Today’s post was written by the Texas Pension Coalition’s Keegan Shepherd.
Last month, Tesla announced that it was building its second US plant in Austin, bringing along with it all of the promises that can be expected with the arrival of a large automotive company to a major metropolitan area. The company claims it will be an economic engine for our city, promising 5,000 jobs and a base pay of $15 an hour. (To be clear, a man now worth more than Warren Buffet offering $30,000 in a town where the average rent for a one-bedroom apartment is $1,300 is far from generous.) The planned billion-dollar factory along the Colorado River will, for better or much worse, completely transform the region.
What remains questionable, then, is why our elected leaders felt it necessary to beg Tesla to come to the Lone Star State with wasteful tax breaks––the type of sweetheart deal that squanders money that’s rightfully ours.
Travis County approved nearly $15 million in tax breaks to encourage the company to set up shop here. More staggering is what the Del Valle Independent School District approved to coax Elon Musk to central Texas: almost $50 million in tax breaks over a ten-year period. Under the guise of economic development, local leaders are bending over backwards to impress Tesla when, in reality, the company should be doing its best to impress us. What we’ve given away in the process are dozens of millions of dollars that could actually be used right now to address several key funding issues for the state.
The Tesla deal isn’t unusual, frustratingly. Our state and local leaders are all too eager to offer staggering amounts in subsidies and tax breaks to corporations that show any interest in setting up a hub here. In 2019 alone, these sweetheart deals totaled nearly $4.5 billion. That number should give you pause because it is truly massive. We are refusing to collect what we’d rightfully expect from any small business owner or resident––no more and no less. In the process, we are willfully refusing to take care of big issues, like keeping our public pensions healthy and pandemic-proof.
I bring up our pension systems because it is one of the key funding issues that lawmakers refuse to address in a consistent and thorough manner. This continued inability to address pension funding head-on (especially the Employee Retirement System’s funding needs) has only made the issue more and more expensive. That said, our state’s public pension obligations are absolutely dwarfed by the funds we pass up on giving away absurd corporate subsidies and tax breaks year after year. For what we gave away in corporate subsidies and tax breaks last year, we could have covered all our public pension systems’ unfunded liabilities––and we would still have more than half of that amount left over to put toward any number of public health, infrastructure, or educational programs.
Doling out these deals to massive corporations during the pandemic feels particularly bizarre. We need every dollar we can get in order to keep Texas––and Texans––safe for the long haul. And let’s face it: if our communities aren’t kept economically healthy, our community members certainly aren’t going to be buying luxury vehicles anytime soon, no matter how many goody bags we send Musk’s way.
Tesla moved to Texas because it saw a new market and could afford the risk. Put another way: there is no reason that we needed to sweeten the deal with yet another corporate tax break. We are the size of France with a population millions greater than Australia’s: we are truly a massive economy. Our lawmakers need to stop selling us out when it’s clear corporations already have good reason to come here. The gravy train has got to move on; these corporations need to pony up.