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2004-07-24
Baytown, TX. Texas Lavishes Corporate Welfare To Move Wal-Mart From California

It costs a lot of money to move a corporation from one state to another. Texas taxpayers are picking up the freight costs on this Wal-Mart deal.
The world's largest retailer has begun construction on an Asian imports center on the coast of Texas, built with taxpayer's welfare. This enormous import facility will flood the nation with cheap Chinese goods, undercutting the U.S. manufacturing base on the taxpayer's tab. Officials in Texas will sign the dotted line on August 3rd on the second half of what has been called a "sweetheart tax deal" for Wal-Mart. The Texas-sized deal, which was negotiated in secrecy, never revealing which company would get the tax breaks, will save the Arkansas retailer an estimated $2 million a year in property taxes. The state tossed in another $500,000 in infrastructure improvements at no cost to the retailer. The Governor's office was involved in brokering the deal, while local officials were sworn to confidential dealings -- including the editor of the local newspaper, the Baytown Sun. The Texas Deputy Land Commissioner and the executive director of the Baytown-West Chambers County Economic Development Foundation, were parties to the deal, which could not have happened without the involvement of an investor known as the Permanent School Fund (PSF), a non-profit development arm of the state's General Land Office. The General Land Office was created in 1854, when Texas gave the PSF 45 million acres, for the purpose of furthering public education. For most of the land office’s history, it sold land, gas and mineral leases, and the proceeds from these sales grew the PSF fund to $9 billion, which was invested in certificates of deposit and stocks and bonds. But in 2001, the Texas legislature broadened the PSF's power by allowing the Land Office to use the fund to buy real estate. This opened the door for a transaction like the Wal-Mar deal. The PSF buys the 250 acres of land, and builds the $2 million s.f. import facility. That cost comes to $80 million that the PSF fronts. Wal-Mart then leases the building from the PSF for 30 to 40 years. Because the PSF is non-profit, the whole property is removed from the local tax rolls, and Baytown will see nothing in property taxes. Having consummated one deal, now the same parties are finishing up plans for a second phase of the project, which will enlarge the import center from 2 million to 4 million s.f. But it would be a mistake to view the promised 600 "new" jobs as additions to the workforce, because the "new" Wal-Mart facility is really just relocated from California. Wal-Mart began looking to get out of California after a union lockout of West Coast ports. The cost of land in California, and organized labor prompted Wal-Mart to abandon California, and look to get its Asian goods into America through some other port. Wal-Mart wanted cheap land, proximity to a port, and a lower cost workforce. Wal-Mart told Texas officials it was looking at 36 different sites in eight states. Wal-Mart will pay about $4.8 million a year for the first five years, with adjustments after that initial term. The school fund will get the rent payments. This subsidy to move Wal-Mart from California represents one of the largest moving bills Texas taxpayers have ever paid.

What you can do: Do Texas officials seriously believe that Wal-Mart will rent that facility for 30 to 40 years? They better check their lease agreement carefully about the commitment to continuously operate a distribution center. An arm of the Texas taxpayers now own a huge retail distribution operation that they 'stole' from another state, and which will flood the country with take-out from China, which will only further erode the manufacturing based of America. All done with public money. These kinds of deals give enhanced meaning to the term "free market." For earlier stories on this subject, search by "corporate welfare." This deal comes just months after a report from Good Jobs First (which used this database for some of its research) showing that Wal-Mart has received more than $1 billion in tax subsidies to build its empire. Wal-Mart has truly become the King of Tax Welfare. Texas officials: can you say 'breach of contract?'










 
 
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