Little Accountability in Subsidies Found

Wednesday, January 18, 2012 at 8:07 PM by

What happens when a corporation that receives public money for economic development doesn’t create the promised jobs? All too often, nothing, according to a new report from Good Jobs First that highlights how states often do not have policies in place to enforce job-creation commitments made by companies receiving public subsidies.

Active enforcement of job-creation requirements is important to make sure that public money is well spent. Merely having the requirements on paper without enforcing those standards risks turning economic development programs into corporate giveaways, the report warns.

According to Good Jobs First, in order to help insure that public money is well-spent, state economic development agencies should:

  • Require corporate recipients to report back on job creation and other benchmarks, and make that information easily accessibly on-line;
  • Verify company-reported figures;
  • Penalize recipients not in compliance with subsidy requirements;
  • Give state officials minimal discretion as to when to penalize recipients, as this often leads to watering down of enforcement mechanisms; and
  • Publish detailed information on enforcement activities.

Wisconsin actually scores better than most other states on enforcement policies for economic development subsidies, tying for an 8th place ranking. But that is more a reflection of how poorly other states rank than on the quality of Wisconsin’s policies.

Wisconsin does allow for the recapture of some subsidies if the recipient des not meet the jobs commitments, although some of those recapture decisions are left to the discretion of state officials. Where Wisconsin falls particularly short – as do many other states – is in publicly posting the names of companies found to be in non-compliance, and the dollar amounts that companies were penalized.

Tamarine Cornelius

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