Bacon's Rebellion

Democracy Thrives in Sunlight

Justified Incentives or Corporate Welfare? We Need More Transparency to Tell

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by

James A. Bacon
in

money_bagsby James A. Bacon

Wow, big economic development news for the City of Norfolk! In the past week Governor Terry McAuliffe has announced two deals: Norfolk Southern will spend $8.2 million to accommodate 165 employees in its corporate headquarters, and Movement Mortgage will invest $2 million in a deal that will net 200 new jobs. Too bad citizens will never know if the public subsidies in support of those deals were justified.

The Norfolk Southern jobs are being relocated from Roanoke, where the railroad company continues to dismantle the remnants of its old Norfolk & Western Railway presence. The Movement Mortgage jobs are part of a larger relocation of the mortgage company’s operations center from Virginia Beach.

To facilitate the transfer of jobs from Roanoke to Norfolk, McAuliffe approved a $1.925 million grant from the Governor’s Opportunity Fund to “assist Norfolk with the project.” The nature of that assistance is not detailed in the press release, nor is any “assistance” that Norfolk is providing Norfolk Southern. The press release made no mention of Norfolk competing with any out-of-state jurisdictions for the investment, nor did it provide any other justification for the subsidy.

To facilitate the transfer of 550 existing jobs from Virginia Beach to Norfolk, as well as the addition of 200 new jobs, McAuliffe approved a $600,000 grant from the Governor’s Opportunity Fund to “assist Norfolk with the project,” plus employee training through Virginia Jobs Investment Program. The press release did not specify the nature of the assistance to Norfolk, although it did state that the city was in contention with Arizona, North Carolina and South Carolina for the project.

Bacon’s bottom line: There is no way to tell from the substance of these press releases whether the Commonwealth of Virginia, in facilitating the transfer of jobs from one Virginia locality to another, is engaging in corporate welfare or not. The press release announcing the Norfolk Southern deal provides no justification whatsoever for the nearly $2 million subsidy. The press release announcing the Movement Mortgage deal does mention competition from three other states, but there is no way for citizens to know how serious that competition was, nor whether the company was just playing one state off the other to get the sweetest subsidy it could for a decision to stay in Hampton Roads anyway. State and local officials will not comment because the details involve proprietary information and cannot be disclosed.

Here’s a suggestion: If corporations want to tap public funds, then they waive any non-disclosure rights so citizens can evaluate the merits of the subsidy. In some instances, the subsidies might be warranted in order to snag an investment Virginia would lose otherwise. In others, the public might be giving away money unnecessarily. In either case, citizens have a right to know. Lacking right to know, taxpayers are entitled to the presumption that they are being shaken down.

For another view: Meanwhile, spurred by the Norfolk Southern announcement, the Richmond Times-Dispatch makes a related point on how Virginia governors take credit for job creation when very little credit is due.

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5 responses to “Justified Incentives or Corporate Welfare? We Need More Transparency to Tell”

  1. LarrytheG Avatar
    LarrytheG

    ” Roanoke, Va. – Jan 27, 2015
    Norfolk Southern today announced that it will close its Roanoke office building at 110 Franklin Road SE later this year and relocate the functions currently housed there to Atlanta or Norfolk.”

    http://www.nscorp.com/content/nscorp/en/news/norfolk-southerntocloseroanokeofficebuildingrelocateemployees.html

    so.. it was/is wrong for McAuliffe to try to keep those jobs in Virginia?

    the problem with the ” Justified Incentives or Corporate Welfare? We Need More Transparency to Tell”

    is that the info about Norfolk competing with Atlanta was already readily known… except apparently to those who might conjure up bad behavior on the part of government….

    😉

    question is – if NFS wants to play Va against Ga – should we play that game?

    or perhaps more to the point – is it wrong for Va to play that game?

    1. James A. Bacon Avatar
      James A. Bacon

      Larry, you have the same questions I have. How can we hope to answer them without greater transparency?

  2. LarrytheG Avatar
    LarrytheG

    Jim – I don’t think we’re ever going to get to see the negotiations.

    I note at the county level – they go into closed session WHENEVER they talk to potential businesses and what we get to see is the final agreement at the time they vote it in public.

    they tell you when they go into closed session that to disclose the details will put them at a disadvantage in their discussions…in part because the businesses do not want their competitors to know the details -either.

    So – Norfolk southern nor Norfolk want Atlanta to know the details of a potential agreement – and vice versa…

    so I’m not sure that the advocacy for “transparency” is realistic …

    I’m actually much more concerned with the State and localities current tendency to want to exempt areas of FOIA – for things -AFTER the FACT.

    that seems much more an issue to me.. I’ll grant them their negotiation shrouding… but after it – folks should know the details… and right now – more and more localities – and the State are making exceptions for things that would NEVER be disclosed and that’s much much worse.

  3. TooManyTaxes Avatar
    TooManyTaxes

    Virginia’s FOIA law is a joke. It’s full of special-interest loopholes.

  4. Reed Fawell 3rd Avatar
    Reed Fawell 3rd

    It use to be not so long ago that private interests bribed public officials for government favors and preferential treatments. Now it is the reverse.

    Now, America’s Federal government officials bribe all sorts of people, groups and institutions within American society. Those getting bribes or “offers they cannot refuse” range from very poor people to very rich people, and also include everybody and every group, organization and thing in between the rich and poor.

    These Federal officials bribe all these people, groups and industries in order to buy their own reelection and also to gain long term power and control over an ever larger constituency that then is beholden to the Federal Governments, its Federal politicians, and one of two political parties.

    In this way Federal officials use other peoples money (the public’s money) to buy, own and dictate the conduct, direction and results of the work that those constituencies do, how they do that work, and what are the acceptable results of that work. Hence the constituencies become supplicants. They have traded their freedom for a place in line where they can feed off public monies, and so gain security and wealth so long as they produce for their masters, the government elites that now feed and addict them to government money and control.

    This dirty money used to be called bribes. It is now called government backed bonds, loans, and grants. It’s often funded with Grand Federal initiatives driven by ideology and the concurrent quest by ideologues in the Federal government to expand their own power by expanding the Federal government’s control. Public money is used in tandem with Administrative laws and regulations, a carrot & stick routine.

    Hence, George Mason recently called itself the largest research institution in Virginia. Hence revelations concerning JWU Global Warming Department.

    Might we not be concerned over the productively, independence, and purpose of its research. And actions, given its RICO request to jail independent researchers to fail to tow the party and government line.

    And that’s only a drop in the Ocean. Federal money is now everywhere corrupting everything. It started on steroids with nearly $trillion of peoples money spent on non-existent shovel ready projects. Then it build a website that did not work, despite more than half a billion dollars spent to advertise the $multi-trillions the Federal government is now using to buy and utterly control and dictate to America’s health care industry, and its patients. This in turn is now being used to generate huge amounts of free cash floating around to buy and control American’s health and science research results.

    Like Mobsters everybody and everything is being dragged into racket. “Non Profit” institutions now are tasked to produce and promote and rubber stamp the results the Federal Government wants.

    Institutions that used to be independent and privately run are sucked in, if only for “Government protection.” Otherwise they can’t compete, or even survives. These hostages now that we use to call “our hospitals, our research centers, our colleges and our universities.”

    Now the state enablers are plunging in. Like Virginia’s Governor giving the people of Virginia’s money away to private corporations while he refused to tell the people why he is giving their money away or where it goes.

    For that state giveaway that the public is not allowed to know about see:

    https://www.baconsrebellion.com/2016/03/justified-incentives-or-corporate-welfare-we-need-more-transparency-to-tell.html

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