How's that Tax Abatement Now?
Tax Abatements and other Economic Development "tools" used by states, cities and counties have been a favorite topic here at Jessica's Well. We have been told over and over and over again that these "tools" are necessary to create or retain jobs.
Basically, we are led to believe that "incentive" payments offset some of the risk of locating in a community, or that the "incentive" is the "final push to get over the hump." Then deals are struck, everybody smiles, money changes hands, people are hired, and those incentives go straight to the bottom line of the recipient company. Nobody has really worried about the clawbacks, that was until the nation entered into this pitiful economy of the last year and local budgets started shrinking.
According to this AP Story on MSN, things are changing:
As the economy sputters along, municipalities struggling to fix roads, fund schools and pay bills increasingly are rescinding tax abatements to companies that don't hire enough workers, that lay them off or that close up shop. At the same time, they're sharpening new incentive deals, leaving no doubt what is expected of companies and what will happen if they don't deliver.
Even in Texas, where the economic climate is better than many other parts of the Country, the State is getting tough:
In Texas, where companies can get money from the Texas Enterprise Fund if they promise to create a specific number of jobs, the number of clawbacks rose to nine in 2008, compared to a total of seven for the previous three years combined, the governor's office said.
You know the City of Midland is looking at a shortfall this year (look at the sales tax numbers), I wonder if they are having the MDC do the due diligence on all their employment deals, or if they have looked into to the status of their own deal with Cingular? Looking at the parking lot I'm not so sure there are 562.5 full time employees out there.
UPDATE: The MSN Story borrows heavily from a blog posting on December 15 over at clawback.org. In looking at their link regarding the Texas Clawbacks, as of October 31, 2009, TRACE Engines has received $250,000 of a $465,000 grant, and has repaid the State of Texas $17,930 in clawbacks. The MDC just amended the financing agreement.
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5 Comments
Car pooling, Ospurt, car pooling.
I drive by the Cingular/AT&T/Builders Square lot several times a week. I have been struck by the same lack of cars that you have. Then I figured out that AT&T must be incentivizing the staff to car pool. About 3 bodies per car would make the math work.
When you are driving in from Crane each day (because it costs too much to live in Midland) for that great gig with Ma Bell, it is good to share the cost with a couple of buddies. Bonus: Getting a bunch of good stories on what you did last night cranking on the way in gives you a means of passing the day instead of answering the phone.
If you are selling your pnseoral items, Texas proabaly has a casual sale rule regarding sales tax.However, you better keep your business accounts and your pnseoral accounts separate. If you start comingling funds, if/when you get audited, you will have a lot of explaining to do.
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I am shocked ! Shocked !
Are you actually suggesting the city actually recommend these businesses actually to scan their contracts with the city to actually determine if they are actually complying with their actual contract ? ! ?
This could cause ill-will and hurt feelings on both sides PLUS all the bother of trying to point blame and screw-up any future deals..er..investments !
Why mess up a good thing ..or "stir up" a bad thing when we can easily avoid the whole thing by merely raising taxes!
It's what we've done in the past and my daddy always used to say "If it ain't broke, don't fix it ".