Giving Amazon A Public Store

November 20, 2018

Gov. Tom Wolf, several legislative leaders and city leaders in Philadelphia and Pittsburgh all refused to divulge the incentive packages that they had proposed to lure Amazon’s so-called “second headquarters” Pennsylvania. The prize was a massive corporate development that could include as many as 50,000 jobs. Now that Amazon has ended the expense and announced that it will split the development between the Crystal City complex near the Pentagon in Arlington, Virginia; and the Long Island City area of Queens, New York, the Pennsylvania leaders have revealed the proposed public aid packages that they had offered to one of the world’s wealthiest corporations. The state government offered $4.6 billion in incentives over 25 years, mostly through a grant program tied to the amount of state personal income tax the company would collect from employees, plus $100 million in transportation development. Philadelphia’s government offered another $1.1 billion in incentives, whereas Pittsburgh offered about $556 million. All of the governments involved fought in the courts against public disclosure of the incentive packages. They argued that the offers would have had to be approved by the Legislature and respective city councils in public votes had Amazon chosen one of the Pennsylvania cities. But ratification after the fact entails a completely different dynamic than disclosing and debating such a massive offer from the outset. As it stands, the process involved a few state officials deciding to give away the store. And the issues are not limited to state incentives. The debate also would include the potential impact of such a development on housing prices, transportation availability and costs and a host of other development issues. The combined value of the incentives offered by the winning sites turned out to be about $2.5 billion, less than half of that offered by Pennsylvania and a smaller fraction of the offers from Maryland, $8 billion; and New Jersey, $7 billion. For Amazon, it wasn’t necessarily about publicly funded incentives. Multiple analysts said after the location announcement that the company’s greater concerns were proximity to the talent it would recruit for the enterprise, overall business conditions and other business matters. So, public disclosure of the Pennsylvania incentives would not have affected Amazon’s decision because the incentives were not its priority, making the shroud of secrecy over the packages all the more inappropriate. When public officials put public money, services and other value on the table, the people paying for it should be informed.

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