COLUMBIA — Greg LeRoy stumbled upon the issue of corporations exploiting tax breaks and subsidies during his work as a consultant on industrial job retention.
"I kind of backed into it by accident," LeRoy said.
WHAT: Author Greg LeRoy on "Is EEZ/'Blight' Good for Columbia?"
WHEN: 7 p.m. Thursday
WHERE: Friends Room, Columbia Public Library, 100 West Broadway
As he was studying the closure of factories, LeRoy found that some of the companies closing plants and laying off workers had received significant tax breaks as an incentive to economic development.
“When you read the fine print there was really no recourse for the cities,” LeRoy said. “It was legal to literally take the money and run.”
LeRoy now serves as executive director of Good Jobs First, which emphasizes accountability in economic development. He founded Good Jobs First in 1998 after winning the Public Interest Pioneer Award from the Stern Family Fund.
The not-for-profit organization promotes disclosure of the costs and recipients of tax subsidies, "clawback" measures if companies don't live up to the requirements of the programs, and job quality standards to qualify companies for tax subsidy programs.
LeRoy wrote “The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation” in 2005. The book gathers evidence of tax breaks used by cities and states to entice businesses and their failure to create and retain jobs with good benefits and salaries.
Citizen groups are hosting LeRoy via webcam for a discussion about establishing an enhanced enterprise zone, or EEZ, at 7 p.m. Thursday in Columbia Public Library. LeRoy said he would also propose alternative solutions to the loss of manufacturing jobs.
“Growing a better economy requires citizen involvement,” LeRoy said. “It’s unfortunate that Columbia’s lost some manufacturing jobs, but I doubt the reason was property taxes.”
EEZ is a state program run by the Missouri Department of Economic Development. It provides for local property tax abatement on new or expanded facilities and state tax credits for new employees. Supporters of establishing an EEZ in Columbia have said it can be used to attract manufacturing businesses and create jobs.
LeRoy called enhanced enterprise zones a “blunt instrument” that needs to be more targeted. Instead of using an EEZ, the city should analyze what has driven the loss of manufacturing jobs to determine what can be done to combat that, LeRoy said. He also supports a risk-assessment program to target companies that are at risk of closing or laying off workers.
"If you’re trying to create an incentive for a company to do something that otherwise wouldn’t happen, you have to target it," LeRoy said.
He points to the 2010 audit of EEZ programs that showed a lack of verification and overly ambitious forecasts of job creation and investment as evidence that the results of enhanced enterprise zones are overstated. He said these types of audit results are not uncommon.
"These programs cost a lot of money, but they don’t show up as positive creators of jobs," LeRoy said. "Even people who support these programs don’t claim they create net new jobs."
He said the research shows that at most, tax incentive programs like EEZ move jobs around to different geographic areas. Mike Brooks, the president of Regional Economic Development, Inc., said that may be true.
"It depends on what view you have," Brooks said. "As a community, we are interested in seeing jobs created here."
Brooks said that while getting a company to relocate to Columbia from another state might not be a net change for the country, it will benefit Columbia and the state of Missouri.
LeRoy said he was surprised at the size of the initial EEZ proposed in Columbia.
“I can never recall seeing a zone that takes up half the geographic area of a city,” he said. "You wouldn’t want to capture more than 8 to 10 percent of a tax base in a program like this."
The EEZ map LeRoy referred to covered much of Columbia, but was rescinded by the city council in early May. The council established a new EEZ Board on May 21 to advise the council on the application process.
The discussion Thursday is sponsored by several local organizations, including Citizens InVolved and InVested in Columbia, or CiViC, Keep Columbia Free, the National Organization for Women, the Mid-Missouri Women’s International League for Peace and Freedom and the Columbia Climate Change Coalition.
“He really is an expert,” said Linda Green, a member of CiViC and the Mid-Missouri Women’s International League for Peace and Freedom. “He has a blueprint for protecting the city's finances.”
Green said CiViC sponsored giving copies of LeRoy’s book to all of the Columbia City Council members and plans to give copies to the members of the EEZ Board. The first meeting of the new board is scheduled for 8 a.m. Friday at Daniel Boone City Building.
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