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Illinois Leads Nation in Wal-Mart Subsidies

By a wide margin, Illinois leads the nation in public subsidies to Wal-Mart, according to new data from the nonprofit research group Good Jobs First.

Illinois has given or promised over $150 million in state and local subsidies to Wal-Mart or to developers of shopping centers anchored by a Wal-Mart store – far more than any other state, according to data released by Good Jobs First in a new online searchable database,

After Illinois, the states with the most dollars going to Wal-Mart were Texas, Louisiana and Missouri, each with subsidies totalling between $90 million and $100 million, according to the data base.

Illinois also leads other states in deals concluded in the last three years, with $50 million promised in nine deals involving new Wal-Mart stores.

The Good Jobs First database updates a 2004 study by the group, which identified $1 billion in subsidies to Wal-Mart nationwide. In the last three years, at least $220 million in additional subsidies were granted.

One problem is the lack of consistent public disclosure of economic subsidies, said Philip Mattera, research director for Good Jobs First.

“Illinois has a relatively good disclosure system for the key subsidies given out at the state level,” he said. For subsidies from municipalities and other local entities, the group generally learned of deals from newspaper articles and followed up with local officials.

Subsidies include industrial revenue bonds, free land, infrastructure development, and abatements of property and sales taxes.

The largest subsidies in the state were for Wal-Mart supercenters in Country Club Hills – with property and sales tax rebates totalling $12.25 million – and Orland Hills, where $12 million in sales tax rebates have been promised for a supercenter that will replace an existing Wal-Mart.

Belleville is providing $9.9 million to a development with a Wal-Mart supercenter that will replace an existing Wal-Mart, which received a $7 million city subsidy for land acquisition and infrastructure improvement in 1994.

Similarly, Collinsville is providing $9.5 million for a development with a Wal-Mart supercenter that will replace a Wal-Mart store built in 1991 with financing from a $2.4 million IRB.

Public subsidies to Wal-Mart and other big-box retailers are “not good public policy,” Mattera said, since new big box stores “do not really stimulate economic growth but simply take business away from existing smaller retailers and threaten the jobs of their workers.”

Wal-Mart creates jobs with poverty-level wages and contributes to sprawl, he added. “Public money shouldn’t be used to encourage more of this.”

In addition to direct and indirect development subsidies, Wal-Mart employees in Illinois accounted for nearly $53 million in state and federal Medicaid spending, Good Jobs First estimates.

“Jobs Scams” – Chicago to Gulf Coast?

When Greg LeRoy returns to Chicago to talk about his new book, “The Great American Jobs Scam,” he’ll touch on local subsidies of corporate headquarters and TIFs — as well as the post-disaster reconstruction of Lower Manhattan and the Gulf Coast.

Subtitled “Corporate Tax Dodging and the Myth of Job Creation,” the book looks at the $50 billion which LeRoy estimates U.S. states and cities spend on job subsidies. What are called “business incentives” are really “tax scams,” LeRoy says — too often “paying companies to do what they would have done anyway.”

That may well include President Bush’s proposed Gulf Opportunity Zone.

LeRoy was research director at the Midwest Labor Research Center in Chicago for ten years before founding Good Jobs First, a D.C.-based nonprofit that promotes accountability in economic development spending, in 1998.

Among cases drawn from across the country, the book looks at the $56 million subsidy package given Boeing when the corporation moved its headquarters to Chicago — and consultant Arthur Anderson’s role “cooking up highly improbably ripple effect numbers.” LeRoy says Boeing moved here because “Chicago had what Boeing wanted” in terms of transportation, financial, and cultural infrastructure.

The book also examines the expense to schools and other public services of nearly 900 Tax Increment Finance zones in Illinois, including 135 in the city of Chicago.

Based on their experience watchdogging reconstruction funds for Lower Manhattan after 9/11, Good Jobs First recently joined other groups urging that Gulf Coast aid projects be monitored so low and moderate income people, displaced workers, and small businesses are included in benefits.

In New York City, requirements that HUD funds benefit lower-income residents were waived, and $20 billion in reconstruction funds “fueled gentrification and wage polarization” while slighting reemployment needs of low-income workers, according to a statement from GJF and other groups.

“If 9/11 is the blueprint for New Orleans, woe is the Gulf Coast,” LeRoy commented.

Bush has proposed tax-advantage enterprise zones and emphasized tax breaks to induce companies to return to New Orleans. Such programs “benefit a small number of large companies” but produce little in real economic results, LeRoy said.

He noted that despite calls to address poverty and racial discrimination, the administration has lifted prevailing wage and affirmative action requirements for federal contractors in the region; despite the health and environmental dangers of toxic flooding in New Orleans, environmental regulations for refineries are being lifted.

“While there will be a push from some quarters to address every problem with tax cuts and private deals, we believe the key to economic development is making sure public dollars are spent on public goods — infrastructure, culture, affordable housing, schools, and the like,” GJF and the other groups said in an open letter.

“In the absence of these public goods, tax breaks will not bring jobs back to the region. With them, tax breaks won’t be necessary,” they said.

The groups call for “a rebuilding plan that encourages broad public participation, strict rules targeting benefits to the most vulnerable survivors, and accountability safeguards.” Federal funds should put dislocated workers in good jobs, develop affordable housing, modernize refineries to reduce toxic emissions, and should go not just to”mega-projects” but also to “community-oriented development in which local stakeholders have a real voice.”

LeRoy added that there the administration has said nothing to date about rebuilding marshlands and barrier islands to protect the Gulf Coast from future storms.

One lesson from Lower Manhattan’s reconstruction project is that big players “moved very quickly to lock people out,” LeRoy said.

LeRoy will be speaking and signing his book at a program sponsored by the Illinois AFL-CIO, the Chicago Federation of Labor, and the Center for Tax and Budget Accountability, at DePaul University, 25 E. Jackson, on Tuesday, September 27 at 5:30 p.m. Reservations are requested at 312-332-1480.

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