Maryland's strange secrecy about the incentive to Giant

May 22, 2002|By JAY HANCOCK

THE STATE of Maryland is about to give a lot of your money to Giant Food, a highly successful grocery chain, but government officials didn't want you to know the details.

Giant threatened to move its fresh-food distribution center to Virginia until Maryland agreed to give the company tax credits, training grants, capital grants and other blandishments to help defray the cost of a new facility.

When Giant said last week that it would keep the operation in Maryland, building the warehouse in Howard County, Gov. Parris N. Glendening said he was "very pleased" by the decision but made no mention of how much it was going to cost the state.

Reporters from three newspapers asked the Department of Business and Economic Development how much money Giant would receive. Sorry, said the agency. Can't tell you. Wait until the General Assembly votes on the package.

The Assembly itself was no help, either.

This is a novel interpretation of open government. Under the same logic, the governor's budget would remain secret until after the legislature voted it into law.

Elsewhere on this page, my colleague TaNoah Morgan reports the size of the Giant deal: almost $2 million. But this information should be credited to Morgan's reportorial energy, not to government candor.

Why didn't the state want to say how much Giant is getting?

Is it because the deal looks like political payback? Giant and its executives have given more than $5,000 to Glendening's election campaigns. The company, based in Landover, was an early supporter of Glendening's 1994 gubernatorial bid when he was Prince George's County executive. What better way to say "thank you" than a trailer-full of taxpayer dollars backed up to the loading docks in Landover?

Perhaps state officials are shy about detailing the Giant incentives because, in an election year, the package looks like a mash note to the Teamsters union, which represents most of the warehouse's 550 workers.

The union is an important political base for Glendening and Kathleen Kennedy Townsend, the lieutenant governor and gubernatorial aspirant. Most of its members probably would have lost their jobs if the operation moved to Virginia, a state not known for its union-friendly legal code.

Or maybe the state won't disclose the Giant giveaways because the premise justifying them - that the grocery warehouse would otherwise move to Stafford County, Va. - is extremely dubious.

Only a third of Giant's 187 stores are in Virginia. The rest are north of the Potomac, and the large majority - 108 stores - are in Maryland. Giant's headquarters is in Maryland. Its frozen-food distribution center is in Maryland. Its dry-goods warehouse is in Maryland.

Why would Giant think about putting a transportation hub on a thinly stored periphery, on the far side of an infamous traffic knot called the Capital Beltway, unless it was a feint to force incentives from Maryland?

I called several warehouse and industrial distribution consultants and they said - this may surprise you - that generally it makes sense to put a store-supply center near the stores. That's why people call it a "center" and not a "circumference" or a "tangent."

The farther a distribution facility is from the retail shelves, the more gas, time and money the trucks burn in getting there.

Giant spokesman Barry Scher says the company is adding stores in the Charlottesville and Shenandoah Valley areas, which could have made the Virginia site - halfway between Richmond and Washington near Interstate 95 - cost-effective. Lower labor costs and Virginia's incentive package also might have made the Stafford County site work economically for Giant, says Maryland economic development secretary David Iannucci.

Supply-chain pros agree that labor costs are important but not as key as geography. In this case geography - the Potomac River and the endless construction projects at the Woodrow Wilson Bridge and the "Mixing Bowl" interchange south of Washington - was on Maryland's side.

Until the federal government bans states from using taxpayer money to conduct corporate bidding wars, companies will ask for economic development incentives, and states will give them. "We simply want the same opportunities" as other firms getting Maryland incentives, says Giant spokesman Scher.

It should be said that Maryland officials are doing a better job of focusing and deploying incentives than they used to. Maryland has given millions to other warehouse/distribution operations, and the political component in the Giant deal may have been a minor factor.

But the whole process would stink less if taxpayers footing the bill could routinely learn its size before it was a done deal.

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