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Wednesday, January 25, 2006

Corporate welfare in Glendale

From the Republic:
The AAA travel and financial services club will locate up to 1,100 new jobs over the next three years in Glendale as it creates a regional customer service and information technology center in the West Valley.

Roughly 500 of the jobs are considered "high-wage" positions, paying more than $75,000 a year, said Barry Broome, chief executive of Greater Phoenix Economic Council, which helped broker the deal. Up to half of the jobs would be call-center positions that would pay less than Maricopa County's median household income of $46,111.

When fully staffed, the facility will employ up to 1,400, according to AAA, and will be one of the city's largest employers.
Sounds like good news, doesn't it? Not quite...
City Council members will hold a special meeting Thursday to discuss, and likely accept, the 10-year incentive package the city is offering AAA. Glendale is offering to:

• Give AAA $1,200 for every job the company creates that pays more than $50,000.

• Reimburse the company up to $750,000 for facility rehabilitation and waive permit fees up to $49,700.
That $1,200 subsidy per job doesn't sound like much, but about 700 of the jobs will qualify for it. That's $840,000 of the taxpayers' money to buy these jobs. Given that it's a "10-year incentive package", I'm wondering if it's $840,000 per year. Throw in another three-quarters of a million for redecorating and some miscellaneous regulatory relief, and the owners of AAA – a profit-making enterprise – brought home quite a score.

"But, but, but!," the City of Glendale and the Greater Phoenix Economic Council will exposulate:
The project is expected to pump $42 million into Glendale's economy over 10 years.
As always, it's the seen and the unseen. Whether the total price tag is $1.6 million or $9.1 million, it remains that the City of Glendale is going out of pocket to buy jobs. Certainly those jobs have an economic benefit, but we can never know what economic benefits are lost by robbing a profit-producing Peter to pay corporate welfare to a profit-devouring Paul. All we can know is that what might have happened will not.

Here's a simple lens for distinguishing one from the other, though:

The businesses that do best for everyone – their clients, their employees and their investors – are the ones that are so busy making money that they don't have time to wrangle deals to rob the taxpayers.

posted by Greg Swann | 6:54 AM  


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