From Harford Campaign for Liberty:
This month, the President of the County Council introduced a new resolution at the request of our County Executive, David Craig. It is Resolution 3-14, an Economic Opportunity Fund Loan for Kohl’s Department Stores, Inc., and can be found at the Harford County Council website under ‘Current Bills and Resolutions.’ This of course is not the first government loan to a private corporation this county has seen. In 2012 alone the County Council approved 3% interest county loans to Bizerba Label Solutions and BAFS, Inc. for $100,000 and $200,000, respectively. We’ve also seen a $100,000 Workforce Training Grant issued to Smith’s Detection, and Council approval on $23 million in Tax Increment Financing to the James Run Developers. We could probably fill hours of debate on the merits or hazards of these types of public-private partnerships and if the jobs created are worthwhile enough to warrant thousands of dollars in taxpayer money. However, in the Kohl’s Resolution, Harford County will be deciding upon their first ever ‘conditional loan’, and setting a dangerous precedent for the future of Harford County business.
A conditional loan is a low-interest loan issued which accrues interest on the principal borrowed, but does not require monthly payments from the company borrowing the money and is often forgiven at the end of the specified term. In the case of the resolution introduced February 12th, Kohl’s is being offered a $400,000 conditional loan from the state of Maryland and a $100,000 conditional loan from Harford County in exchange for locating a new e-commerce distribution center in Edgewood and creating a minimum of 550 jobs at the site. The Harford County Office of Economic Development has asked that Kohl’s fill at least half of those jobs with Harford County residents, but that is not a condition needed to receive the monies offered. In fact, in the proposal letter sent to Kohl’s on March 30, 2011 Kohl’s is assured that the county has “established a ‘job access/reverse commute’ bus service from Baltimore City’ that will be available for every warehouse shift.
Also included in the ‘goodie bag’ of incentives offered to Kohl’s were the property tax credits and job creation credits that come with buying property in a Maryland Enterprise Zone. In December 2011 Harford County had already granted the Enterprise Zone designation to Kohl’s, which is estimated to save the company $2.3 million in County taxes and $650,000 in state taxes over the next ten years. The job creation tax credit adds another $893,000 in state tax credits. The Office of Economic Development has already given the company a $50,000 grant with which to train its new employees. Kohl’s also benefits from the superior infrastructure of our state roads, and from being strategically located near BWI and the port of Baltimore. Why the need then to give away another $500,000? Will this company seriously consider uprooting a $90 million dollar center if they don’t get a positive vote from the county?
We are fortunate that our state and local governments cannot operate as the federal government does, with a mounting deficit and no budget in place. But that does not mean the Maryland legislature or county officials should hand out grants and giveaway loans to every company considering a move to Maryland. When we begin to consistently operate in this manner we see increasing bond debt, suspicious backroom deals and companies calling the shots. Furthermore, we do not lose companies to Delaware and Virginia because they give out bigger goodie bags of incentives; we lose companies like Bechtel Corp and tech firm Acentia because our neighboring states have far more advantageous corporate and personal tax rates. Financial tricks like TIFs and conditional loans are not the answer to bringing new business into the state.
Our County Council will hold their public hearing for Resolution 4-13 on March 12, 2013. Please call or email your Council Representative as soon as possible, and tell him or her to vote NO on this resolution. If you can, make plans to attend the hearing at 7pm, and speak your mind. This is a half million dollars of our hard-earned money. Tell your elected official you want your hard-earned money to go toward roads, schools and county buildings, not a department store. We need to stick to responsible fiscal policies if we want Harford County to continue to grow and thrive.
The County Council offices are at (410) 638-3343. Please call or email today. For more information on fiscal responsibility and how to advocate for it locally, visit www.harfordliberty.org.
Christina Trotta
Steering Committee Member
Harford Campaign for Liberty
I love how these C4L types decry the fact that so much of the State of Maryland’s money goes to Baltimore City and the DC suburbs, yet on the rare occasion when a Harford County business has the chance to get something from the State in the form of a $400,000 loan, conditional on a $100,000 match from the County, they are the first to say no thanks.
So let’s say the Council rejects the $100K match. Then guess what, that $400K from the State of Maryland is going to go somewhere else in the state. You may not like it. You may think it’s a poor use of taxpayers money and not a legitimate function of government. But the fact is that this loan will go to somebody in Maryland, since its already in the budget. Might as well go here.
I understand that just because Harford declines a handout it just gets redistributed somewhere else, but that’s not the point. The point is that government SHOULD NOT be handing out loans, that is the job of a bank! If a financial deal is “so good” for the county then why doesn’t a bank commit to the loan?
Why is it alright for the gov. to steal my hard earned money, via taxation, and give it to a multimillion dollar well established corporation, who obviously doesn’t need help? Once again the CC and David Craig admin. pick the winners and losers and promote crony-capitalism.
If government handouts were completely cut we would be on our way to a balanced budget.
TR, It sounds like you’re relying on the old “Gee Mom, all the kids are doing it.” argument. So does that mean if all the other counties jump off a bridge then Harford County should follow suit? The bottom line is: bad government is bad government! Government will grow and corruption will soon follow (it may already be here) if these practices continue. And people restore good government one step at a time. I say Harford County is as good a place to start as any.
550 jobs for $100,000. So, let’s see, that means each job is costing Harford County $181.81 each. And that’s the MINIMUM, folks!
Do you THINK each job will generate $181.81 in additional tax revenue for the county?!? Not to mention employ 550 people that could use jobs?!?
Seriously?!? @Christina Trotta is out of her mind!
Common Cents, I don’t think the math is quite that simple. The county expected about half of the jobs to go to county residents according to the auditor’s note, so its 275 jobs. And the county also ponied up $50,000 in a training grant, which has already been distributed. So, that’s $150,000 in direct county funds, $400,000 in direct state funds, and $3.91 million in county and state tax credits over 10 years.
Last year, the county council approved a $600,000 in county aid and conditional loans to Bizerba Label Solutions to move sites and create an additional 8 jobs. If you think that’s practical, you’re out of your mind too!
@Christina,
No matter how you look at it, the numbers don’t make sense.
First 550 jobs in Harford County is 550 jobs in Harford County. Anybody who travels to Harford County will be spending money in Harford County. Potentially moving to Harford County – i.e. raising our propert values.
Now, let’s assume there are only 275 jobs (and the other jobs just don’t count – which they do), and add the additional 50k. Let’s see, $150,000 / 275… So we’re about $500 / job. BIG DEAL!
As for your $3.91 million in county & state aid, well, let’s do the math. 3.91 million + 150,000 Harford County + 400,000 state = 4.46 million.
Now, 4.46 million / 550 = 8109.09 per job for 10 years. That’s a cost of $810 per job per year. If the average job paid just $20,000 per year (a ridiculously low number), that would be $11,000,000 million per year. At 4.75% state tax rate, that’s $950 per job in income.
So, in your worst case scenario – our state makes $140 / year, or – if for those of you mathematically inclined – $140 / $810 = 17.3% return on investment.
But, @Christina – you’re forgetting about the REST of the deal. You know, the construction companies who will build and maintain the facility. The local businesses who will feed them lunch. The gas stations where they will buy their gas. The supply stores where they will purchase their goods.
That adds up to a lot more.
Before you run off posting things – learn the numbers.
Okay, the campaign for liberty people are dumb, this is benefital to the community to help encourage industrial development in the private sector. Almost all states and some municipalities have areas with less taxes and other benefits to help stimulate growth. Silly old Ron Paul weirdos killing the ability for a moderate conservative to have power in Maryland, I blame you for O’malleys successor
Hi pissed…
I don’t think they are dumb. I say ‘they’ because I do not know them personally and have not attended one of their meetings. However, their concern is quite legitimate.
Kohl’s is a company that had a revenue of about $18 billion and over $1 billion in profit. Why exactly do they NEED help from Maryland to attract a location? Explain that one to satisfaction and then apply your ‘dumb’ label.
In the past the government helped business by passing legislation to assist in the construction of railroads, etc… Those investments were necessary by the government because the risk and cost were so execessively high that the venture would not have been attempted otherwise. The residual benefit was obvious.
In this case, a company with a billion dollar profit does not need our tax money to attract our business. And if voiding the tax burden is the lure that signals the business climate in Maryland is far worse and a bigger problem!
I won’t call you dumb, but you are woefully misdirected in your anger with respect to the government. And, on top of that – this is not a ‘conservative’ measure. Go read about Herbert Hoover and how he’d view this arrangement.
@LocalGuy,
It’s economics 101. We need their 550+ jobs. They can put them anywhere. They have the supply, and we have the demand, so we need to pay them or someone else will.
Again – it’s just a simple law of supply & demand. If jobs were bountiful, you’re point would be accurate. But they’re not, and our legislators know it and (for once) are doing the right thing by the count.
I would agree with most of what you have to say, however you can’t put an E-Commerce warehouse anywhere. I know that there are other possibilities than Harford County, and we would like to have the business here, but it is not fair to say that Kohl’s could locate the warehouse anywhere.
I understand your point. My mistake – It is true Baltimore City needs the jobs our tax money is creating. It is also true the county and state coffers are over-flowing. I’m just too stupid to recognize the importance that a multi-billion profit business should benefit from local revenue rather than perhaps investing it in a local idea that could generate commerce locally. I will just take it on faith that a local entrpreneur is not reading this article and asking where he or she went wrong. My apologies for filling this thread with nonsense. And all along I thought that Kevin Mansell could spare a half million in chump change out of his own pocket for his company… can’t do that when the textbooks say not to… silly me. Again, my apologies.
We don’t HAVE to pay them anything.. they are a private company. If they want to expand their business, they do it out of the company’s pocket, not the taxpayers. Why should we be forced to pay a company to create employment opportunities for .00001% of the population of our state? Why should the county government provide taxpayer funds when they are busing people from out of Harford to fill the positions that WE ARE PAYING FOR? Why can’t you people realize that our government is broken and stop begging for them to steal more of our money?
No one is being “forced” to pay any company to come to Harford County. It is an enticement for them to locate their warehouse here. I could care less if they locate here or not, but at least call the offer what it really is.
I will agree to stay here for only 5,000.
Would you consider $4000 tax free for 10 years residency, and a Kohl’s gift card? We can renegotiate in 2023…
CDEV, some days when I read your posts I would pay you to leave. I don’t think anyone is going to pay you to stay so have you set a departure date yet?
Don’t got all in a lather. We disagree often but I take your point about being paid to come. You and I know its just a bidding war for public funds. But it really doesn’t matter to me where they go to. I can’t remember the company that the State of Maryland was trying very hard to get here recently and when they shunned us for Virginia Mr. O’Malley called it a ‘regional win’.
Please enlighten me, is KOHL’s a private company? I thought the point of a private company is that they weren’t a subsidiary of the government. Why should tax dollars go towards the improvement of a private institution that has their own money? Instead of loaning this company OUR money, the government should just let it fail as the ‘free market’ would dictate. If I wanted to give my money to KOHL’s, I’d buy stock in their company. Since I do not want to give my money to KOHL’s, I haven’t bought stock in their company. The government already gives these corporations big tax loopholes and grants and ‘job creation credits’.. Why do they need a lump sum loaned to them? It’s not our(the taxpayer’s) responsibility to bail out these companies when they need renovations.
I will not pay state or federal taxes from this day forward. I’d rather have that money in MY pocket, thank you.
Oh, another question comes to mind.. Who is slated to make money off this endeavor? I can almost guarantee you one of these state/county/local politicians are in line to make mucho buckos once this farce is finished.
I admit I’ve never tried to start a business in Maryland, but if all the anecdotal evidence I’ve gotten is true, Maryland is not the most business friendly state in the Union. That said, perhaps if that were NOT the case, these types of sweetheart deals would not be necessary… of course, that also ignores the fact that the deals themselves are decidedly unfair, discriminatory actions to begin with…
please forgive my poor use of “anecdotal”…. I didn’t mean subjective or unreliable…
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