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Subsidizing the Corporate One Percent: Subsidy Tracker 2.0 Reveals Big-Business Dominance of State and Local Development Incentives

March 3, 2014 Comments off

Subsidizing the Corporate One Percent: Subsidy Tracker 2.0 Reveals Big-Business Dominance of State and Local Development Incentives (PDF)
Source: Good Jobs First

As a result of substantial enhancements Good Jobs First has made to our Subsidy Tracker database, it is possible for the first time to estimate the share of total state and local economic development awards going to big business. The data show a very high degree of concentration: we estimate that at least 75 percent of cumulative disclosed subsidy dollars have gone to just 965 large corporations, even though these companies account for only about 10 percent of the number of announced awards.

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Grading Places: What Do the Business Climate Rankings Really Tell Us?

May 8, 2013 Comments off

Grading Places: What Do the Business Climate Rankings Really Tell Us? (PDF)

Source: Good Jobs First

As business climatology’s sponsorship has diversified, so have its practitioners. However, its core methodological tricks have remained the same: Choose public policies that are of high concern to the corporate and/or high-wealth sponsors (e.g., unemployment insurance rates then or the estate tax today). Use self-interested respondents and/or anecdotes to ascribe otherwise unverifiable or even improbable weights to the variables. Choose variables that reduce inequality (e.g., state minimum wages) and down-rate them, in the name of jobs, of course. Or choose variables that are self-fulfilling because they are outcomes, not causes (e.g., using high-speed broadband access as a predictor rather than an indicator of growth). Or cherry-pick small, incomplete sample sets to suggest positive or negative correlations.

A recurring proof of the flawed methodologies is their lack of predictive value. It used to be Grant Thornton allowing 50 state manufacturing lobbyists to each weight their own “business climate” variables, obviously an unscientific data pollutant. Today, the same kind of idiosyncratic issues surface, as when the American Legislative Exchange Council (ALEC) inveighs against Tennessee’s estate tax. In our 2012 study focusing specifically on Rich States, Poor States: The ALECLaffer Economic Competitiveness Index, we actually found small negative correlations between some of ALEC’s favored policies and positive economic outcomes (and no statistically significant positive relationships).

Indeed, the underlying frame of these studies—that there is such a thing as a state “business climate” that can be measured and rated—is nonsensical. The needs of different businesses and facilities vary far too widely. Besides, states are not the meaningful unit of competition in economic development: metro areas are, and conditions can vary more among metro areas within a state than they do between states. Young tech start-ups need lots of engineers and venture capital. Server farms and mini-mills need cheap electricity. Warehouses need proximity to interstate highways. Headquarters need access to finance, marketing and industry-specific talent pools. Given these realities, “business climate” studies must be viewed for what they actually are: attempts by corporate sponsors to justify their demands for lower taxes and to gain public-sector help suppressing wages.

Breaking Down Silos Between Economic Development and Public Transportation: An Evaluation of Four States’ Mode st Efforts In Making Job Subsidies Location-Efficient

October 31, 2012 Comments off

Breaking Down Silos Between Economic Development and Public Transportation: An Evaluation of Four States’ Modest Efforts In Making Job Subsidies Location-Efficient (PDF)

Source: Good Jobs First

Since publishing Another Way Sprawl Happens in 2000 and Missing the Bus in 2003, Good Jobs First has repeatedly documented the pro-sprawl bias of economic development subsidies and advocated for better geographic targeting of workplaces to achieve location efficiency. That is, taxpayer investments in economic development and public transportation should be geographically aligned to address the problems of urban sprawl, forced auto dependency and jobs-housing spatial mismatch.

Good Jobs First has issued six studies mapping more than 5,000 economic development subsidy deals in 13 metro areas. Five of the reports explored transit location efficiency as a goal of economic development subsidy targeting, and two are of special note here. Our 2003 study, Missing the Bus: How States Fail to Connect Economic Development with Public Transit summarized the results of a 50-state survey in which we failed to identify even a single state economic development program that directly connected jobs with transit. By 2006, when we published The Geography of Incentives: Economic Development and Land Use in 2 Michigan, we had identified two states that partially aligned smart growth goals with economic development subsidies: California and Maryland. That same year, Illinois passed the state’s landmark Business Location Efficiency Incentive Act. In 2008, New Jersey enacted a major tax credit program available only to businesses moving within a half mile of major rail transit centers. (Since that time, we have not learned of any other new state location efficiency policies.)

Unfortunately, a review of the status of these small steps finds that they have not been adequate to popularize the concept. This report is an update on the use of location efficiency policies in Illinois, New Jersey, Maryland, and California. It describes how some programs have faltered, lost their way, or were inadequately designed to effect lasting changes in policy. In part, their collective failure in breaking down the policy silos of transit and economic development is a result of weak design. None of the four policies reviewed in this document reform existing job subsidies to restrict funds to location-efficient development projects. Some are structured to give preference to location-efficient applicants. Others provide bonuses to reward location-efficient decisions. In the case of New Jersey, an entire new location-efficient tax credit was enacted atop the state’s already generous arsenal of economic development programs. Two of the four programs do not even specifically cite transit access as a goal.

The result of these weak structures is in most cases a policy tool ineffectively designed to actually change land use and transportation patterns or economic development location decisions. Over the past few years, these programs have either been little used or deregulated to the extent that they can no longer be said to serve the goal of location efficiency. In all four cases, no evaluation of results on transit access, commuter choice or behavior, or land use pattern has ever been conducted. But given our findings here about how poorly the programs have been designed and/or executed, we doubt a performance audit would find useful impact.

Report: Privatization of State Economic Development Agencies Can Undermine Integrity and Accountability

February 24, 2011 Comments off

Report: Privatization of State Economic Development Agencies Can Undermine Integrity and Accountability (PDF)
Source: Good Jobs First

Transferring state business recruitment functions from government agencies to private entities is not the panacea that its proponents suggest, and the track record of those few states that have taken the step is filled with examples of misuse of taxpayer funds, political interference, questionable subsidy awards, and conflicts of interest, according to a report published today by Good Jobs First, a non-profit, non-partisan research center based in Washington, DC.

“Rather than making economic development activities more effective, privatization is often little more than a power grab by governors and politically connected business interests,” said Philip Mattera, research director of Good Jobs First and principal author of the report.

Interest in economic development privatization has surged recently. It is being promoted by newly elected governors in Wisconsin, Ohio, Iowa and Arizona who are urging that state commerce or development agencies be replaced by public-private partnerships (PPPs).

“Turning economic development over to PPPs is fool’s gold,” said Good Jobs First executive director Greg LeRoy. “What really matters is business basics: strategic public investments in skills, infrastructure, and innovation—not privatized smoke-stack chasing.”

+ Full Report (PDF)

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