You can't sell a TAXPAYER SCAM!
Skepticism Grows Around Boston's GE Deal
Critics cite Boston's impoverished schools and toxic contamination in the Berkshires
Chris Hoeh (center), a private school teacher whose child attends Boston public schools, holds a sign questioning Mayor Marty Walsh's priorities between giving General Electric a tax break and fully funding the public schools budget. Photo by Dylan Martin.
General Electric ($GE) relocating its headquarters to Boston has been called a victory for Boston and Massachusetts, but not everyone feels that way. Just ask the large group of protesters outside of Symphony Hall Tuesday night, where Mayor Marty Walsh was giving his annual State of the City address. To them, the city offering GE a $25 million tax break while the city's public schools face a reported $50 million budget deficit shows that Walsh doesn't have his priorities straight.
"I don't want that money going to corporations that don't even pay taxes."
"He has his priorities out of order," Christine Langhoff, a retired schoolteacher, told BostInno. She was holding a sign that said, "We have enough money for schools we deserve," accompanied by a GE logo, crossed out.
"I live in Dorchester, short distance away from where the mayor lived before he moved," she said, "and my property taxes have just gone up by 30%. I don't want that money going to corporations that don't even pay taxes because they got a tax rebate last year."
Tito Jackson, a Boston City Councilor for District 7, was standing with the protesters and said the city is moving in the wrong direction if it will consider tax breaks for companies while facing such a large budget deficit with the schools.
"The City Council will have an opportunity to hear all of the finances behind that," he said, "but the real underlying issue is that the reason why a company like GE would come here is because of our talent, and if we don't invest in our talent and our talent pipeline, a company like GE will come and go and will not stay here."
While Boston's schools superintendent, Tommy Chang, estimated the school budget deficit at $50 million, Walsh's administration has said it's closer to $10 million, according to the Boston Globe. During his State of the City Tuesday night, the mayor defended his commitment to schools, highlighting, among other things, his initiative to get the state to fully fund full-day preschool.
But GE receiving roughly $151 million in incentives from the city and Commonwealth remains an issue with protestors and others who don't see the deal for such a profitable company as reason for celebration. Broken down, the deal includes the up to $25 million property tax break from the city, up to $120 million through grants and other programs from the state, some $1 million for workforce development grants and up to $5 million for an "innovation center."
"What we offered GE was less an incentive package, than a cultural advantage."
Not counting the $1 million workforce development grants and the $5 million for the innovation center, the deal comes out to $181,000 per GE employee when considering the 800 jobs it will bring to Boston.
What's more, the Globe reported Wednesday morning that the city has pledged up to $100 million to reopen the Old Northern Avenue Bridge, and that the state will commit $25 million for infrastructure improvements—both on top of the $151 million already announced in the GE deal.
"What we offered GE was less an incentive package, than a cultural advantage," Walsh said in his State of the City address.
Walsh has previously said convincing GE to move its headquarters here is like winning the Powerball. He has also said that GE will "bring positive activity to the economy and continue to grow our industries." In addition, he has said he is confident that "this is the start of a strong partnership."
"GE is not only a historic innovator, returning to the city where Thomas Edison got his start. It’s not only another step forward for Boston on the world stage," Walsh said during his State of the City address. "It’s a magnet for talent and investment that we’ll direct toward our shared goals: in opportunity, in community, in education."
When asked to break down what exact financial benefit GE will bring to Boston and Massachusetts, a Walsh spokeswoman provided an initial economic analysis that was done by the Boston Redevelopment Authority, based on an early estimate that GE would move 600 jobs to the state. The analysis predicted that in addition to 600 direct jobs, the move would bring 1,840 indirect jobs to the state, with 590 of them in Boston proper.
According to the BRA analysis, that's expected to generate annual incomes of $220 million in Boston, part of $325 million in new income flowing into the state. That translates into a $10,000 annual fiscal impact on Boston's budget and $20.9 million annual impact on state tax revenues, according to the BRA.
An excerpt of the Boston Redevelopment Authority's analysis of General Electric relocating its headquarters to Boston.
Another touted benefit is the startup accelerator of sorts that GE plans to launch called the GE Digital Foundry, though there are very few details on this right now.
People critical of the incentive package GE is slated to receive have started using the hashtag #makeGEpay to voice their grievances or concerns on Twitter.
Jay Bardhan, an assistant professor of mechanical and industrial engineering at Northeastern University, told BostInno that GE moving to Boston could be a great opportunity for his students, but said his main concern is with the city and state's process for determining the value of GE's incentive package. He added that he would like GE's relocation here to be a win for everyone but wants to know what exactly was communicated to the city and the state to convince them of using so many tax dollars.
"Does this hamstring the state because if we raise corporate taxes, is GE going to leave?"
"What’s the impact on tax revenue?" Bardhan said. "Does this hamstring the state because if we raise corporate taxes, is GE going to leave?" he added, referring one of the major reasons GE is leaving Fairfield, Conn.
State Sen. James Eldridge, D-Acton, is another person who has been critical of the deal. In a phone interview with BostInno, he said his objection is that GE is being offered tax breaks and incentives while the state is in need of more investment for transportation, education and workforce development.
"When you think about Massachusetts, our economy is pretty strong, creating an average of 6,000 jobs per month," Eldridge said, "so why are we dedicating $120 million for just 800 more jobs?"
To help make his point about the need to invest in more workforce development, Eldridge pointed to a new study by the Brookings Institute showing that Boston ranked No. 1 in income inequality. He said high-paid GE employees are the "the least deserving of tax breaks and subsidies" and will only continue to perpetuate income inequality in Greater Boston.
Another issue Eldridge said he has with GE is toxic contamination produced by the company in Pittsfield, Mass., when it had a 254-acre facility there. As reported by MassLive, GE had reached a $250 million settlement for the proposed cleanup of polychlorinated biphenyls (PCBs) that had leaked from its facility in the Berkshires, but the company is now in disagreement with the Environmental Protection Agency as how to clean up contamination in the Housatonic River.
The International Business Times noted that local environmental groups found that EPA's proposal, which GE has criticized and said would cost it $600 million, doesn't go far enough.
In speaking with MassLive, Gov. Charlie Baker said "there's no connection," in his view, between GE's fight with the EPA and the state contributing to an incentive package for GE to relocate its headquarters.
"I think that has to be considered when giving out tax breaks and subsidies."
"With respect to the commitment we made to General Electric, to GE, that was mostly, almost completely, a capital and infrastructure commitment, which I believe in the short term and in the long term is going to be a really good investment for the Commonwealth and for the people of Massachusetts," Baker told MassLive. An earlier report in The Boston Globe had a mixture of "grants, tax incentives, infrastructure improvements and help with real estate acquisition costs."
But for Eldridge, there is a question of whether a company that's currently fighting GE over the cleanup of a contaminated river should receive any kind of tax breaks or incentives for its corporate headquarters.
In statements GE provided to both the International Business Times and MassLive, a company spokesman said “GE remains committed to a common-sense solution for the Housatonic [river] that is fully protective of human health and the environment, does not result in unnecessary destruction of the surrounding habitat, and is cost effective."
Eldridge disagrees. "I think it’s fair to say GE doesn't have a reputation of being a good corporate citizen," he said, "and I think that has to be considered when giving out tax breaks and subsidies."
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