Camarena-Skeith and Malfaro: Who picks up the slack for city's incentives?
Minerva Camarena-Skeith and Louis Malfaro, Local Contributors
Published: 6:06 p.m. Thursday, Jan. 7, 2010
The American-Statesman article "Medical firm eyes a move to Austin" (Jan. 6) quotes Mayor Lee Leffingwell about a subsidy deal he is negotiating with Hanger Orthopedic Group Inc. of Bethesda, Md., to relocate to the Domain.
Leffingwell promises that the deal with Hanger will be "cash-positive" for the city. But any time a company is given substantial tax abatements, other taxpayers are forced to pick up the tab for increased city services like police, fire protection and infrastructure. If the jobs do not pay living wages, families are left dependent on public assistance at taxpayer expense.
Austin Interfaith believes that the city should encourage potential employers to locate in Central Texas using our quality of life, skilled work force, schools and institutions of higher learning as selling points — the factors that business leaders repeatedly mention when selecting a site for their business.
City officials should not subsidize private companies unless those companies agree in writing to pay high wages and benefits, hire locally and provide career advancement for their workers.
Between 2000 and 2007, the City of Austin gave $64 million in public tax subsidies to companies that created 1,400 jobs — about $46,000 per job. This is why we believe these jobs should pay living wages of at least $18 an hour ($37,000 a year) with benefits and a career ladder.
To put this in perspective, $18 an hour translates to $37,000 a year. It is below the average wage in Texas — $18.90 an hour.
A family of four becomes eligible for city social service assistance when it earns less than $21.20 an hour. We oppose using tax dollars to subsidize low-wage jobs.
The City Council approved a $508 million water treatment plant, wants to build a $32 million wastewater tunnel to service future luxury downtown condos and is considering a $600 million rail line to connect the downtown business district to the airport and the University of Texas.
While we are not against infrastructure spending per se, we are very concerned about the impact these decisions will have on poor and working families as well as small businesses. This burden is increased when new companies are given tax subsidies or abatements.
Economic pressures on families and on city, county, school district, Austin Community College and health district budgets are exacerbated during tough economic times like these. Austin's poverty rate — child and adult — is higher than the national average. Investing in education, effective work force development and good jobs are the best use of our tax dollars.
Any deal in which working families are asked to use their tax dollars to subsidize private businesses should be done judiciously, and only when companies guarantee that the jobs they bring are high-wage jobs that provide a true return on the public's investment.