2021

July 29, 2021

What never takes a vacation? Big companies getting massive economic development subsidies! Plus: Meet a hard-charging community member looking to shake up things in Cincinnati. And what Franklin County, Ohio can teach us about government tax transparency.

It’s Arlene with Good Jobs First, with the latest on what our small, mighty crew is up to.

But before we dig in, we’ve had a huge influx of people join our email list. Welcome aboard! Reach out anytime.

Disney, Apple, Amazon, Google, really?

When Disney excitedly announced it was moving 2,000 jobs from California to Florida, it left out a minor detail the Orlando Sentinel later reported: it’s getting a taxpayer giveaway of up to $570 million.

The Magic Kingdom isn’t alone among mega-corporations that have recently gotten huge subsidies from the public. See:

  • Apple’s $845 million subsidy in North Carolina.
  • Amazon’s $150 million deal in upstate New York, which required it to hire mostly local labor but then Amazon said it couldn’t find any so it got a pass on that.
  • Google’s $25 million subsidy for a data center in Nevada. Data centers create very few jobs, as we detailed in this report.

Here’s what these deals have in common:

  • They’re going to massively profitable companies (Google and Apple alone just reported Q2 combined profits of $40.2 billion).
  • They’re choosing places driven by facility-specific business basics: cheap land and electricity, or access to talent and transportation, or proximity to customers or existing operations.
  • They cause tax burden shifts to existing residents and small businesses, who must now pay more for schools, roads, safety and other public services.

Our executive director Greg LeRoy wrote about how federal funding strings can help end this free flow of public spending.

GJF to Treasury: Don’t use stimulus money for subsidies

On a related note, you know what federal pandemic money now flowing to the states shouldn’t be used for? Economic development “incentives.” We made recommendations to the U.S. Treasury about how American Rescue Plan Act money could best be spent to get relief to those who need it the most. 

Cincinnati’s TIF crusader

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My colleagues were digging into the state of economic development subsides in Ohio – as we here at Good Jobs First do – when they came across Cincinnati resident Michelle Dillingham. Through her years in community nonprofits, and later as a legislative aide for a city councilman, Dillingham was struck by the state of the city’s under-resourced schools (the state Supreme Court ruled over 20 years ago its funding formula was unconstitutional, a situation yet to be remedied).

She began to see just how big a role tax abatements play in Cincinnati, where schools are heavily dependent on local property taxes. I talked to Dillingham about the impact of tax abatements in Cincinnati for our “5 questions with” feature. Check it out.

Ohio’s biggest county unveils new hub to track subsidy spending

Good Jobs First research analyst Kasia Tarczynska spends a lot of time mining government websites to expand our Subsidy Tracker database.

Local governments’ are usually inferior to state websites, so she often must go deep to get details of a deal. No longer in Franklin County, Ohio, thanks to its recently released Tax Incentives Hub. It includes comprehensive information on subsidies, breaking down costs by localities and governmental agencies. Recipient names are also listed for major programs. (The County of 1.3 million residents includes the state capital Columbus.)

Kasia writes: “The figures are staggering. For example, in 2020 the Franklin County Board of Developmental Disabilities lost $27.2 million. Franklin County Children Services lost $19.3 million. Even the Columbus Zoo lost revenue: $2.8 million. But no public services lost as much as public schools: $97.3 million in 2020.”

 

cc: county auditors everywhere

Other news you may have missed:

  • Good Jobs First project coordinator Christine Wen and I wrote in the Houston Chronicle about how a massive corporate subsidy program in Texas especially harms African American and Latino students (note: paywalled).
  • Wen and Good Jobs First research intern Connor Rigney wrote in the Syracuse Post-Standard about why New York’s school boards should have a say when their money is given away to corporate tax abatements.
  • West Virginia set aside $30 million for a new “deal-closing fund” that has no spending rules or guardrails. Tarczynska told the Mountain State Spotlight why that’s bad public policy.
  • On Tuesday night, the Fort Wayne City Council voted not to give Amazon a $7.3 million property tax abatement for a warehouse it’s building. That’s great news. Buuut, the project, then-code-named “Project Mastodon,” had already been approved for a $16 million subsidy, in March. In fact, construction is well underway (not that that stopped Amazon from threatening to pull out anyway). It’s great Fort Wayne didn’t give Amazon more. But here’s the thing: Amazon should be paying communities to arrive, not the other way around.
  • Our Violation Tracker database recently added a new category: penalties imposed on securities firms by the Financial Industry Regulatory Authority (FINRA). So far, we have assembled 726 cases with total penalties of more than $1.3 billion.

That’s it for now. Until next time!

Arlene