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CORPORATE WELFARE SELDOM WORKS OUT! BETTER TO SAY NO TO PRIVATE-PUBLIC PARTNERSHIPS!

Two articles, one in the WSJ and one in Style, Richmond’s urban alternative newspaper, both touching on events in Richmond, illustrates the dangers of public-private partnerships (an aspect of Agenda 21, I am told!) that I call corporate welfare.  If i were in office, I would have voted no to both.

From the Wall Street Journal, we have this report on state tax bennies used to lure movies to different states, including our Commonwealth:

Of the nine “Best Picture” nominees in 2012, for example, five were filmed on location in states where the production company received financial incentives, including “The Help” (in Mississippi) and “Moneyball” (in California). Virginia gave $3.5 million to this year’s Oscar-nominated “Lincoln.”

It’s great that Steven Spielberg, a director that I admire very much (for movies like Amistad and Schindler’s List) but disagree with his politics, came to the River City to film an important movie!  (I am sorry that he wasted time and money on our worst Chief Executive ever but that’s another story!)  But do not expect that all these tax breaks actually brought jobs to the area!

Such state incentives are widespread, and often substantial, but they don’t do much to attract jobs. About $1.5 billion in tax credits and exemptions, grants, waived fees and other financial inducements went to the film industry in 2010, according to data analyzed by the Center on Budget and Policy Priorities. Politicians like to offer this largess because they get photo-ops with celebrities, but the economic payoff is minuscule. George Mason University’s Adam Thierer has called this “a growing cronyism fiasco” and noted that the number of states involved skyrocketed to 45 in 2009 from five in 2002.

In its 2012 study “State Film Studies: Not Much Bang For Too Many Bucks,” the Center on Budget and Policy Priorities found that film-related jobs tend to go to out-of-staters who jet in, then leave. “The revenue generated by economic activity induced by film subsidies,” the study notes, “falls far short of the subsidies’ direct costs to the state. To balance its budget, the state must therefore cut spending or raise revenues elsewhere, dampening the subsidies’ positive economic impact.

It’s all right to attract firms and films both here to Virginia, but no tax breaks to get it!  It’s not worth it.  But we also have Style’s report on the Redskins deal:

So it’s about context. Remove the Bon Secours’ projects, which were planned long before the Redskins’ deal, and you’re left with the $10 million, taxpayer-funded training camp. All told, the new facility will generate approximately $190,985 in city taxes this year, according to an analysis performed by Chmura Economics and Analytics. At this rate, it will take 52 years for the investment to pay off.

Fifty-two years?  I’ll be 105 years old!  But wait for it – there’s more [Pastor Dwight Jones is the Mayor of Richmond]:

Jones:“Is $18 million in new payroll tax good for the city?”

We aren’t sure what the mayor’s talking about here. The city doesn’t collect federal payroll taxes, so it’s impossible for it to collect $18 million in taxes that don’t exist.

Public-private partnerships seldom work and usually end up costing the taxpayers more than the benefit.  If corporate welfare must be done, make sure the taxpayer gets actual tangible benefits, not pie in the sky promises of tourism or tax revenue.  Otherwise it favors certain parties, leads to crony capitalism, buys off companies for Agenda 21 projects since they got benefits and expect to get more under the old system, and can breed corruption and graft.  The best advice is when the Mayor, the Governor, civic leaders, actors, directors, and other celebrities say yes, time to say NO.


About Elwood Sanders

Elwood "Sandy" Sanders is a Hanover attorney who is an Appellate Procedure Consultant for Lantagne Legal Printing and has written ten scholarly legal articles. Sandy was also Virginia's first Appellate Defender and also helped bring curling in VA! (None of these titles imply any endorsement of Sanders’ views)

One Response to “CORPORATE WELFARE SELDOM WORKS OUT! BETTER TO SAY NO TO PRIVATE-PUBLIC PARTNERSHIPS!”

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  1. [...] knew it was going to happen.  I blogged on this; so I must say:  I told you so.  Now if I ever run for supervisor, check me for a fever but one thing for sure:  NO sweetheart [...]


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