Florida can ill afford corporate welfare

Published Dec. 21, 2012

Imagine if Florida had another $4 billion to spend on education, infrastructure and social services. It could invest in public schools and universities. It could pay for expanded mass transit and buy land again for conservation. Instead, the state is spending $4 billion on tax breaks and other incentives for businesses. Gov. Rick Scott is a strong supporter of these kinds of enticements, but the game is heavily tilted toward the companies that pit one state against another, and it doesn't always work. A reassessment of Florida's real priorities is in order.

Florida's $4 billion giveaway is pretty big but the king of corporate welfare is Texas. A New York Times analysis of more than 150,000 incentive awards nationwide found that Texas alone accounts for more than $19 billion a year. Nationally, companies extract at least $80 billion from state and local coffers in the name of job creation. The awards come in various forms, including sales tax breaks, income tax credits and breaks, cash grants and guaranteed loans, property tax abatements and free services. In return, companies promise to create a set number of jobs. But hard evidence is spotty that the jobs get created — often states and local governments don't effectively track whether the obligation was fulfilled. And there is no way to tell whether the jobs would have come anyway.

State and local budgets have been reeling since the recession, resulting in cuts to vital public services. But instead of reducing interest in throwing public money at private companies to relocate, expand or stay put, the bidding has gotten more intense. Governors and mayors are focused on creating jobs — Scott promised to create 700,000 in seven years — and that has fed the frenzy, emboldening corporations to demand more. The giveaways have real-life consequences. For instance, the Manhattan Institute for Policy Research, a conservative-leaning group, found that the film credits New York gives for making movies in the state each year could pay for 5,000 public school teachers.

There is nothing conservative about such government largesse going to private industry. It gives a competitive advantage to certain companies, typically large corporations with political clout, distorting the marketplace. And it puts government in the position of picking corporate winners and losers, a role much maligned by Republicans when it was the Obama administration providing loan guarantees to the solar panel maker Solyndra.

In Florida, companies like Embraer Aircraft Holding and the Boeing Co. can win deals worth tens of millions of dollars that are hashed out in a process shrouded in secrecy due to exemptions from public records law. Whether the promised jobs materialize is another matter. A Tampa Bay Times/Miami Herald analysis late last year was not encouraging. Since 1995, it found that only one-third of the jobs promised by companies that signed contracts with state officials for incentives had been filled. The program starves government coffers and shifts the remaining tax burden to individuals and small businesses. Overall, that's not a good deal for Florida or the nation.