Wednesday, August 15, 2007

The Hidden Numbers Behind Heineman's Corporate Welfare

by Kyle Michaelis
Following up on Gov. Dave Heineman's celebrating the success of the Nebraska Advantage Act, it was suggested to me by a reader that we whip out our trusty NNN Calculator and take a closer look at the actual numbers.  The press release from Heineman's own office reads:
The Nebraska Advantage was designed to encourage new capital investment and job creation in communities throughout the state. The program took effect on Jan. 1, 2006. By the end of July, 116 applications had been received from businesses expecting to invest a potential $4.06 billion in the state and create more than 10,400 new jobs during the next several years.

Gov. Heineman adds:
"We knew one of the most powerful issues for our state and for the young people attending our colleges and universities was to create good quality jobs right here in Nebraska. The Nebraska Advantage is creating real jobs and real results for Nebraska."

But, remember that whole part about the program being "more popular" and, thus, "more expensive" to the state - perhaps more than double original estimates (which the Associated Press reported but the Omaha World-Herald neglected entirely):
OWH: Richard Baier, the state's economic development director, said he does not know how much the business incentive tax credits equal, but he estimated them at about 12 percent to 15 percent of the value of investments made.

AP: The total value of the tax breaks for the businesses that have applied through the end of last month could hover around $600 million.

The $600 million in tax breaks falls squarely in line with Baier's 12-15% estimate of the $4 billion in potential investment Heineman's credited to Nebraska Advantage. But, let's not forget about all those "good quality jobs" Heineman promises as the true cornerstone of the entire program - "more than 10,400 new jobs during the next several years."

Well, this is where the NNN Calculator comes in handy:

Cost: $600 million
Benefit: 10,400 jobs
Total tax credits per job created = $57,692.30

It's funny how that number never found its way into Heineman's press release, nor the media reports that followed. Of course, there are ancillary benefits to our communities if this program actually encourages $4 billion in capital investments, but - as a tool for job creation - it's plain to see that Heineman's Nebraska Advantage appears to be nothing more than an instrument for corporations to take advantage of Nebraska taxpayers.

Under this program, the state is handing out $57,692.30 in tax credits for every job that's supposedly being created.  And, I would love to know how many of these potential jobs will pay an annual wage that comes anywhere even close to that amount. You can bet that it's not many.

Heineman is reporting numbers like these and hailing them as a success???? Is he crazy? Or, maybe Heineman just knows he can afford to be so shameless and deceptive because the Nebraska press will publish his spin without subjecting the facts to even the most basic level of scrutiny.

The people of Nebraska need to see these numbers for themselves. Seem a little funny, don't they? Seem a little stupid and short-sighted, wouldn't you say? Unless Nebraska taxpayers are so soundly in favor of corporate welfare - handing out $57,692.30 to create a $30,000 per year job - Heineman should have some serious explaining to do.

But, who will ask the questions? Who will demand the answers? Will you?

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