Thursday, January 7, 2016

Corporate Welfare

Corporate welfare comes in a few varieties and though hard to believe we have some elected officials promoting a distinction between good and bad corporate welfare. It should come as no surprise that good corporate welfare is the one that concentrates power and influence with the party advocating one over the other.

So what are they?

Well, first we have Development Authorities, which (primarily for PR purposes) may provide infrastructure improvements, but for the most part provide ad valorem tax incentives (AKA abatements). These are generally funded by Authority issued bonds which is key to most criticisms--Authorities members are appointed (by elected politicians, but ignore that for now) and the indebtedness is not subject to direct or indirect public approval.

Then we have so called Improvement Districts, usually business areas that self-tax and use the funds in the district for district benefit. Sounds like the ultimate in local control and responsibility. Until you factor in government, largely federal grants. One local ID bragged that for every dollar collected locally they received nineteen dollars in federal matching funds. It is noteworthy that the federal government operates at a deficit--what a business would call a loss, or perhaps, indebtedness. Again, taxpayer debt.

Finally we have Tax Allocation Districts or TADs. Proponents of TADs (IE, those in control of the money) tout the fact that taxpayers in the TAD continue to pay taxes, but quietly gloss over the fact that these taxes are diverted, under their control, to the narrow benefits, as they see them, of the designated district. Outside the district, taxpayers are screwed (see APS and the Beltline TAD) but the politicians involved maintain power thru control of the TAD expenditures.

So. Is one better than the other? Perhaps. If you like being a shaker and mover, aren't interested in getting yourself elected but don't mind sucking up to those who do then you can wield the power of Other Peoples' Money on a Development Authority. If you're a business [owner] that wouldn't mind spending a dollar to get your hands on ten to twenty dollars of OPM to spend on your wants, then the Improvement District is for you. If you're a politician who believes it is your gawd-given right to make sure every penny spent in your area get's the blessed touch of your healing hands then you'll be a big fan of TADs.

But if you're just a taxpayer, or worse yet one who believes in small government, then there is a special word for you. Screwed.