It’s no secret that local governments give billions of dollars to companies in the form of tax breaks and other benefits, in both good times and bad. But policymakers are loathe to tally up the real costs of this approach to economic development. Today the New York Times launched a series of articles on such subsidies as the top cover story in both the printed paper and today’s website.
A Times investigation has examined and tallied thousands of local incentives granted nationwide and has found that states, counties and cities are giving up more than $80 billion each year to companies. The beneficiaries come from virtually every corner of the corporate world, encompassing oil and coal conglomerates, technology and entertainment companies, banks and big-box retail chains.
The Times analyzed more than 150,000 awards and created a searchable database of incentive spending. The survey was supplemented by interviews with more than 100 officials in government and business organizations as well as corporate executives and consultants.
A portrait arises of mayors and governors who are desperate to create jobs, outmatched by multinational corporations and short on tools to fact-check what companies tell them. Many of the officials said they feared that companies would move jobs overseas if they did not get subsidies in the United States.
Over the years, corporations have increasingly exploited that fear, creating a high-stakes bazaar where they pit local officials against one another to get the most lucrative packages. States compete with other states, cities compete with surrounding suburbs, and even small towns have entered the race with the goal of defeating their neighbors.
Today’s article digs into G.M., still the country’s biggest recipient of such incentives (not including the federal bailout), despite breaking its job creation pledges in Michigan cities (a few of them now embroiled in the controversy over Michigan’s now-repealed Emergency Manager legislation).
Tomorrow’s article will look at Texas, the biggest granter of subsidies and one of the states I’ve been looking at closely for its draconian cuts to education, cuts driven in large part by state tax cuts and subsidies pushed by the state’s Republicans.
The database created by the Times draws on the work of many nonprofit researchers, including Good Jobs First, which maintains its own database [and used to employ me!].