Thursday, March 9, 2017

More on City of Tyler tax abatements

What this is about is a decision made yesterday by the Tyler City Council to extend a tax abatement to Hood Packaging.  I don't really like these tax abatements because I think they are "crony capitalism" and they also force other taxpayers in the community to pick up the tab.  But I'm not really ranting about the city's decision to do this, because it is done all of the time, all over the country.  I'm mainly irritated with the reporting on this that has left me confused.  I think there are some concerns and questions that remain unanswered.


First of all, what is Hood Packaging getting out of this, again?


Faith Harper's  article in the Telegraph suggests the company has been getting a free ride from the city for the past three years and will continue to get the same in this new deal.  But today's  article on KLTV's website states that Hood will only get a tax break on the new part of their operation.  Which is it?


Did the city really need to give the company this deal?


The Tyler Economic Development Council (TEDC) and Hood are claiming that if Hood doesn't get a sweet deal from Tyler, they might expand a plant in Canada instead.  Canada?  Has anyone at TEDC or the city council researched what the Canadians are offering, if anything?  Do we know the company would get a better deal elsewhere?


And, finally, you've shown us the numbers, but...


What do they mean, and where did they come from?  Since news articles don't usually contain footnotes and references, I don't know what kind of research they did.  But it appears on the surface that these reporters did what most American journalists usually do, which is to interview some people and print what they said.

There are several numbers here that should have been checked.  The first few numbers are from the Tylerpaper article:

Employment increased from 78 in 2012 to 140 in 2016, according to the EDC. The average hourly rate is $20.11 before benefits and $26.55 with benefits.


I'm not too worried about those, because they are easy to verify.  It just would have been nice to know where those figures came from.  Both articles go on to say that this new addition to the company will retain four jobs, add four new jobs, and will involve investing an additional $4.5 million in the operation.  Okay, good, as long as city leaders follow up on that, I'm okay with it.

On the same thread, here's another one:

According to the EDC it has invested more than $38 million in major capital projects in Tyler, and more than $15 million was made in the last two years.


Hmm..."according to the EDC..."  I'm assuming they mean the Tyler Economic Development Council (TEDC).  So do you see where I'm going with this yet?  Again, easily verified.  Did you do that, Ms. Harper? (Telegraph)  Mr. Murray?(KLTV)

Okay, but here's the one that really made me nervous. Faith Harper from the Telegraph stated the following as fact, without attribution:

Hood Packaging annually contributes $6.8 million to the local economy through its net payroll, local purchases and tax payments.


But pay close attention, faithful readers, 'cuz here's what KLTV said:

Tom Mullins says the company puts $6.8 million into the local economy every year. [emphasis mine]

See the difference?  Tom Mullins (TEDC) said it, so it must be true, right?  This is TEDC's raison d'être--to broker these kinds of deals between businesses and local governments--so of course Mullins is going to vomit some impressive-sounding number in the millions of dollars to support his cause.  Did anyone think to investigate where that number came from?  Somebody at TEDC working from a spread-sheet on the old lap-top?  From Hood Packaging?  From an independent consulting firm or some neutral economist on faculty at a university?

Oh, and get this...


Smith County may jump on this bandwagon, too.


And now that the city has authorized the tax break, the company will go to Smith County and TJC with the same request. All in all, Tom Mullins says the company would be relieved of about $100,000 in taxes, in exchange for their $4.5 million investment.

Great.  So when election time rolls around, the Three Stooges--Commissioners Jeff Warr, Cary Nix, and JoAnn Hampton--can talk about how they "partnered" with the city to "bring in X number of millions of dollars in economic development, blah, blah, blah..."

I'd better stop there before my blood pressure starts going up.

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