Making smarter use of business incentives

Subsidies: State officials must use higher standards when doling out taxpayer money to companies.

October 13, 1999

IN a perfect world, no state would spend taxpayer funds to lure corporations -- and jobs. But reality dictates a different approach in which states compete fiercely to hold on to big companies and lure new ones.

Maryland officials have handed out some $100 million to businesses over five years. In most cases, the money was well spent, ensuring thousands of jobs for local citizens. In a few instances, though, taxpayers were royally ripped off by companies that took the state's money and reneged on their promises -- or never intended to move from Maryland.

Nearly every state has joined the bidding war. Some have spent hundreds of millions of dollars to gain big manufacturing plants. As Sun reporter Jay Hancock showed in a four-part series concluding today, companies cynically play one state against another.

No state will drop out of this game unilaterally. A bill by Rep. David Minge, a Minnesota Democrat, would curb state business incentives by imposing a stiff federal tax on these deals. Gov. Parris N. Glendening supports this bill, but passage is doubtful.

Maryland's governor could take other steps. As the next chairman of the National Governors Association, Mr. Glendening should get governors to cooperate so that companies do not manipulate and deceive states.

Closer oversight and scrutiny are essential.

The governor must review the way Maryland measures the benefits of incentive packages. He must demand ironclad provisions so companies meet requirements for receiving state aid.

Legislative leaders should have a bigger role earlier in the process. Once the governor agrees to a deal, lawmakers must be brought in while time remains to question the agreement.

Incentive packages to businesses won't disappear. But elected leaders have to hold companies to a higher standard and minimize the ability of corporations to play games. It's not too much to ask our leaders to impose tougher standards before they dole out taxpayer money.

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