State, local corporate subsidies: a new coalition for accountability.

• Author: Pierce, Neal R.
• Position: Commentary

Amazement has been our typical response to the extent of corporate self-dealing, opaque bookkeeping, and conflicts of interest brought to light by the Enron debacle and subsequent scandals of 2002.

But not for Greg LeRoy, founder-leader of a Washington-based policy group called Good Jobs First. LeRoy, a former union official and community organizer, is becoming America's No. 1 watchdog of how subsidy-hungry corporations are putting the squeeze on state and local governments--and all of us as taxpayers.

The record is enough to curl your hair. LeRoy's reports have highlighted a near tidal wave of tax abatements or outright payments that states and localities feel obliged to make to land footloose businesses--or sometimes just to convince the ones they have to stay put.

Just one recent example: the New York Stock Exchange demand of $400 million to stay in Manhattan, offering, in LeRoy's words, a "laughable threat to move to New Jersey, even though most of its major member firms have already been paid to stay in New York!"

All too often, LeRoy complains, companies simply fail to create the jobs or pay the wages or invest the dollars they promised in return for their tax breaks or subsidies.

States and localities, he charges, are grossly negligent in monitoring and evaluating the effectiveness of the massive incentives they offer. He highlights a finding by the U.S. Economic Development Administration that only two states (Maryland and New York) have created models to figure how well subsidies work. The other 48 collect no data on effectiveness, or rely on data from client companies--leaving the fox, as it were, in charge of the chicken coop.

Last month in Baltimore, LeRoy's Good Jobs First, formed in 1998, held its first-ever national conference, [which attracted] 300 people from 36 states involved in community-based organizations, labor organizations, state tax and budget watchdog groups, environmental/smart growth organizations, and academia.

Whether from the left or right, the attendees agreed that state and local economic development efforts should be fully accountable--"to fix the candy store mess," as LeRoy puts it.

The anger doesn't seem so much targeted at local governments, however. All too often they find themselves beaten down, abused by businesses playing one state or locality against another. And by independent consultants, or business relocation arms of big accounting firms, who may work one time for local governments, another...