Over the weekend, the New York Times discovered that state and local governments, in their pursuit of jobs and economic growth, were lavishing billions of dollars of taxpayer money on corporations large and small. For some of us, this was hardly news. But The Times, to its credit, did what few others have been able to do, namely, create a corporate welfare database and break it down by state.
How does Virginia rate?
The commonwealth is not as generous as some states (Texas hands out cash like it owned a printing press), but we’re hardly slouches. According to the Times, Virginia gives companies $1.29 billion per year — $161 per capita, or eight cents out of every dollar in the state budget.
Looking down the list of welfare recipients, one sees some of the world’s largest companies: Microsoft, Rolls Royce, Northrop Grumman, Alpha Natural Resources. Even Steven Spielberg’s DreamWorks made the list as an LLC. That’s a neat trick.
The argument from economic development officials and from politicians is that such financial favors are an essential part of doing business with businesses these days. Without a nominal grant, a tax break, a loan guarantee or all three, companies will take their capital investment, jobs and the tax revenue they will generate over time to other states and localities eager to make a deal.
A Joint Legislative Audit and Review Commission report on Virginia’s incentive grant system notes that these monies “appear to have a positive but small impact on the site selection decisions of businesses.” So the grants may be a deciding factor in some cases. Or they may have been no factor at all. Not exactly a resounding endorsement.
[Continue reading Norman Leahy’s post at Bearing Drift.]
Norman Leahy blogs at Bearing Drift. The Local Blog Network is a group of bloggers from around the D.C. region who have agreed to make regular contributions to All Opinions Are Local.