We look at 3 kinds of "bills for billionaires" -- "Bailouts",  "Crypto Crimes", and "Revenue Ratchets." 

Billionaire bailouts are subsidies to industries or individuals that are profitable and successful without help from taxpayers. 

They do not need the help,  but they beg for money from lawmakers, and too often they get it.  Consultants and lobbyists specializing in this "jobs scam" are thriving and growing more brazen in their asks for handouts.  They claim that taxpayers should give them money because they will "create jobs."   The devils are in the details,  and the devil is in that general presumption that more jobs will be created, and that those will be good jobs.   

Click for some examples of bad legislation resulting in public funding that costs more than the public good:

• • Stadium Steal From Children  
  • Private infrastructure making private profits from public funding 
  • ** Each of these could potentially produce a public benefit in addition to supporting a private industry,  but these examples were negotiated to the sole benefit of the private industry,  not the public good. ***  

Economic Development can be a useful tool.  Some of the valid goals include:

• support a new, innovative industry with great promise for the future
• rejuvenate an area or neighborhood that has fallen into disrepair or downright despair
• diversify the economy of a region or state that is too dependent on a limited number of industries.

However, lawmakers MUST require specific public benefits outweigh public payments.  

Examples of public payments costing more than the benefits include

• public funding for sports stadiums  -  click for more information about "Stadium Steals from Children."  
• subsidies for mature industries that no longer need help  
• free land or lump-sums to recruit a business to build in a specific city, but the jobs promised are far greater than the actual jobs created
• tax favors for private airplane owners 

When a business is mature and generates large sums of revenue for business owners,  then government subsidies should not be started, and if they already exist, they should be repealed.  

CHECKLIST of Accountability Measures in Economic Development bills:

1. SMART Goals:  the goal of the economic development incentives should be defined considering the SMART goal acronym.
   • Specific goals should state requirements for job quality such as:
     1. Wages:  Each job that is counted as "new" must pay more than the median regional wage per hour.  There is no point in taxpayers paying for jobs that push local wages down.  
     2. Full Compensation: Employers are required to pay for a specific standard of healthcare insurance, earned paid time off, paid family and medical leave, etc.
     3. Safety: Beneficiaries of an incentive must be held to a high standard of worker safety,  with reporting and enforcement defined in the bill that establishes the incentive.  
   • Measurable goals should state the number of jobs,  and any other measurements to ensure the public is getting a benefit. 
   • Achievable goals set standards that are high,  but also can be met with the resources available. If the goals set standards that are so high that they cannot be attained,  then the entire program becomes unenforceable, and a taxpayer boondoggle. 
   • Relevant goals achieve something that helps the public.  The goals should be written so that a person reading them can easily see that each goal is part of the bigger picture to improve the local economy, and grow to provide revenue to the local government to cover the costs that the business's presence add.  
   • Time-bound goals should require that milestones be met by certain dates,  or by dates that are relative to the day the incentive is given. 
     • If a certain number of jobs are not created as "new"  by 1 year after the business has applied for a tax credit,  then the business may either apply for an extension,  or the business will be ineligible to receive the tax credit.  
2. Review of Goals:  Specific people (elected and staff) must be tasked with evaluating whether the goals have been met,  and they must report their evaluation by a specific calendar deadline.  
   • Specific roles must be defined in the bill to enforce the provisions of the economic development program.  It's not strong enough policy to require that the business must report.  Instead the requirement must specify the job title in government of the person responsible for enforcement,  or their designee or successor.  For example,  the Office of the Auditor General must conduct an audit, and report.  The JLBC must report aggregate dollars paid as incentives, and the numbers of organizations that received them.  The members of the House Commerce Committee must meet publicly by Sept 1 of each year to question the results. 
   • Actual results must be achieved,  not just promised results.  The classic problem with many economic development programs is that they get started with the promise of a certain number of "new" jobs,  but those jobs never materialize.  
3. CLAWBACKS:  If an important goal is not met, the incentive should not be given to the business.  If the incentive has already been disbursed to a private business,  the economic development law must require that the business must return the money to the government.  That is, the government must claw back the money because the business did not hold up their end of the deal.  
4. The public benefit must be greater than the public cost. 
   • The public benefit should be defined in terms that are as specific as possible.
   • A public benefit is one that helps all the people of Arizona,  or it helps people who need help. A temporary tax incentive to a fledgling business that grows into an independent, profitable enterprise is fair economic development because the benefit went to an organization that needed some help during an incubator stage.  
   • ALL PUBLIC ASSETS  should either be open to the public 24/7 such as a public park,   or any entity of the public may rent the asset at a price that both is equal to all renters, and the aggregate rents paid will cover the annual costs of maintaining the asset.   For example:  a publicly-owned school or stadium is not open to the public at all times.  But an organization may rent part or all of the building for a price that is equal for all similar uses, and that pays for the maintenance of the school or stadium.  
   • If the public benefit is an increase in jobs,  then the number and wages of the expected jobs must be defined in the bill to establish the program,  and the jobs must be defined as part of the SMART Goals, with reviews, enforcement,  and potential clawbacks. 
5. TRANSPARENCY:  Before, during,  and after the program is established,  the public must be allowed to see it and question their elected representatives about it.   
   •  Before: The public must have many opportunities to participate in and comment on the economic development program during the process of writing and amending the bill that establishes it.   NO strikers for economic development bills!  No passing them in the middle of the night with a large budget package and without time for public comment!  Every bill that gives a subsidy or tax incentive to a private corporation -- and every bill that supports a public asset that helps a private corporation -- must be heard in at least 1 committee hearing in each chamber of the legislature with public testimony.  If there is nobody from the public to testify at a committee, then that committee meeting does no meet this standard of transparency. 
   • During:  The economic development program must publish annual or more frequent reports of the incentives that were paid by taxpayers and the benefits provided to the public directly related to the economic development program. 
   • After:  Both indirect costs and indirect benefits must be considered as each year passes after the program has been established.  Indirect benefits to the public may include things like the local team spirit, or the love of creative art spaces.  indirect costs that taxpayers pay must be considered including the increased need for public safety, parking, water, sewer, education, and transportation.  The reporting for the program must include specific attention to the results of the program in the longer term,  after 5 years, and after 10 years. 
6. SUNSET:  In Arizona,   raising taxes or repealing a tax cut requires a 2/3 vote of the legislature.   It is a nearly impossible standard to meet.  As a result, lawmakers pander to special interests by easily cutting taxes, but a balancing tax repeal of a loophole is almost never done.  THEREFORE, it is wise to include a specific sunset date with any economic development package.  A sunset date should be around 5 years to 8 years after the program begins.  The "sunset"  is the automatic repeal of the tax incentive program on that date.   If the program is evaluated and found to be achieving good goals that benefit the public,  then lawmakers should renew it after  or before it sunsets. 

If a new bill for "economic development"  is missing any of the 6 provisions listed here,  it should not be accepted by any lawmaker.   

The "Gift Clause"  of the Arizona Constitution prohibits a gift of public funds. 

Be wary of bills that are touted as great economic development packages, but are really just a gift of public funds to an organization or billionaire who can afford a big team of polished lobbyists.