Risky Business: Corporate Subsidies in Florida
In case you missed it, the St. Petersburg Times ran a great story last Sunday about the massive subsidies given to lure companies -- sometimes called "recruitment incentives," other times called "corporate welfare" -- and whether or not they've been good for the state of Florida.
They do a good job of laying out the issues states grapple with in their search to land big-ticket deals for jobs, beginning with a telling story about Florida's attempt to bring an AT&T plant to Orlando:
Between 1995 and 2003, they gave the plant more than $49-million in tax breaks and benefits, promised still more and credited AT&T and its successors with creating 864 jobs and investing $1.2-billion in construction and new machinery.
Today, however, some of the plant's equipment has been shipped overseas. Many of the jobs are gone. Employment, which climbed from about 890 in 1995 to 1,869 in March 2000, is down to about 600. Unless a buyer materializes, the plant will close by the end of the year.
Nationwide, budget-strapped states spend some $40 billion a year in tax breaks, free land, and other "incentives" to lure industry -- even though most research shows that incentives aren't one of the top factors corporations consider in deciding where to locate.
These subsidies are often handed out with little public debate, with few requirements in terms of wage or environmental standards, and as the Orlando example shows, little accountability to make sure the corporations do what they promise to when taking the money. Even Wal-Mart is getting in on the action.
Good Jobs First -- one of the leading watchdog groups for accountable development -- is holding what promises to be an excellent conference on these issues in May. If this isn't an issue of "fiscal responsibility" I don't know what is.
Chris Kromm is executive director of the Institute for Southern Studies and publisher of the Institute's online magazine, Facing South.