Opportunities Lost to Corporate Welfare

Delaware FOR SALE sale
Within a total of 14 calendar days, SB 200, the “Commitment to Innovation Act,” was rushed through committees, voted on by both chambers (under a suspension of House rules), and signed by the Governor. This latest corporate giveaway will be funded by you the taxpayer and is the latest display of an arrogant disregard for you and your family’s dire economic circumstances. I am forced to post on this matter and the recently signed “Delaware Competes Act” to make you aware of the willingness of this Administration and legislature to forfeit over $60 million of revenue in a futile attempt to bribe multi-billion corporations to not leave Delaware when, in fact, they have already done so. Delaware’s working people and local business community do not deserve to be shortchanged by such economically irresponsible flights of fancy.

Corporate Welfare Fails to Work

I certainly have not and will not support any of these corporate welfare tax bills. DuPont/Dow moved the majority of research and other jobs in the agricultural spinoff to Iowa and Delaware taxpayers are left with some extremely costly crumbs (headquarters only) in Wilmington. Let me point out to all that there was and will continue to be opposition to this ravaging of the taxpayers’ wallet and I certainly will do my best to expose my colleagues to the illegitimacy of such policies that offer no return on investment for Delaware taxpayers.

My point is that manufacturing a product, such as Nabisco has done for many decades, producing billions of dollars of Oreo cookies in Chicago, benefits the local community and businesses with decent paying jobs. The corporation that owns Nabisco recently built a factory in Mexico and is moving Oreo production and 600 Chicago jobs to that facility, despite having extorted over $45 million in subsidies from Chicago taxpayers. This is happening to take advantage of dirt cheap wages and rueful working conditions. The only beneficiaries of such a callous move are those multi-billion dollar corporations and their CEOs (see DuPont/Dow $80 million bonuses) while idling thousands of American workers who no longer have spendable income to support the consumer spending that is needed for local businesses to survive. Ross Perot was right about that sucking sound.

For another example, look at DuPont’s recently opened $200 million factory built in China employing thousands of Chinese workers manufacturing solar panels for sale back here, or Johnson Controls recently constructed and opened battery manufacturing facility ($150 million) in China for distribution from the Delaware distribution center in Middletown that taxpayers invested millions in infrastructural and road improvements. Also note the DuPont/Dow ($130 billion merger), spinoff headquarters that will stay in Wilmington, with a paucity of jobs, while a significant majority of the actual jobs of the agricultural research branch goes to Iowa. This will leave Delaware with 1,700 layoffs of well-paid positions and only a promised potential for future job growth numbering less than a quarter of that if it comes to fruition at all. The price tag of that economic development mirage will be an additional $9.6 million price tag of State taxpayer money and as much as $6 million of County taxpayer funds. The list goes on and on.

Another devastating consequence of the DuPont plan is the actual amount of revenue that will be lost to Delaware by those layoffs. The adjustment of that 1,700 number downward to 1,150, conceding that 500 of those targeted will retire, still leaves Delaware with over $92 million in lost salaries per year. This translates into a loss of $5.5 million in state tax revenue alone (at a conservative 6% rate). In addition, there is the loss of tens of millions of dollars of consumer spending capabilities (needed to sustain local businesses). Add in the draining of millions of dollars in burdens to an already stressed unemployment fund and other necessary government support systems.

Increasing Costs of Corporate Welfare

The “Corporate Welfare” policies of this Administration have cost the Delaware taxpayers over $250 million during Governor Markell’s term. This irresponsible wasting of the taxpayer dollars has resulted in no discernible return on investment and has stopped absolutely no job losses incurred by these wealthy corporations. Further compounding this administration’s erroneous economic missteps is the recent policy that was passed, despite my and Representative Williams objections, labeled the “Delaware Competes Act.” This corporate giveaway will cost over $48 million in lost revenue to Delaware in three years with absolutely no appreciable effect to retain or grow jobs. Now the Administration has signed more legislation branded as “The Commitment to Innovation Act,” further eroding revenue that provides basic, necessary services to Delawareans. Neither of these misguided economic policies will reinforce local business growth or stability and will leave a gaping hole in Delaware’s budget that this Administration will attempt to fill on the backs of state employees, seniors, and the poorer families in Delaware.

Adding to the insult of these types of corporate giveaways is the actual statistical proof that these types of bribes and irresponsible economic policies have been marked by failure after failure at an unaffordable expense. Read the March 4th News Journal article and please note that $22 million went to JPMorgan which profited to the tune of $24.5 billion last year with “promises” of job growth that would inevitably have occurred without this taxpayer outlay. Note also the $11 million gift to Incyte Corp., which announced plans to move half of its Delaware workforce, nearly 300 people, to Pennsylvania this year. The Fisker and Bloom debacles speak for themselves as monuments to irrational and irresponsible wastes of taxpayer dollars.

One tenth of that $250 million diverted to supporting locally based businesses for job growth, infrastructural investments, and production improvements via tax credits and subsidies would ensure a healthy and robust growth in our local communities and not end up in the pockets of corporate profiteers. You can also rest assured that those local businesses that provide the bulk of jobs in Delaware and drive Delaware’s economy will not be shipping out to China or Mexico or Malaysia.

Call your legislators and demand that they resist and reverse this callous and flawed attempt to redistribute and divert revenues from Delaware families into the coffers of wealthy corporations.

John Kowalko
State Representative
25th District

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