According to this AP report:
Gov. Robert Bentley is pushing legislation that would give new tax breaks to large industrial projects that locate in Alabama or expand in the state. . . . It would expand the state’s industrial incentives to allow a big industry to withhold up to 90 percent of the state income taxes from its employees’ paychecks to recoup the cost of building or expanding a plant.
“The state’s chief industrial recruiter, Seth Hammett, said Kentucky, Georgia and Mississippi have similar legislation and Alabama needs it to be competitive.” When will we learn that “big industry” plays state governments like a fiddle; now the Governor want us to be competitive in this game.
By way of example is Evergreen Solar. In January, after receiving $23 million in grants, up to $17.5 million in low-interest loans and a low-cost 30-year lease on state-owned property in 2009, Evergreen announced its Massachusetts plant’s closure. According to one MA State Senator:
“The Commonwealth of Massachusetts invested almost $60 million in state grants, tax breaks and subsidized loans in Evergreen Solar to create approximately 800 jobs, translating into about $75,000 in taxpayer dollars being spent for every job, . . . And of course, now even those 800 jobs are gone, and we aren’t getting our $60 million back.”
According to this article,
The manufacturer expanded its Devens factory in 2008, promising to bring its total of Massachusetts-based employees to 1,000 by the end of 2009. “Evergreen Solar is at the leading edge of our clean energy economy in Massachusetts,” then-governor Deval Patrack, D-Mass., stated during a ceremony announcing the expansion.
However, during the course of 2009, it was China – not Massachusetts – that played a major role in Evergreen Solar’s next round of expansion announcements. In early May, the company entered into a framework agreement with Jiawei Solar Co. for a major ramp-up in String Ribbon wafer manufacturing in Wuhan, China.
Seven months later, Richard M. Feldt – who was then the company’s chairman, CEO and president – announced that declining module prices were “making it very difficult for manufacturers located in high-cost regions to remain cost-competitive.” As a result, another manufacturing step – module assembly – was shifted to Jiawei’s campus in Wuhan, China.
In wake of this move, Massachusetts policy-makers are trying to learn from this mistake. First, they proposed clawback provisions.
State Sen. Jamie Eldridge, who represents Massachusetts’ Middlesex and Worcester district, called Evergreen’s exodus “yet another sign that it’s time for Governor Patrick and the legislature to take a hard look at Massachusetts’ current job-creation strategy of giving large tax breaks to big corporations.”
“At a bare minimum, we ought to ensure that every economic development deal our government makes includes a strong clawback provision,” Eldridge wrote in his official blog. “Although there were some clawback provisions in the Evergreen Solar deal, they weren’t strong enough – and as a result, it seems we’ll be getting very little of our initial investment back.”
The Riley administration employed some of these clawback measures. As reported last February, Alabama began inserting them in economic development deals during his administration. The Massachusetts policy-makers also suggest greater transparency and accountability.
“If we are looking to increase the efficiency of the state’s economic development agencies, then we need to be collecting the performance management data that will allow us to make informed decisions and ensure that our economic development dollars [are] being spent as efficiently as possible,” the bill states. “Quite simply, you can’t manage what you can’t measure.”
Specific transparency requirements introduced in the bill would mandate that the Massachusetts Department of Revenue produce an annual unified economic development budget “detailing tax reductions, tax credits and subsidies for economic development, [and] including all line item expenditures for any state-funded entity, including quasi-public authorities.”
Uniform reporting requirements would require all applicants to economic development programs to meet certain data-reporting requirements, including existing as well as proposed job numbers, benefit levels and salaries.
The proposed legislation does not require claw-back provisions but places everything at discretion. This insure the accountability provisions are strong. Before “big industry” gets this tax money, let’s require accountability and transparency in the agreements and then enforce its provisions.