On Monday, Good Jobs First (GJF), a non-profit, non-partisan research center focusing on economic development accountability, released another round of reports showing how states give away millions of dollars in corporate tax breaks and subsidies each year, money that could’ve been used to fully cover the cost of funding their pension systems. The states highlighted include Colorado, Louisiana, and Missouri. In each of these states, the annual cost of their corporate tax breaks and subsidies could pay for the entirety of their yearly pension system contributions, which provides retirement security for millions of public employees.
For some of these states, the disparity between the tax breaks and subsidies and the pension systems are particularly alarming. In Missouri, for example, the state gave away over half a billion dollars in corporate tax breaks and subsidies last year. The cost of the state’s public employee pension obligation that same year was about $150 million. In other words, Missouri could’ve filled its public employee pension obligation three times over instead of giving away millions of dollars to major corporations.
In Colorado, the discrepancy is equally alarming. In 2018, the cost of the state’s subsidies and corporate tax breaks could’ve fully met the cost of the state’s annual public employee pension obligations more than twice over.
According to GJF, state and local governments have multiple ways of redirecting tax revenue to benefit large corporations. For example, in Louisiana, the state government allocates tax revenue to corporations with the Industrial Tax Exemption Program (ITEP). ITEP, which is more than 80 years old, allows the state government to control local property tax abatements, averaging $2.3 billion annually from 1998 to 2017. The state’s Commerce and Industry Board can then dole out this money to various companies, such as awarding three deals worth billions to large energy companies, with no way to ensure that these tax breaks and subsidies go towards creating jobs in the state.
Public pensions, on the other hand, have a real and measurable impact on local communities. In Missouri, according to the National Institute on Retirement Security (NIRS), expenditures from state and local pensions supported $7.2 billion in economic output and 50,829 jobs. In Louisiana, according to NIRS, expenditures from state and local pensions supported $5.9 billion in economic output and 42,751 jobs. And in Colorado, expenditures stemming from state and local pensions supported $7.6 billion in total economic output and 51,663 jobs.
We hope that state lawmakers put their priorities in order, stop the giveaways, and protect their employees’ retirements in 2020 and beyond.