It was one of those things they figure reporters will never get their hands on. After all, it was just a friendly PowerPoint presentation among good corporate citizens on how to scam the idiot taxpayers out of millions of dollars.
Of course, now that it’s on the internet, any idiot taxpayer could read it. The presentation, called “Turn Your State Government Relations Department from a Money Pit into a Cash Cow,” was given in March at a meeting of the State Government Affairs Council in Georgia. The point was nothing less than teaching dozens of corporate execs how to shake down state and local governments for millions in incentive funds regardless of whether a company already plans to move to a particular state or city without them.
The whole thing would have almost been funny if one of the two guys giving it wasn’t Robin Stone, former vice president of state and local government relations for The Boeing Company. That would be the same Boeing Company down whose throat Governor Mike Easley’s administration tried to shove a $534 million incentives package from state and local governments last year in an attempt to get it to build a $900 million jet plant in Kinston. (Worse yet, Easley’s Republican opponent in the race for governor, Patrick Ballantine, accused him of not being “assertive” enough in landing Boeing. The plant wound up in the state of Washington, which coughed up an outrageous $3 billion in incentives to create 1,200 jobs.)
The other “instructor” was Michael Press, national director of Ernst & Young’s Business Incentives Practice. North Carolina has been an incentives gold mine for Ernst & Young, which did the research that created the rationale for a new business incentive grant program passed by the legislature in 2001. Unless the state gave away millions more in incentives, the company told legislators, it might fall behind in attracting business and that would be a disaster.
Then, as reported in the Carolina Journal and the Raleigh News & Observer, Ernst & Young almost immediately began working as a consultant to private companies on how to qualify for money under the program it helped to justify and create. One of those companies was Time Warner Cable, which received advice on how to extract millions in incentives from state departments — at a time when the company was proposing an 1,100-employee campus in Charlotte. As it later turned out, Time Warner was planning to locate here anyway.
This was a scam right out of Press and Stone’s presentation, which advised execs to use the threat of not moving to a state “but for” the tax incentives, but to be prepared to “do-it-themselves” if governments didn’t fork over the incentives. In other words, if you plan to locate somewhere anyway, shake them down good for incentive money first.
“Identify the REAL incentives,” the presentation reads. “Don’t settle for off the shelf.” Other advice included “control publicity,” “use local subs and vendors and brag about it,” and to “avoid legislation if possible,” since legislation would more readily commit companies to actually doing what they said they would do in return for the money.
When it was suggested that Boeing was visiting North Carolina to squeeze more money out of Washington state last year, Easley senior policy advisor Dan Gerlach told the Charlotte Observer that “These are not people who do things for show.” Uh-huh.
The fact of the matter is that no one knew what was for show and what wasn’t while the state negotiated the Boeing deal. Thanks to a clause in state public records law, the public isn’t entitled to know any of the details of an incentive deal between a corporation and the state until the ink is dried and the deal is sealed because that might reveal “trade secrets.” In other words, our job as taxpayers is to shut up and pay.
In December, when the John Locke Foundation’s Carolina Journal began its two-month battle to force the state Commerce Department to turn over records from the Boeing deal, department officials were still telling reporters that the price tag for it was “at least $94 million.”
As it later turned out, they neglected to mention a few hundred million. (And this in a state that just had two back-to-back tax increases.)
With the media barred from watching the trough, a feeding frenzy is beginning to develop. The way these deals are structured, there’s little to keep influential politicians from pushing through incentives deals in exchange for campaign cash from the companies that benefit, then claiming they “helped” bring businesses and jobs to North Carolina at election time.
In nine hours in December, the News & Observer recently reported, state legislators doled over $240 million in tax incentives to tobacco and biotechnology companies already located here in exchange for promises to “expand” their operations. According to the N&O and the Center for Responsive Politics, the same companies donated tens of thousands of dollars around the same time to the national Democratic Legislative Campaign Committee, whose finance chairman is Democratic House Speaker Jim Black.
Just a coincidence, I’m sure. Or maybe a move right out of the new cash cow corporate playbook.
Contact Tara Servatius at tara.servatius@cln.com
This article appears in Jun 2-8, 2004.
