Good Jobs First

Center for Media and Democracy: Railroad Owned by RFK Jr.’s Megadonor Repeatedly Violated Environmental and Safety Laws

Source: Khwanchai Phanthong

The Center for Media and Democracy used Violation Tracker to help tell a story of a wealthy railroad owner lavishly supporting two presidential campaigns. Timothy Mellon is the third biggest donor so far this election cycle, CMD reports.

“Robert F. Kennedy Jr. may claim he will be “the best environmental president in American history,” but the Republican industrialist bankrolling the super PAC behind his longshot bid for the White House has a long history of violating environmental laws.

A Center for Media and Democracy (CMD) study of the railroad business that 81-year-old megadonor Timothy Mellon owned for 45 years shows numerous violations of federal and state environmental and safety laws, including a criminal conviction of the company for covering up a 2006 oil spill.”

Read the full story at the Center for Media and Democracy.

Investigative Post: IDAs have ‘perverse incentive’ to issue tax breaks

The Investigative Post wrote a detailed story based in part on a recent Good Jobs First, Perverse Incentive: How New York State’s IDAs Depend on Giving Away Tax Dollars.” The Post wrote about the relationship between funding and Industrial Development Agencies, the unelected boards with power to give away billions in taxpayer dollars to private developments.

From the story:

The so-called “perverse incentive” works like this: A company fills out an application, and then pays the IDA a percentage of its project’s total cost — typically 1 or 2 percent, as set by the individual agencies. The $550 million Amazon warehouse in the Town of Niagara, for example, netted the Niagara County IDA a $5.5 million fee. That alone could keep the IDA open for three years.

In addition to fees, IDAs earn money through grants, charging rent on buildings or industrial parks they own, and land sales.

“It turns out we set up a system where IDAs get paid for good deals and they get paid for bad deals, but they have to do some deals in order to keep open,” said state Sen. Sean Ryan, a frequent IDA critic. “And that’s a real bad incentive system.”

Read the full story at the Investigative Post.

The North Sea as seen from an aerial image. — Source: Getty Images Signature

Last year, Prime Minister Rishi Sunak announced that the UK government will be granting hundreds of new oil and gas licences in the North Sea. This decision was framed as a means to protect jobs, reduce emissions, and enhance UK energy independence and security. However, the move to expand oil and gas extraction contradicts the UK government’s commitment to achieving net zero emissions by 2050. The North Sea Transition Authority (‘NSTA’) (formerly the Oil and Gas Authority) is the agency responsible for granting new oil and gas licences. Alongside this, the NSTA also regulates and influences the oil and gas, offshore hydrogen, and carbon storage industries. It is involved in driving the North Sea energy transition, which sits in direct contradiction to their ability to grant new licences.

This blog delves into the core objectives of the NSTA, examines enforcement data, and explores the potential for reform.

The North Sea Transition Authority: Core Objectives

NSTA’s core objective is to achieve the maximum economic recovery (‘MER’) of UK petroleum, as set out in section 9a of the Petroleum Act 1998. This objective is to be met through the ‘development, construction, deployment and use of equipment used in the petroleum industry’, thereby encouraging the NSTA to support oil and gas extraction. However, this objective stands in direct conflict with the urgent need to mitigate climate change. The continued extraction and burning of fossil fuels, including oil from the North Sea, are significant contributors to greenhouse gas emissions, driving climate change and exacerbating its impacts. By prioritising MER, the NSTA risks perpetuating reliance on fossil fuels and delaying the UK’s transition to renewable energy alternatives. Similarly, within their strategy, the NSTA does not state any provisions or mandate to promote renewable energy.

In 2021, in line with section 9a(1) of the Petroleum Act, a revised energy strategy was produced by the Oil and Gas Authority supporting the net zero strategy, stating that oil and gas companies should ‘maintain good environmental, social and governance practices in their plans and daily operations’. However, even in the face of this revised strategy, the MER of UK petroleum remained a central objective. A year later, the Oil and Gas Authority’s name was changed to the NSTA, with ‘transition’ being carefully added. This change was explained as reflecting the expanding role of the NSTA in the future of energy in the UK. However, Caroline Lucas has criticised this change, stating “an oil and gas body removing the words ‘oil and gas’ from its own name is the very epitome of greenwashing”.

Therefore, after this revised strategy, the NSTA has a responsibility to align the industry with transition, emissions reduction, and decarbonisation, while having the authority to grant new licences for oil and gas exploration. This alignment poses a contradiction for the NSTA, meaning that it faces a critical dilemma between helping with the energy transition while also helping fossil fuel expansion. As was stated earlier, licensing for oil and gas has been ramped up in the last year and shows no signs of slowing down. However, in comparison, the enforcement record of the NSTA is much lower, with only seven cases since 2021 resulting in fines totalling £525,000. Of these seven cases, Shell and BP have both been fined £50,000 each for an oil drilling violation. Therefore, looking at these numbers, it can be seen where the priorities lie for the NSTA, and it is not with regulating the fossil fuel industry.

Reforming the Petroleum Act

While MER stands as the core objective of the NSTA, enforcement action against fossil fuel corporations will be low and granting new oil and gas licences will be the priority. Therefore, the Petroleum Act 1998 that sits at the heart of the NSTA needs reforming. This reform would provide an opportunity to completely rethink what we want the North Sea to be used for: exploitation of oil and gas reserves or the mobilisation of renewable energy technology. It has been suggested that there could be a reversal of ‘maximising’ to ‘minimising’ of economic recovery, or replacing ‘economic’ with environmental recovery. However, even this would still allow too much subjective interpretation.

Removing MER rather than reforming or changing its meaning may need to be considered. This would potentially open the door to the NSTA being able to place greater emphasis on environmental protections, enabling stricter regulations of fossil fuel corporations. Whatever form this may take, a radical reform of the Petroleum Act and therefore the core objectives of the NSTA is needed if the UK is going to fully align with their 2050 net zero target.

Mirror Indy | Indy Star: Brad Chambers’ company received ‘bailout’ from Indy after missing loan repayment deadline

Indiana gubernatorial candidate Brad Chambers, the founder and CEO of Buckingham Companies, has twice missed paying back loans for a project he built that included luxury housing. According to Mirror Indy and the Indy Star, Chambers’ company owes Indianapolis residents $69 million.

From the article:

This was an exceptionally generous incentive deal,” Greg LeRoy, executive director of Washington, D.C.-based economic development accountability group Good Jobs First, told IndyStar and Mirror Indy this week. “This is not gap financing. … That should give the government a great deal of authority in enforcing the terms.”

Read the full story at Mirror Indy.

Commonwealth Journal: For-profit nursing homes are cutting corners on safety and draining resources

image shows the hands of an elderly woman putting her hand on her knee — pixabay

An investigation by The Conversation into nursing homes found disturbing trends among owners of nursing homes. The industry is increasingly led by owners that appear to be focused on profits over patient safety, and ownership can be difficult to trace. The Conversation cited Good Jobs First’s recent report on the topic:

“The investigation revealed an industry that places a premium on cost cutting and big profits, with low staffing and poor quality, often to the detriment of patient well-being. Operating under weak and poorly enforced regulations with financially insignificant penalties, the for-profit sector fosters an environment where corners are frequently cut, compromising the quality of care and endangering patient health. Meanwhile, owners make the facilities look less profitable by siphoning money from the homes through byzantine networks of interconnected corporations. Federal regulators have neglected the problem as each year likely billions of dollars are funneled out of nursing homes through related parties and into owners’ pockets.

“With few impediments, private investors who own the midsize chains have quietly swooped in to purchase underperforming homes, expanding their holdings even further as larger chains divest and close facilities. As a result of the industry’s churn of facility ownership, over one fifth of the country’s nursing facilities changed ownership between 2016 and 2021, four times more changes than hospitals.

A 2023 report by Good Jobs First, a nonprofit watchdog, noted that a dozen of these chains in the midsize range have doubled or tripled in size while racking up fines averaging over $100,000 per facility since 2018. But unlike the large, multistate chains with easily recognizable names, the midsize networks slip through without the same level of public scrutiny, The Conversation’s investigations unit found.”

Read the full story in the Commonwealth Journal.

Read our report, “Care At Risk: Upheaval in the Nursing Home Industry.”

Executive Summary

Industrial Development Agencies (IDAs), New York State’s unelected local economic development agencies, have a perverse incentive to give away tax revenue that would otherwise go to schools, parks, and emergency services. IDAs get the bulk of their funding from the deal fees they receive from giving away local school, city, and county revenues in the form of corporate tax abatements. Simply put, IDA staff and consultants get paid for giving away tax dollars.

More abatement deals — and bigger deals — mean more revenues for IDAs. Given that most IDA revenues in turn go to pay IDA staff salaries and benefits plus their consultants, IDA employees have personal self-interests in generating more deal-driven fees.

We analyzed state and IDA data and found:

New York’s 107 currently active local IDAs got at least 80% of their overall operating revenues from transaction fees from 2018 to 2021.

In 2021, one-third of IDAs got 100% of their operating revenue from transaction fees. More than two-thirds received over 80% of their operating budget from deal fees.
IDAs that abate more taxes get more fees.

In 2021 alone, tax abatements cost NYS school districts a staggering $1.8 billion¹. This figure includes tax abatements given by IDAs along with other local abatement programs.

The bottom line is that IDA staff have a strong institutional and personal incentive to give away more tax dollars as corporate tax abatements instead of having these tax dollars spent on investments in schools, safety and health that are essential for strong local economies.

This perverse incentive motivates IDAs to constantly make new deals and expand their activity. Right now in the upside down world of New York, IDAs are seeking to expand beyond providing tax breaks for industrial projects to abating the taxes on housing development. This is a terrible idea that will reduce the local tax base and funding available for schools while attracting more students.

We conclude with the following policy recommendations:

Eliminate the perverse incentive by funding IDAs within local governments budgets.
Forbid IDAs from abating the roughly 60% share of property taxes that would otherwise go to schools.
Confirm the state constitutional prohibition on IDAs subsidizing housing.

On balance, we believe New York should take a hard look at IDAs and question why so much power is being delegated to unelected officials whose activities take place outside of the constitutional budget process and whose salaries depend upon giving away tax revenue.

Key Findings

IDAs budgets are driven by the size and number of the deals that they award, because a large portion of their budgets are based upon the transaction fees they collect from each project. The New York State Authorities Budget Office (ABO), the office tasked with making public authorities more accountable and transparent, labels these deal fees as “charges for services.” They are “generated from the services provided by the authority,” and can include bond-issuance fees, ongoing project-administrative fees, usage charges, toll collections, etc.²

Essentially, these fees are money that businesses pay to the IDA in exchange for enabling the tax breaks. They are not the same as Payments in Lieu of Taxes, or PILOTs, which are offsetting or “make up” payments which go to the local government, not to the IDA.

As Table 1 details, in total over the past five years, 80% of all the IDAs’ operating revenues came from these deal fees. The largest dollar amount of fees came in 2021, when more than $81 million was collected. The highest share was in 2022, when almost 85% of overall IDA revenues came from fees.

Table 1: IDA Share of IDA Revenues from Deal Fees, 2018 – 2022

Year	Deal Fees	Total Operating Revenue	Total Non-Operating Revenue	% of Operating Revenue from Fees	% of Total Revenue from Fees
2018	$53,548,449	$69,602,841	$29,208,540	76.9%	54.2%
2019	$45,409,182	$56,963,720	$19,824,470	79.7%	59.1%
2020	$41,127,521	$56,005,869	$16,553,689	73.4%	56.7%
2021	$81,612,629	$99,243,706	$33,120,282	82.2%	61.6%
2022	$67,538,030	$79,669,654	$39,846,421	84.8%	56.5%
Total	$289,235,811	$361,485,791	$138,553,402	80.0%	57.8%

Deal fees make up more than half of IDA’s total revenue. This total revenue includes non-operating revenue, such as subsidies/grants, which are irregular sources of income. These are often short-term or one-time payments, such as federal American Rescue Plan Act (ARPA) money, that is sporadic and does not come from core operations. The ABO makes this distinction in its guidance to IDAs for their financial reporting (see Appendix D: Data Dictionary and Appendix B for 2021 example). Operating revenue is generally considered a better indicator of an entity’s financial health.

Read the rest of the key findings and report here.

Contacts:

Ron Deutsch, Senior Policy Fellow, Reinvent Albany, [email protected] or 518-469-6769
Greg LeRoy, Executive Director, Good Jobs First, [email protected] or 202-494-0888

Albany, N.Y. – Deal fees generate 80% of the operating budgets of New York’s 107 Industrial Development Agencies (IDAs), and for a third of IDAs, transaction fees account for 100% of their operating income. But for such fees, most IDAs would expire or barely exist.

IDAs in turn spend most of that revenue on their staff salaries and benefits, and on consultants.

The more tax revenue an IDA abates, the more dependent it is likely to be on deal fees for its operating income.

Those are key findings in “Perverse Incentive: How New York State’s IDAs Depend on Giving Away Tax Dollars,” a report published today by Reinvent Albany and national watchdog Good Jobs First. It concludes that IDAs have a perverse incentive to give away tax revenue that would otherwise support schools, parks, and emergency services.

The findings come from a close analysis of IDA-reported data to the state Authorities Budget Office.

The costs are enormous: In 2021 alone, tax abatements – mostly awarded by IDAs – cost NYS school districts a staggering $1.8 billion.

The report finds that because IDA staff and consultants have a direct interest in making new tax break deals, IDAs are motivated to do more and bigger deals and expand beyond their legal mission of promoting “industry.” Some New York IDAs are ignoring the state Constitution and abating taxes on housing development.

The report includes policy recommendations:

Eliminate the perverse incentive to give away tax revenue by funding IDAs within local government budgets.
Forbid IDAs from abating property taxes that would otherwise go to schools.
Confirm the state constitutional prohibition on IDAs subsidizing housing.

“Watchdog groups have been sounding the alarm for years on IDA problems. New York should take a hard look at IDAs and question why so much power is being delegated to unelected officials whose activities take place outside of the constitutional budget process and whose staff salaries depend upon giving away tax revenue,” said Ron Deutsch, Senior Policy Fellow at Reinvent Albany.

“The power to abate taxes should always reside with people who can be held accountable at election time,” said Greg LeRoy, Executive Director of Good Jobs First. “And people negotiating tax abatements should never have an institutional or personal self-interest in undermining the tax base for basic public services that benefit all employers.”

“Not all of New York’s IDAs are unscrupulous, but the way they are funded opens the door to bad actors interested only in enriching themselves at the expense of our communities. This perverse incentive has been evident for years, but this new research lays bare how dangerous and pervasive it could be. This is why I have spent years pushing for – and continue to push for – policy changes to ensure critical funding is never withheld from schools or other public programs to fund projects that will provide no tangible benefit to their communities,” said New York State Sen. Sean Ryan.

Baltimore Banner: Taxpayers sank almost $100 million into a COVID glove factory that never opened

The promises echoed into a massive warehouse once used by Bethlehem Steel: $350 million in public and private investment, 2,000 new jobs and the return of manufacturing to Sparrows Point within a year.

A piece of blue surgical gloves. Source: Getty Images

It was March 2022, the tail end of the Omicron wave of COVID-19 in the U.S., and a company called United Safety Technology hosted local politicians and federal officials at a groundbreaking of its state-of-the-art nitrile glove factory — jumpstarted by a $96.1 million investment from the federal government.

Two years later, not a single glove has rolled off the line.

The factory sits unfinished, the feds are distancing themselves, and the CEO of the New York-based company says he needs more money…

There might be a better way to do this, said Greg LeRoy, executive director of Good Jobs First, a watchdog organization that researches government subsidies. Rather than focusing on the supply of gloves, LeRoy said, the government could create demand.

That would mean strictly enforcing that federal agencies buy American-made gloves, he said, ensuring a small but steady demand for a domestic industry. To LeRoy, that makes more sense than trying to subsidize a globally competitive manufacturing industry.

“You can’t defy gravity,” LeRoy said. “If you have really cheap imports coming in, I can understand why this strategy didn’t work.”

Read the full story at the Baltimore Banner.

BridgeDetroit: ‘Net loser’: Gilbert’s Hudson building unlikely to meet promised job, tax revenue when GM workers move in

An image of a manhole cover in Detroit. Source: Getty Images Signature

General Motors Co’s anticipated crosstown move from the Renaissance Center to the nearly complete Hudson’s Detroit building puts a high profile anchor tenant in the skyscraper, owned by Dan Gilbert’s Bedrock. But it also puts Bedrock on pace to miss the job and tax revenue creation promises it made in exchange for a controversial $60 million tax incentive in 2022, a new BridgeDetroit analysis finds.

The potential shortfall casts doubt on the basis for taxpayer support for what will be Detroit’s second tallest skyscraper.

Supporters of the tax break insisted at the time that the Hudson’s site would create 2,000 new jobs and net $71 million in new city tax revenue from the additional workers.

But Detroit will not see a net gain in new jobs or local tax revenue for the estimated 850 GM RenCen employees – it simply moves existing jobs from one building to another, which will not generate new tax revenue for the city…

Hudson’s Detroit is on pace to be a “net loser,” said Greg LeRoy, an economist with subsidy tracker Good Jobs First. He reviewed the tax incentive proposal in 2022, and, at the time, labeled Bedrock’s job creation claims “laughable” because office buildings create very few new jobs. Instead, they largely house jobs that already exist.

City officials “rejected” LeRoy’s comments at the time, and insisted jobs would move from outside the city to the Hudson.

“We never like to say ‘I told you so,’ but office space doesn’t create jobs, especially when it’s office space in a market with high vacancy rates, and tenants that move from three blocks away,” he said. “That’s not economic development.”

Read the full story at BridgeDetroit.

Entire books and reports have been written about the ways companies scour the globe for economic development subsidies. But the lack of universal reporting standards, language barriers, and complicated governmental and tax structures make it difficult to examine just how much individual corporations benefit from government assistance across the world. A new Financial Accounting Standards Board (FASB) rule, Topic 832, offers a tiny window to this global practice.

FASB is an independent, private organization that creates rules on how companies should account for and report their finances (it’s the public sector equivalent to the Governmental Standards Accounting Board, or GASB). As we discussed in previous blogs, the new FASB standard requires publicly traded companies to disclose in their financial statements information about some subsidies, such as grants, granted by governments, including foreign ones (though some of the biggest taxpayer benefits companies receive, like property tax breaks, were omitted from the rule).

I looked at the new reporting by several global companies and here is what I have learned about corporate use of subsidies internationally.

Because the rule has limited reporting requirements, company subsidy disclosure can be incomplete, inconsistent, and is often missing. For example, we know Amazon has received subsidies globally, including for its second headquarters in Virginia. Yet, its financial statement is missing the reporting (the company reports, under a separate note on income tax, how much tax credits reduced its income tax liability, but that does not reflect public support through grants or rebates for example).

Some companies that report international subsidies omit the actual amounts or obscure the data by lumping all subsidies from multiple countries into a single paragraph with no breakdown by country. Take Micron Technology, which in its most recent 10-K reported this: “We receive incentives from governmental entities primarily in India, Japan, Singapore, Taiwan, and the United States principally in the form of cash grants and tax credits.”

But, in some cases, we can see some specifics.

As in the U.S., companies benefit from various subsidies offered by national and local governments. Companies get tax credits and refunds, cash grants, free or discounted land, facility build-outs and improvements. Some subsidies come with investment and job creation requirements and clawback provisions.

Global companies have received massive public support from developed countries. For example, in 2022 and 2023, Ireland, a historical tax haven, provided Intel with $1 billion in grants and refundable tax credits for a manufacturing facility. And Ford is set to get $434 million* (C$590 million) by 2033 for its EV manufacturing facility in Ontario, Canada.

Companies also get subsidies from developing countries, promising leaders of the world’s poorer economics development and a bigger tax base — only a full accounting of that assistance can let residents know if their promises materialize. Tesla received $76 million in grants for its Gigafactory in Shanghai. Ford has benefited from undisclosed subsidies provided by the Brazilian government, and in its financial documents admits that its operations have benefited to a “substantial extent” from those perks.

It is interesting to see that a few countries, contrary to the U.S., allow their regions to challenge other region’s subsidies. Ford has caused a conflict between two local governments in Brazil, where the State of São Paulo challenged tax breaks granted to the company by the State of Bahia.

It’s important now more than ever to increase the global transparency around corporate subsidies – and the U.S. is in a prime position to take the lead. For one, many of the companies are U.S.-based and learned subsidy extraction at home. Secondly, the implementation of federal policies such as the CHIPS and Science Act and Inflation Reduction Act sent a global shockwave across the world in the realm of subsidies. The European Union is known for restricting subsidy use, for example, but it loosened its subsidy regiments in response to U.S federal subsidies.

The FASB disclosure could be much stronger, requiring companies to provide a full accounting and disclosure of domestic and foreign subsidies, broken by county, province, and amounts. But if companies take the requirement seriously and disclose the required information in a comprehensive and accessible way, the public (and company investors) can better understand the costs of projects here and abroad – and hold companies accountable for the money they take.

*Converted by GJF as of April 8, 2024

As we noted last week, the Financial Accounting Standards Board (FASB) has made an important contribution to the cause of corporate transparency and accountability with its new Accounting Standards Update No. 2021-10 (Topic 832). The update now requires publicly traded companies to report when they receive government assistance and how that assistance is reflected in their annual financial statements filed with the Securities and Exchange Commission.

While FASB stresses the update’s relevance to investors and market analysts, the general public has a clear interest in this information as well. “Government assistance” means our tax dollars, after all.

Unfortunately, reporting so far has been highly inconsistent.

Our preliminary survey looked at the annual SEC filings of 28 large companies across seven different industry sectors. Of those, 12 contained some form of disclosure sufficient to comply with the new rule’s minimum requirements. Another four disclosed government assistance but failed to provide specific amounts debited or credited against line items on their financial statements.

Topic 832 does call for companies to provide specific assistance amounts but does not require them to disaggregate those amounts by government entity or geography. As a result, these 16 companies provide widely varying levels of detail on the source of assistance and its intended use.

The remaining 12 companies did not disclose any government assistance in the last two years, including Alphabet (Google), Meta (Facebook), Microsoft, and Apple.

Intel, by contrast, boasted one of the most comprehensive notes we reviewed, distinguishing between capital- and operating-related assistance and disaggregating their $2.2 billion in recognized capital incentives by source.

Source: Intel Corporation, 2023 10-K Filing

Inconsistency in reporting, particularly across industries, may be in part a consequence of FASB’s decision to narrow Topic 832 to focus almost exclusively on cash grants, forgivable loans, and asset transfers.

The update does not cover non-discretionary subsidy programs made available to any company that meets predefined conditions, like a sales tax exemption on special equipment. Types of assistance that are not recognized directly in a company’s financial statements, a loan guarantee say, are likewise excluded on the grounds that estimating their value would be burdensome and impractical.

We know that for big tech companies, sales and property tax breaks on their massive and fast-proliferating data centers are some of the most lucrative subsidies these companies receive. Semiconductor manufacturers, meanwhile, are reaping tens of billions of dollars in grants and refundable investment tax credits through the federal CHIPS Act and related state programs.

FASB’s Topic 740 already covers income tax credits, though some surveyed companies, like Intel, have opted to treat refundable tax credits as government assistance.

Despite its shortcomings, Topic 832 is nevertheless a powerful peak under the hood of subsidized companies. Even given its narrow definition, we now know government assistance saved Intel $428 million on its operating costs last year, roughly a quarter of its $1.7 billion reported annual profit. This represented the second largest boost to a surveyed company’s bottom line after the Walt Disney Company, which recognized $800 million in amortized production tax credits in FY 2023.

Also notable is Intel’s inclusion of grants and refundable tax credits the company received for investments undertaken in Ireland. We’ll have more to say soon on Topic 832’s potential to broaden our perspective on corporate subsidies beyond the borders of the United States.

Source: Good Jobs First

Corporations in the United States have now paid more than $1 trillion since 2000 in regulatory fines, criminal penalties, and class-action settlements. This staggering total comes from a just-released report by Good Jobs First.

What stands out is the exponential growth of the fines, as detailed in Violation Tracker, a wide-ranging database containing information on more than 600,000 cases from 500 federal, state, and local regulatory agencies and prosecutors. In the early 2000s, total annual payouts for corporate misconduct were around $7 billion; in recent years, that’s grown to over $50 billion—a 300% increase in constant dollars.

Despite making up only 20% of the database’s penalty total – roughly $215 billion – the annual total of penalties levied by state and local agencies also exploded: from around $2.5 billion in the early 2000s to $8 billion last year.

States not only play a role in enforcing state-level regulations but are also responsible for the application of some federal laws, such as the Clean Air Act and the Clean Water Act. Nearly two-thirds of the state totals came as the result of cases in which state attorneys general brought a group action, usually against a large company poorly operating across the country.

Financial and consumer protection offenses account for the largest portions of multi-state penalties. The largest such case to date was a 2008 settlement with the Swiss bank UBS, which agreed to pay $11 billion to resolve allegations that it misled investors in the marketing and sale of auction rate securities. That same year, Countrywide Home Loans paid nearly $9 billion to resolve allegations of predatory home mortgage practices.

Multi-state litigation is also common in enforcing healthcare violations. This played a particularly important role in exposing the actions of pharmaceutical manufacturers and distributors in exacerbating the opioid crisis.

Excluding multi-state cases, state regulation focused primarily on financial, consumer protection, and environmental offenses. Financial cases accounted for nearly $23 billion in penalties—soaring above every other category. Consumer protection and environmental violations follow at $15 billion and $13 billion, respectively.

Variations in state legislation, size, population, or funding can cause wide discrepancies in the penalty totals of the states. Those totals range from over $21 billion in California and New York, to less than $9 million in South Dakota.

Map of state penalties from $1 trillion report — Source: Good Jobs First’s Violation Tracker

California and New York together account for more than half of all state penalties apart from the multi-state cases. Sixteen other states have totals between $1 billion and $3.5 billion.

When state penalties are broken down into our nine offense groups, California and New York are at the top in every category except for healthcare-related offenses. The leader in that area is Florida, which has handed out nearly $2 billion in healthcare penalties since 2000, mostly related to nursing home violations involving resident health and safety. Washington State—renowned for its medical care—comes in second with more than $830 million in penalties.

Some of the disparities among state penalty totals is likely due to inadequate disclosure practices rather than an actual lack of enforcement. Numerous states need to improve agency transparency so that the public can see how much enforcement they are actually doing.

While state governments generally do a good job in targeting larger companies in their multi-state actions, some states have limited participation in these cases. More vigorous enforcement is needed at the local level in most states to duplicate the achievements of county and city agencies in California and New York. Taking what appears to be a half-hearted approach to enforcement deprives residents of the protections contained both in state regulations and in the federal laws the states help to enforce.

That companies have paid $1 trillion in fines, fees, and penalties for their actions is bad enough. But the totals would be much higher – for federal, state, and local agencies – if so many of these corporate leaders weren’t simply given a slap on the wrist when caught engaging in harmful or deceitful practices.

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Executive Summary

Key Findings