Beebe Over-Bids the Most (Posted by Mark Moore at Arkansas Watch on Wednesday, February 6, 2013)
Governor Mike Beebe has been working on “bringing jobs” to Arkansas. He recently announced a deal to bring “Big River Steel” to the depressed Arkansas Delta. How did he manage to bring this 1.1 billion dollar project to Arkansas? Easy, he paid them to come.
Whenever you see a politician announcing that he is bringing a big business to the state you can rest assured that you are looking at the guy who overpaid the most for the project. These companies have gotten expert at pitting states and localities against one another. In addition to being smarter than most politicians, the businessmen’s goal is the bottom line, the politician’s goal is to make himself look good using other people’s money. Guess who loses under this paradigm?
Here, if you have Face Book, is an outline on one sheet of paper from proponents of the deal. It is corporate welfare for the business and taxpayer funding of public image campaigns for politicians. The plan is to issue bonds so that we can raise $125 million dollars and give $70 million of it to the company just for lowering themselves to locate here. We loan them $50 million more dollars on very favorable terms. $5 million goes to the bond dealers who arrange the transaction. With interest, we will pay in about $180 million to retire the bonds.
Oh, but there is more! Our Department of Workforce Services will spend $10 million public dollars paying for their job training, because in the new planned economy, private companies expect the public to pick up the tab for training their employees! Of course in this case it is more justified than normal because, well, are you sitting down? Good. The retirement fund for state employees will own 20% of this venture! They will buy $50 million worth of stock in this company.
Yes my friends, it now appears that investment decisions for our state employee pensions are now decided based on the political needs of elected officials, rather than the interests of those who rely on the financial health of the fund. That would not just be state employees, but those of us who will be asked to make up the difference should this thing go down- I.E. you and I.
When ENRON did something akin to this, using its employee retirement funds to purchase stock and pump up its stock price, it was judged to be criminal. But using the fund to pump up the political stock of those who will crawl over each other to try and take credit for this deal seems to be OK. Crazy world, eh?
Proponents say the plan will bring 525 high paying jobs to Arkansas. They also point out that there will be some jobs related to initial construction, but friends those crews are not local for the most part. These are not residential houses. This is a steel factory and the specialty construction workers who build them tend to travel to where the work is. They also say that there is the “potential” for 2,000 jobs related to vendor services for the factory. Maybe that is so for things like stuffing the vending machines with junk food for quarters, but the real high dollar vendor services are likely to be supplied by the same people who are supplying them for the steel plant which currently exists right across the river in Mississippi.
I figure we will be paying at least $18 million per year for these 525 “high paying jobs”. In other words, over $34,000 of taxpayer expense annually per job. Gov. Beebe is using the Beijing model, where industries appear to be a huge success only while massively subsidized by the taxpayers. You can’t build an economy like that, but you can destroy one because when costs are shifted like that then resources are misallocated.
Please ask your legislators to vote against sending the debt measure required to fund this ridiculous corporate welfare to the ballot. When they ignore you and send it to the ballot anyway, I urge you to vote it down.