Jobs, Jobs, Jobs
Jobs, Jobs, Jobs
By Phil Krinkie
October 26, 2012
“Jobs, jobs, jobs, it’s all about jobs” was the campaign slogan that helped propel Gov. Rudy Perpich to victory in 1986. Minnesota’s economy was struggling and the promise by a gubernatorial candidate to create jobs was what Minnesotans wanted to hear.
Today across our state and across the nation we hear a similar chant of jobs, jobs, jobs from Republicans and Democrats alike. Whether running for city council or President of the United States the rhetoric is the same. Each candidate has a plan for how government will create jobs. The difference in the job creation pitch from the days of the Great Depression is that today’s economic stimulus programs are not public works projects. The current job creation projects more often than not have the federal, state or local government playing the role of venture capitalist, providing millions of taxpayer dollars to private companies with the hope they will succeed.
Take, for example, President Obama’s ill-fated “green jobs” initiative. The best example of this boondoggle is of course the now famous Solyndra debacle. In this case, one company, Solyndra, a manufacturer of solar panels, was given $535 million in government backed loans. Within two years the company declared bankruptcy, yet managed to pay large bonuses to its top executives to dispose of the company’s assets. The final result is there were no permanent jobs created and taxpayers lost over half a billion dollars.
At the state level similar economic development programs are in place to provide low cost loans or outright grants on the theory that these will create permanent jobs.
Through the Minnesota Department of Employment and Economic Development (DEED) grants are provided to private businesses from a pool of money appropriated by the legislature.
In addition to Federal and State grant programs cities and counties have Economic Development authorities that also provide grants as well as property tax forgiveness to private businesses. As an example of give away programs at the local level, in 2010 the Minnesota Legislature created the “temporary authority to stimulate construction” program.
With high unemployment in the construction industry, lawmakers hatched the idea to allow cities with “Tax Increment Finance” districts to use excess funds to spur private development. In a recently published exposé, done by Finance & Commerce, on this job creation program for cities, their investigation pointed out that of 76 projects in 35 cities, 44 of these projects didn’t even track the number of construction jobs created with the $36 million of taxpayer funds. Of the 76 projects, 24 received outright grants and another 17 were given forgivable loans. Thirty percent of the projects were for retail developments, 27% were for housing and 24% were for business development.
Of the $36 million in taxpayer funding, $3.74 million went to Target Corporation, $24 million was used to demolish buildings at an old shopping center and $90,000 helped open a pizza parlor. Hardly the type of developments associated with high paying jobs or long term economic growth.
Another recent state economic development snafu was when the City of St. Paul awarded a $38 million ballpark construction contract without a hint of a competitive bidding process. The day after Governor Dayton announced a gift of $25 million of state bond funds to build this $54 million 7,000 seat ballpark, St. Paul awarded a no bid design-build contract to a Minneapolis construction company. After a lawsuit was filed, the City of St. Paul reversed its position and stated it would follow an open bidding process. This example points out just one of the many flaws in the process of government run job creation programs.
Most of the time there is little or no tracking process in place to determine how much, if any, long term economic growth occurred with the expenditure of hundreds of millions of taxpayer funds.
In working to regulate activity in the private sector, government should strive to create a level playing field for all businesses. The goal should be to create an equal opportunity for all enterprises to succeed, not use taxpayer money to reward some and the tax code to punish others.
Hopefully, on Election Day voters will be able to differentiate between private sector job growth created through plans to improve the business climate versus government stimulus programs that create more government spending with little or no permanent job growth.
With an endless stream of public dollars flowing into private businesses under the guise of economic development, it is time for the government to stop picking winners and losers. The role of government is to regulate commerce, not try to create commerce.
Phil Krinkie, a former eight-term Republican state rep from LinoLakes who chaired the House Tax Committee for a while, is president of the Taxpayers