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.

In Fact Daily: (posted on web for subscribers only; text pasted below and attached)

Three companies scouting city as Council considers new rules for incentives

Three companies involved in the manufacturing of solar panels are interested in moving their operations to Austin, according to Mayor Lee Leffingwell. Though nothing has been put in writing, Leffingwell has met with representatives from those companies, and, he said Wednesday, “all three are very seriously considering Austin.”

According to the mayor, one of the companies would like to be operational by next summer, though the process would involve several months of lead time even after an agreement with the city was reached. That company, Leffingwell said, is interested in moving into a shell rather than erecting a building from the ground up.

The mayor said he is encouraged by the news: “I have said, ever since 2005, that targeted industries, like those in the renewable energy business, would be specifically the ones we would want to talk to about coming to Austin.”

So, any changes to the city’s economic incentives policy—such as those being considered at today’s City Council meeting—are not just an academic exercise.

The Council is expected to approve an ordinance establishing an enhanced economic incentive proposal review process. That would require a formal cost-benefit analysis as part of the city's evaluation process for economic incentive agreements including “direct and indirect costs of such proposals.” It would also implement a timeline of 13 days to allow citizens to review and comment on any economic-incentive proposals before the Council could take action on them.

The ordinance is the result of a February Council resolution directing the city manager to convene a stakeholders group – made up of members of the Austin Chamber of Commerce, Greater Austin Hispanic Chamber of Commerce, the Capital City African-American Chamber of Commerce, Liveable City, and Austin Interfaith – to consider elements of city policy concerning economic incentives. The group met on three occasions in March, April, and July to discuss the implementation of the cost-benefit analysis as well as a timeline for the city’s review process.

One issue the stakeholders group did not make a determination on concerns wages and benefits for workers employed by companies that receive tax incentives from the city. This is a concern for Austin Interfaith and other citizens’ organizations, which see the issue as vital to the economic and social future of the city. These groups want the Council to ensure that any companies receiving incentives from the city provide their employees with a living wage (no less than $18 an hour), health benefits, and clear paths to advancement within the company, and that those companies have a strategy to hire local workers.

According to Austin Interfaith Strategy Team member Minerva Camarena Skeith, these groups are concerned that economic incentives without built-in safeguards for local workers might cripple the economy. “We want to make sure,” she said, “that our tax dollars are being spent on bringing high-quality jobs to Texas, not just providing breaks for corporations. If companies are going to be profiting off our incentives, they should have to provide for the city and its citizens.”

“We have to ask ourselves: Is Austin is going to be a city of low-wage workers, or are we going to set a higher standard?”

According to Skeith, at accountability sessions Interfaith Austin held during this year’s elections, all current members of the City Council, including Leffingwell, made commitments to support worker protections in any economic-incentive legislation. “We’re confident,” says Skeith, “that the council members will honor their commitments.”

But one council member, Sheryl Cole, says she is concerned that such a proposal could have unintended consequences for the city. “I simply do not want us, in the interest of helping our work force earn more and receive more benefits,” Cole said, “to operate under a faulty premise and keep economic opportunities out of Austin for the most vulnerable members of our society.

“I certainly support living wages and health benefits. I am, however, concerned that we do not take any actions that have a negative impact on our unemployed and underemployed, such that we are not granting incentives to help those most in need of social-service assistance. I do, however, think that the ordinance can be drafted in such a way that we do not exclude any companies that have jobs that would be available to the most vulnerable members of our society but … that cannot pay the living wage or health benefits,”

Leffingwell, for his part, believes health benefits should be a necessary component of the city’s economic incentive agreements. “I don't see how the city could enter into an agreement with any company,” he said, “that did not provide the opportunity to have basic health insurance for its employees.”

Austin Interfaith Victory Pages
November 19, 2010
A newsletter on the successes of Austin Interfaith member institutions

Welcome University United Methodist Church

We are proud to announce University United Methodist Church has joined Austin Interfaith. We look forward to working with Senior Pastor Dr. John Elford, Associate Pastor Susan Sprague and their congregation.

Austin Interfaith GOT OUT THE VOTE.
 Capacity
Austin Interfaith created a nonpartisan Get Out the Vote effort involving 20 institutions and 200 trained leaders that reached an estimated 25,000 people in this fall’s election. We worked to increase voter participation in our member institutions as well as 9 targeted precincts around them. Our plan is to build on this in the upcoming election cycles.

 Votes
The leaders’ work translated to an increase in the number of raw votes cast in the precincts they claimed—a 14% compared to the 2006 gubernatorial election. In comparison, the increase in raw votes in Travis County as a whole was only 5%.

 Percentage
The percentage of registered voters who cast ballots increased on average in the nine precincts Austin Interfaith leaders targeted (compared to the 2006 election). This is compared to an overall decrease in that percentage for Travis County as a whole. Austin Interfaith worked its precincts, which are predominantly on the east and south sides of the county, with an intensive campaign of block walks, worship service announcements and phone calls, Austin Interfaith leaders GOT out the vote. (Precincts targeted included 101, 124, 133, 258, 424, 438, 439, 450, and 461)

Readers’ Corner: Hot off the Princeton University Press is an account of work the Industrial Areas Foundation (IAF); Jeffery Stout’s Blessed are the Organized: Grassroots Democracy in America hit the shelves this week. Stout traveled the country investigating how citizens are joining together to address issues affecting families and neighborhoods. All of the leaders and institutions he writes about are connected to IAF organizations like Austin Interfaith.

Upcoming Actions and Events:

• Pre-K Speak-Out at AISD School Board, 1111 West 6th Street
7pm Monday, Nov. 22nd
Austin Interfaith, in partnership with Education Austin, recognizes the necessity of full day Pre-K for our children’s long-term success in education and to a thriving economy in Austin. Speak-out to the school board to stop the proposed elimination of full-day Pre-K.

• Austin Interfaith Holiday Party on Thursday, December 16th at 7pm, location to be determined