By Nathan Newman, Progressive States Network

RecoveryResources.jpgOverall, federal recovery spending is working as intended, helping states provide needed services and avoid layoffs that would be worsening unemployment rates. The Center on Budget and Policy Priorities estimates that these funds are providing states with 40 percent of what is needed to help their budgets in balance over the next few fiscal years. The recovery plan has provided states with flexibility in addressing key programs and priorities.

Unfortunately, a number of states have wasted budget funds on trying to steal jobs from one another, as highlighted by Good Jobs First. A few of the worst examples:

  • A multi-state bidding war for a battery production consortium ended up with Kentucky offering $200 million to subsidize a 2,000-worker facility at a cost of $100,000 per job.
  • Georgia paid $100 million to NCR to move its 1250-person headquarters from Dayton, Ohio - its home for 125 years - down to an Atlanta suburb.
  • New Jersey has approved a radical new Tax Increment Financing (TIF) law that gives developers a whole range of subsidies.
As Good Jobs First writes, this is part of a long-term trend where "footloose states and cities like a fiddle so that small businesses and working families get stuck with higher taxes and lousier public services."

But in a time of economic crisis when state budgets are devastated, wasting money on zero-sum bidding wars is destructive to the overall economy, since it diverts money from investments in people and infrastructure that will actually build long-term economic competitiveness for our country.