A lesson in ChamberMathTM
If you have ever had the occasion to wade through the explanations provided by the Church of Economic Development on how they go about determining which companies are deemed worthy of corporate welfare and which are not, you will remember that the process, as described by them, sounds almost like a combination of higher-level science and hard, hard financial analysis.
In fact, the process of determining to whom and how much of our....um....municipal affections would go was described as being so extensive and so disciplined that any company that was lucky enough to begin getting public assistance would only be doing so under an agreement that was ironclad in it's protection of the taxpayer. Further, the level of subsidies would be tied to the number of jobs created and maintained using a formula that calculated the risk v. reward and the return on investment down to the last red cent. The. Last. Red. Cent. I mean, it was all done by Certified Economic Developers! The best kind!
At this point we are aware that the City Council has, with a unaminous vote and two abstentions, rendered clawback provisions and iron-clad agreements protecting the taxpayers as somehow passe', if not altogether obsolete.
But what about the damned-near hard science of calculating the proper balance of corporate welfare incentive money to jobs created? Surely they got that right. I mean, it's just a mathematical equation, right?
Right?
So how come every time one of these deals fails to meet the performance requirements spelled out in the original agreements, the same people who assure us that they know exactly how to calculate the proper level of incentives never fail to tell us that, sure, "Company A" was supposed to create 115 jobs....and, sure, they have only created 25....but it is still a good deal!"
It is always salaries and property taxes paid this, and economic impact that, etc., etc. It is how the Trace deal is being spun and it is how the collapse of the Mother-of-All ED Deals, Cingular, was spun.
Here's a hint: When any numbers you plug in to "The Formula" all end up with "ED Success Story!!!" as the result, it is a pretty good indication that there is no actual formula.
0 TrackBacks
Listed below are links to blogs that reference this entry: A lesson in ChamberMathTM.
TrackBack URL for this entry: http://www.jessicaswell.com/cgi-bin/mt/mt-tb.cgi/3059
8 Comments
Otto, are we no longer at war with Andrews?
Portia , we have ALWAYS been at war with Andrews.
I love your use of the "ChamberMath" yet you are so completely unaware that Economic Development no longer reports to the Chamber or falls underneath the Midland Chamber of Commerce. If you are so unaware of this simple fact, what else is wrong in your blogs?
This is like saying a Child no longer reports to its parents or falls under their control and responsibility once they reach the legal age of maturity.
The MDC may have become a more independent organization in the last year, or so, but to say the relationship with the chamber is dissolved with the wave of a budgetary pen is as naive as asserting this blog is "unaware of simple facts."
The MDC and the Chamber have traded dollars, staff and office space from the very beginning and even you use the phrase "no longer."
Besides, ChamberMath is a term to describe the formulas used by Chamber's and Economic Development organizations alike to calculate the economic impact of their policies and decisions, it really doesn't speak to who reports to who.
FYI, according to the 2009 MDC Audit, as of September 20, 2009 the MDC had no employees (pg. 15). The reason they have no employees is because the MDC contracts with the Midland Chamber of Commerce to "design, develop and implement and economic development program approved by the MDC." This includes paying personnel, administrative and approved probram expenses. The amount budgeted in 2010 is $802,822. (pg. 22).
Now, it is true that the MDC has made changes to their staffing and has actually taken on the direct employment of their own staff, but that has just been since February of this year.
Nothing has changed other than who we answer to," said Hatley on Friday. "Before, it was the Chamber board, but we had always really taken directions from the MDC board. So it just made sense that we answer directly to them instead of indirectly through the Chamber of Commerce."
Glad to see the research. My point was that the information seemed a bit “leading”. However, as you have pointed out in your own follow-up that that the organization in question no longer reports to the Midland Chamber of Commerce, I am quite satisfied. I just feel that we should put responsibility where it belongs, clearly.
Thank you very much for your repost. It is greatly appreciated.
Also, while the organization charts may be technically separated, we have in the instance of Trace a lot of cross pollination, if you will, between all involved. Especially if taken over a timeline.
One of the major and most vocal investors in Trace was at one time a Chamber Board President, a City Council member, and an active member of the campaign to pass the ED Sales Tax initiative.
I appreciate your arrival here at The Well. But I think that I need to suggest that you read back through a lot more of the posts and the whole body of our arguments against some of the things we are against. And for, for that matter. I say this because it would be easy to read what I wrote above and think that we are calling people crooked (or close) when we are most decidedly not.
We may be guilty of snark a lot of the times, but the arguments put forth here are backed up with principles that have remained very consistent over the years.
Where was it that Trace threatened to go ? Tyler , Temple, Killeen ,Laredo , where exactly?
Does it not seem possible that the Trace agreement appears more like a good-ol'-boy deal than a serious investment in tax-payers money.
Oh well , it's probably just me .