Economic Development Sales Tax: 10-Year Review - Part IV(d)
(Have the tax dollars raised by the creation of the 4A sales tax been spent as voters were told they would be? You be the judge. The following is re-posted from March 29, 2010.)
ED Wayback Machine, Part IV: Government Bailouts? No problem!
It seems like I have heard something recently involving Chrysler and taxpayer assistance...although I am sure I don't what it was.
Now, while the author of this letter apparently has no problem with even serial government bailouts, the fact of the matter is that most Midland voters probably do. And anyway, these are not bailouts, right? Or even subsidies. They are forgivable loans. Forgivable loans with hard-wired, iron-clad, taxpayer-protecting, "Clawback Provisions" that sometimes make the more traditional loan agreements with professional private lenders look tame by comparison. In fact, in many of these agreements the Shilocks at the MDC/City are even harder on the "Lendee" than would be any private sector lender. I know this because I read it in the paper:
Ten years later, reality has asserted itself. Currently, several of the MDC's "clients" are attempting to renegotiate their agreements; presumably to make them less stringent, not more. We shall soon see what the actual level of enforcement on these agreements is going to be. It is a tough one. On the one hand, these companies are probably hurting. On the other, we certainly don't want to be written down as patsies to future "incentees". Well, as much as one can have an economic development fund at all and not be seen as a patsy, anyway.
We have asked these questions (and others) before, but the opportunity presents itself again:
- Philosophically, what is the difference between the MDC taking money from the taxpayers and giving it to [Insert MDC Client Name Here] and the Obama administration taking money from the taxpayers and giving it to Chrysler or GM?
- Should the MDC/City Council decide not to actually enforce these contracts (or should they renegotiate them down) isn't that the exact same thing as a taxpayer bailout?
An interesting paragraph from above:
"The economic development agreement is sometimes more stringent than normal business agreements because public funds are involved, and the city has an interest in seeing that these dollars are protected and not wasted."
Really? Then given an actual choice, why would any company choose the more stringent agreement? They wouldn't ever.....unless they were betting that the provisions in the agreement, however stringently written, won't be enforced.
The dice are rolling on that as we speak.
And, yes, everything that is happening nationally applies here. Directly. Every reason there is on why the Obama Administration and the U.S. Congress shouldn't try to direct an economy at the national level applies in every way to the Midland Development Corporation and the City Council at the local level.
(Originally posted by Walsingham on March 29, 2010)
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