We are Cannibals


Our property taxes are becoming too burdensome to bear. Yet we can’t pay for our schools. We’ve invented impact fees to pay for our schools but that increases the cost of our homes, which leads to higher property taxes once again. We homeowners get stuck coming and going. In effect, we’re cannibalizing ourselves to make ends meet.

I got most of my schooling in the ’70s. We had great schools then. My parents had great schools. And property taxes weren’t the premier topic of conversation or worry. What happened?

This is what happened:

DeKALB – The city council agreed Monday that it is willing to forgo about $100,000 in property taxes to help lure an as-yet unnamed company looking to build a large warehouse.

City officials and the head of the DeKalb County Economic Development Corp., Roger Hopkins, do not know the name of the company that is shopping around for a place to build the 410,000-square-foot distribution center.

Hopkins said Monday that the inquiry came via a site selection firm, a company that scouts locations for other companies looking for land and tax breaks.

“Site-selection firm” is a code name for a firm that plays cities against each other to get tax breaks they don’t need in the name of bringing jobs into the community that may not be all they’ve promised. I know this as I know every other trick in the book, and the book is called The Great American Jobs Scam: Corporate Tax Dodging & the Myth of Job Creation.

Jobs Scam describes 14 different tax dodges developed over the last half -century that has communities competing so furiously for corporations and their jobs that in some states taxpayers have paid $100,000, $300,000, even $500,000 per job with no guarantees that these positions will pay enough to benefit the community–or even materialize at all. One scam is about snatching up freebies and then leaving for greener pastures, which reminded me of Farm & Fleet’s move to Sycamore. Another is a kind of auction that we saw occur with bringing Boeing Corp. to Chicago.

Illinois made a rosy jobs claim to justify a big subsidy package it assembled to attract the headquarters of Boeing Corp. in 2001…[T]he aerospace giant announced it was moving its head offices with 500 jobs away from Seattle and was considering Chicago, Dallas-Fort Worth and Denver. A bidding war ensued, with Chicago and Illinois offering about $56 million in subsidies, Denver $18 million, Dallas-Fort Worth $14 million. Boeing chose Chicago, although evidence suggests that it was the city’s many assets–financial, business-service, cultural, and quality of life–not the subsidies, that won the deal. [emphasis added]

Why aren’t our governments getting this? I think I know. I was at a 4th Ward meeting where one of my neighbors blasted the group who opposed the Keating/Rockefeller warehouse plan and deprived us of jobs. If “civilians” can be dissed so rabidly for questioning the wisdom and sincerity of the “jobs, jobs, jobs” corporate rah-rahs, one can imagine what pressure our public servants have to bear. Politically, Mayor Daley would have been eviscerated for not playing the game. We civilians need to get savvy about these ploys and let our elected representatives know we won’t blame them for “losing us jobs.”

Here’s what Paul O’Neill, President Bush’s first Treasury Secretary, had to say about the situation.

[As a businessman] I never made an investment decision based on the Tax Code…[I]f you are giving money away, I will take it. If you want to give me inducements for something I am going to do anyway, I will take it. But good people do not do things because of inducements, they do it because they can see that they are going to be able to earn the cost of capital out of their own intelligence and organization of resources. [emphasis added]

LeRoy says, “Their decision-making process is driven by business basics; subsidies rarely make a difference.”

The company–let’s call it Acme Widget–says to the consultant: to make widgets, we need a location that has plenty of workers who know how to make widgets or who have comparable skills and can be readily trained. We also need a location with plenty of access to the main ingredients of widgets. And we don’t want to be far from our widget customers or from transportation systems to reach them.

I read: Location, location, location. That’s what counts, not the give-aways.

DeKalb still has good schools and good infrastructure. We have NIU and Route 88. There is no need to subsidize any company’s locating here. There is no need to pay “retention bonuses.” To the corporations who are basically telling us, “We like that you have good schools but we don’t want to help pay for them,” we should wave bye-bye–and make sure that other communities like Sycamore, Rochelle and Cortland do the same. Call the bluffs; refuse to compete with your neighbors. That is, in the end, the only way we are going to maintain the quality of our schools that so attract these companies in the first place. If we want to help businesses, why not find ways to help start-ups and the small businesses that make up our middle-class backbone? The big guys are exporting most of their good jobs anyway.

Just when you’re at your maddest, LeRoy prescribes the remedies. They involve enforced transparency and accountability. Illinois actually is among the first to begin such a program, which tracks every corporation–beginning 2004–that receives state subsidies and tax abatements of any kind with a report card on whether they’ve kept their job promises. Target DeKalb is in there. Meanwhile, DeKalb itself–if it must do handouts for the time being–should ensure that our agreements with big biz contain ironclad “clawbacks” that essentially are money-back guarantees if the business does not produce the promised jobs or leaves the area within such-and-such timeframe. No more cannibalism!

Greg LeRoy has also founded a smart-growth & accountability website called Good Jobs First.