JR Ball, a writer for the Baton Rouge-based publication Business Report, discusses the latest goodies that a private enterprise is receiving from a local government. Costco is the latest beneficiary from the race to the bottom that showers corporations with tax benefits with the hopes of attracting them to their town:
The three great issues of our time in the Capital Region are these: 1) protecting our turf in the global economy by using any government means necessary to score jaw-dropping wins in the retail and hotel sectors; 2) whether the luring of big-box behemoth Costco secures Baton Rouge a much-coveted seat at the exclusive table of world-class cities (out of our way, Venice!)
Daniel C. Vock writes for Stateline about the fact that NFL teams, and the stadiums they use, are often receiving substantial subsidies from local and state governments:
Yes, after a timeout for the recession, the National Football League is back in the game of getting public money to pay for better stadiums. In many cases, teams want to replace or renovate stadiums finished during a 1990s sports construction boom.
“We had a real lull from the beginning of the Great Recession,” said Victor Matheson, an economics professor at Holy Cross who studies sports. “Just in the last year, however, we’ve seen the tide turn… We have a little bit of a backlog, so you’re seeing a bunch of stadiums on the table now.”
Jon Gabriel from FreedomWorks recently wrote the following article about how the local government of Stockton, California, went on a spending spree during the housing bubble. This created a big unsustainable government and led to a bankrupt government. The local government borrowed $300 million to build, based on the false nation of wealth and prosperity created by the housing bubble. Today, Stockton is bankrupt.
More foolish than the politicians’ building boom was the evermore lavish (and theoretically unending) benefits for public employees. City employees only had to work one month then retire for the city to cover their and their spouse’s insurance for the rest of their lives. After Stockton dug themselves into endless debt, they did the only thing they could, becoming the largest city in America to file for bankruptcy. This week, a federal judge ruled that Stockton was eligible for bankruptcy protection and can develop a plan to reorganize its debt. The biggest part of that debt is the nearly $1 billion the city owes to the state’s employee pension plan, CalPERS.
The biggest question in the Stockton bankruptcy isn’t “how could this happen?” but “who’s next?”San Bernadino stopped paying creditors and CalPERS last year and is requesting bankruptcy protection, while Fresno is considering a similar fate. Outside of the Golden State, Miami is under an SEC investigation for making struggling taxpayers fund a $600 million baseball park and Harrisburg, Pa. might request bankruptcy for a second time.
Nick Sorrentino at Against Crony Capitalism writes about the collusion between local governments and the companies that operate red light cameras.
Earlier this year we highlighted the Redflex scandal in Chicago and the abuse of the motorist at the hands of robot cameras elsewhere. Abuse is rampant and companies are making big bucks ticketing citizens. In some cities the company maintaining the cameras gets 50% of the ticket revenue. I wonder if the old sensitivity meter ever gets turned up when a company is behind in quarterly revenue. My bet is that it does.
James Eng from MSN News has recently reported an egregious case of collusion in Elmwood Place, Ohio. Recently a judge called the automated speeding cameras “a scam that motorists can’t win.”
Optotraffic – the company that provides the cameras to the government – receives 40 percent cut on the revenues from the fines. The two cameras reported 6,600 speeding citations, three times the town’s population.
“Remember, Optotraffic has a financial stake in this game. I use the term ‘game’ because Elmwood Place is engaged in nothing more than a high-tech game of 3 CARD MONTY,” the judge wrote emphatically. “It is a scam that motorists can’t win.”
Critics of speed and red-light cameras argue that the devices violate motorists’ rights. The say municipalities and law enforcement agencies are using automatic cameras mainly to raise revenue, not to boost traffic safety.
Jeremiah McWilliams writes an article at the Atlanta Journal-Constitution about a recent audit of the “Atlanta Workforce Development Agency,” which they recommend shutting down entirely:
A report by the city of Atlanta’s internal auditor asserts widespread problems at the city agency charged with matching low-income or laid-off workers with local companies and recommends that the mayor consider shutting down the office.
The Atlanta Workforce Development Agency does a poor job tracking workers and employers, reports incomplete information to the state of Georgia, keeps loose watch over sensitive personal information and relies too much on a small group of partners to provide training — an arrangement that could lead to accusations of cronyism, according to the stinging audit.
Josh Katzowitz writes an article at CBS Sports about a recent deal to keep the Carolina Panthers in Charlotte, North Carolina. A substantial portion of the cost is going to be borne by the taxpayers in the city:
With Los Angeles still looking for a team to move to town — the Chargers seem to be the best bet, but they’re still locked down in San Diego for the 2013 season — you can cross yet another potential franchise off the list.
That would be the Panthers — who have won concessions from the Charlotte City Council, which will invest $143.75 million during the next 15 years for upgrades to Bank of America Stadium, according to the AP.
When you go to the movie theater, do you go to watch a movie or to buy BBQ sauce? That sounds like a strange question, but consider the following story.
Warren Theaters in Wichita, Kansas, is now selling Brewer’s Best BBQ Sauce. Why? It may not be coincidence that the sauce company is owned and operated by the Mayor.
Rewind to 2010 when Mayor Brewer championed Warren’s application for incentives suggesting other cities where waiting to jump if Wichita didn’t put its taxpayers on the hook to support Warren’s IMAX theater. Industrial Revenue Bonds were approved, saving Warren from paying $630,000 in sales taxes and an estimated $136,099 a year in property taxes. Three years later the theater is now selling Brewer’s BBQ sauce to movie goers. One is left wondering if the theater plans on expanding its line of grocery items.
Stories like this mark a growing trend of all too cozy relationships between local and state governments. The film industry has jumped on the bandwagon of incentives. There are currently 44 states (plus DC and Puerto Rico) that offer some sort of movie production incentive. Whether it’s $1 million to train film industry employees in North Carolina or $100 million to “pay Hollywood to stay in Hollywood,” filmmakers across the country are benefitting from the “arms race” for movie locations among the states.
If you think that movie production incentives are good for the economy, you might want to consider the overwhelming cost. States offered $1.3 billion in film incentives in 2011.
Nearly all filmmakers are enticed by these credits, even ones making substantial profits. Consider Disney, which took $183 million in tax credits in 2011 despite making $40.9 billion in revenue.
To the extent that government remains in the business of handing out cash to its friends, lobbying the government for special favors is rational, even if it is harmful to taxpayers. So the next time you ruin your alignment on a pothole or are complaining about not having enough teachers in your child’s school, don’t get upset – you can always go watch a taxpayer-subsidized movie and check out the selection of sauces made by your local elected officials.
Justine Sharrock at Buzzfeed writes about a case in San Francisco where companies promised to fund local charities in order to receive special tax breaks from the city:
Twitter and six other San Francisco tech companies are set to receive sizable tax breaks from the city in exchange for non-binding promises to make charitable contributions totaling, in many cases, just tens of thousands of dollars — along with promoted tweets for local groups.