The Problem:

One of the most prominent issues plaguing corporate incentive programs is lack of transparency. Whether by design or incompetence, local residents and businesses are prevented from providing input into corporate incentive deals because the process is opaque, there is inadequate notice when meetings and votes are public, and as noted above, restrictive contracts prevent public officials from disclosing details, including restrictions on which materials are subject to public records law. This lack of transparency aids dominant corporations, which have the most resources for navigating complicated application processes and can exclude opposition from local businesses that might oppose their subsidies.

Compounding this problem, as Economic Liberties noted in a previous report, public records law often specifically exempts key corporate subsidy information from disclosure until it is too late for community members or local businesses to act on the information they receive.[1]

The Policy:

As an example of how increased transparency can be beneficial, the California Competes program requires applications to be publicly posted before they are approved in a public meeting. Such measures allowed concerned workers and labor unions to protest tax credits that would have gone to Grubhub, causing the delivery app corporation to withdraw its application. All corporate incentive programs should require applicants to be publicly listed for a set amount of time ahead of public approval, and all records — except for truly proprietary information — should be made immediately available. Corporate subsidy programs should also not be exempt from public records or freedom of information laws.

Notes:

[1] Garofalo, Pat, “None of Our Business? How Corporate Power Corrupts Local Economies and Democracies,” American Economic Liberties Project, June 2021, http://www.economicliberties.us/wp-content/uploads/2021/06/Working-Paper-Series-on-Corporate-Power_9_6.28.pdf.