Point Austin: Questions for Visa
A few queries before providing corporate welfare
By Michael King, Fri., Nov. 30, 2012
Beginning with Wednesday's staff briefing, City Council is considering whether to donate $1.56 million (over the next 10 years) to Visa Inc. The "economic development grant," of course, is not exactly charity. Under the terms of the proposed agreement (a vote is expected next week), in return for the city's annual grant, "Visa is proposing to establish a Global IT Center creating at least 794 jobs [and retain 47 existing jobs] over the next five years, with average salary [and] wages across all positions of $113,351 a year." Those kinds of jobs (and local economic generators) are nothing to sniff at, and the city estimates (based only on direct costs and benefits) a net $6.8 million benefit to Austin. Although the company site is not specified (an existing facility to be renovated), it is said to be located within the city's "desired development zone" (i.e., not over the aquifer), and that the company recruits a diverse workforce with "commercially reasonable" local hiring and would adhere to the city's minority business contracting programs.
As is common with these deals, Austin is expected to genuflect to what has already been negotiated under Gov. Rick Perry's Texas Enterprise Fund. (The TEF supports "free enterprise" by donating taxpayer money to businesses considering Texas location or expansion; it's called an "enterprise" fund, presumably, because "state socialism" might give people the wrong idea.) The Governor's Office announced the state's ante as $7.9 million, "contingent upon finalization of local incentives." That is, should Austin balk and the company walk its jobs elsewhere, city leaders would take the blame for not feeding the corporate gift-horse additional oats.
According to Perry, "the TEF has invested more than $472 million and closed the deal on projects generating more than 63,900 new jobs and more than $22.6 billion in capital investment in the state."
You could almost consider that $22 billion-and-change your own.
About Those Numbers
As you might guess, there is much less to the TEF than meets the gubernatorial press release. The indispensable watchdogs at Texans for Public Justice have been reviewing TEF grants since the program's 2003 inception and have concluded that the governor's numbers are – to put it politely – baloney. Perry's 63,900 number apparently includes every job promised over the nine program years; in late 2011 he was claiming about 60,000, of which TPJ reported ("Con Job," Nov. 2011), "Putting aside five TEF projects that make fraudulent job claims and a sixth project that appears to be undergoing an audit, TPJ found evidence that TEF had created 22,349 jobs by the end of 2010. That number amounts to 37 percent of the job claims made by the Governor's Office."
Of the 65 projects TPJ reviewed, it found that only 17 (26%) complied with their job commitments; 24 (37%) failed to deliver on their original 2010 job promises, 11 (17%) were terminated prematurely, seven (11%) are "troubled" (usually by defaults on job pledges), five (8%, including most of TEF's largest grants) fraudulently claimed more jobs than they actually created, and one project claimed "new" jobs with hiring dates predating its TEF contract.
That's not to say nobody in Texas has benefited from TEF largesse. TPJ separately found that "43 companies that landed a total of $333 million in TEF awards contributed almost $7 million to Perry's campaign and the Perry-affiliated Republican Governors Association [which in turn contributed to Perry's campaigns]. ... The 43 TEF recipients that contributed to Perry and/or the RGA represent about half of the 90 companies that received TEF awards but received 76% of all TEF-awarded funds" ("Perry's Piggybank," Oct. 2011).
Austin's not so near full employment that we can afford to turn our nose up at new jobs. The state's money is already pledged, and Austin's relatively small 10-year commitment is subject to city review and transparency that the state program (with projects subject to the approval only of the governor, lieutenant governor, and speaker) doesn't even contemplate.
But before we fall in line, we should feel free to ask a few more questions. It's unlikely, for example, that Perry and David Dewhurst – who recently and heartily endorsed drug tests for "welfare" and unemployment insurance recipients ("We Want Your Urine," Nov. 23) – asked Visa Inc. Chairman Joseph Saunders or CEO Charles Scharf to provide urine samples before they receive their TEF checks. Perhaps we could add that requirement to the city's Chapter 380 matrix, to protect ourselves (and Visa's stockholders) from corporate decisions made under the influence.
Visa was also among the corporate paymasters who succumbed to U.S. government pressure to block payments to WikiLeaks – although the organization is not charged with any crime and is guilty only of journalistic embarrassment of U.S. and other officials. Might we not ask, does Visa presume the constitutional authority to decide which media are or are not worthy of financial transactions – or does it just leave those decisions to Sen. Joe Lieberman?
Finally, and more simply: Why does a $10 billion company like Visa need to play one state against another, one community against another, all in order to extort tribute in the form of public funding that would better go to education or health care? Visa's "corporate responsibility" standards explicitly emphasize "local giving." Why take away the public money in the first place?
The proposed Visa economic development agreement is available at www.austintexas.gov/department/economic-growth. More on the TEF at Texans for Public Justice, "Watch Your Assets," www.tpj.org.
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