I understand the competitive nature of the state bidding process. It may also be necessary to put together the largest corporate welfare incentives we can muster. But this process has nothing to do with getting government out of the way. It’s just the opposite. Without government give-a-ways, like the services and educational opportunities that we pay for in the form of taxes, these tax freeloaders wouldn’t be interested in adding to the quality of life of our communities. We’ve let these entities off the hook, the genie out of the bottle so to speak, and we can’t take it back.
When a company looks for a site for a new facility, the discussion often starts with geography, moves to labor costs and ends with state incentives. In 2005, Janesville lost in the battle to land a $100 million Lowe’s distribution center and its 500 jobs (to Rockford.) And Illinois officials brought a $26.1 million incentive package to the table. Janesville was able to muster only $15.6 million from state and local sources. Wisconsin communities routinely find themselves on the short end of recruitment battles with neighboring states that are more freewheeling with incentive dollars and tax abatement programs.
Last month, Thomas Industries unveiled plans to move 280 manufacturing jobs from its Sheboygan plant to Louisiana. The move triggered finger pointing at the state Capitol, where some lawmakers said the state didn’t do enough to keep the jobs. Others countered that the move was based on cheaper labor costs in Louisiana. Wisconsin reportedly offered $2.55 million to move about 80 Louisiana jobs to Sheboygan. Instead, the company took a $9 million deal to move 280 Sheboygan jobs to Louisiana.
Ron Pollina of the Chicago-based Pollina Corporate Real Estate said “The competition is primarily global, but in the United States, it’s the states that are real aggressive on taxes,” he said. “Most states aren’t prepared; they just don’t get it.” Away from the Capitol, Wisconsin’s economic development professionals routinely argue that the state’s biennial commitment of about $15 million in cash incentives is woefully inadequate.
Tax credits tied to job creation are particularly antiquated, they argue, because businesses are generally reducing head counts by consolidation and an increased use of technology. Janesville officials have lobbied state lawmakers for designation as a “Development Opportunity Zone” to boost the street value of tax credits by tying them to capital investment, as well as job creation.
The business-interest group WMC lambasted recent proposals for $2.9 billion in tax increases. WMC said Wisconsin has one of the worst business climates in the country.
So now what?