Ypsilanti Township, Mich.,. Some $200 million tax breaks later, this is what remains. |
When the end came and the economy crashed local government found that they weren't really General Motor's partner Through the magic of corporate bankruptcy town and state government was left losing billions in taxpayer dollars.
Mayors and governors desperate to create jobs were outmatched by multinational corporations.They lacked the tools to fact check what companies promise them.The cost of the awards have grown higher as jobs become more scarce. A full accounting of who gives and who gets is not possible because the incentives are granted by thousands of government agencies and officials and many do not know the value of all their awards. Nor do they know if the grant investment was worth it because they rarely track how many jobs are created. Even where officials do track incentives, they acknowledge that it is impossible to know whether the jobs would have been created without the aid. In most cases the receiving companies only have a faint idea of the incentive's value.
Today government incentives have become a cost of doing business. When a business.shows an interest in creating jobs or threatens to pull up stacks for greener economic pastures government is pressured to create or maintain existing jobs. Jobs are the lifeblood of a politician's future.
Connecticut is a small player when comparing its incentive program to other states. Texas grants over 16 billion per year to existing or newly arrived business. Connecticut grants $860 million yearly according to research by the NY Times. $241 per citizen or four cents of every dollar appropriated in Connecticut's budget. Mass. spends $345.00 per capita. Eleven cents out of every budgeted Rhode Island dollar is spent on business grants.
Over the years, corporations have increasingly exploited governments that fear losing an existing business. Business create 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. Big business look for and demand grants and cash rewards, free buildings, worker training and lucrative tax breaks including sales tax mitigation.
Quality of life, educational opportunities and location increasingly play second fiddle to the all mighty buck.
Quality of life, educational opportunities and location increasingly play second fiddle to the all mighty buck.
While government normally has no defining data on return on investment when dealing with big business there is a second negative factor. What if the business fails? When General Motors released a list of factories it was closing during bankruptcy three years ago, communities that had considered themselves G.M.’s business partners were no more.Fifty G.M. properties on their 2009 liquidation list were in towns and states that had awarded incentives adding up to billions in taxpayer dollars according to data compiled by The New York Times.
G.M. walked away and, thanks to a federal bailout, is once again became profitable. The towns have not been so fortunate, having spent scarce funds in exchange for thousands of jobs that no longer exist.
Business subsidies are hurting local governments by diverting money from public education. It’s not creating new jobs, it's moving jobs from one locality to another. It’s motivated by politicians who want to claim they have brought new jobs into their city or state. Connecticut government has short changed Connecticut's school children for 23 years. Equalization Cost Sharing Grants are presently shorted an estimated 764 million dollars yearly. Could there be a correlation between ECS Grants and the 860 milllion in incentives passed out to business? Is big business sucking away our children's education? Read On
Connecticut Business Receiving Grants (12 pages)
Connecticut Business Receiving Grants (12 pages)
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