Questions about GE deal
Should we be committing public dollars to lure big companies?
GENERAL ELECTRIC’S DECISION to move its corporate headquarters to Boston says a lot of great things about our state. According to GE’s chairman and CEO, Jeff Immelt, the company picked Boston because it is a “dynamic and creative city,” with a “diverse, technologically-fluent workforce” that aspires to be a leader in “the digital transformation of industry.” Massachusetts is already home to the most innovative workforce in the country, and we should welcome our new neighbors.
At the same time, the nearly $150 million relocation package given to GE — to be funded by Massachusetts taxpayers — raises serious, valid concerns. Mayor Marty Walsh’s chief of staff Daniel Koh says “we will be reaching out to businesses not just in Connecticut, but across the nation, and using this as an example of how we collaborate and how we work with companies that want to come here.” It is therefore both critical and fair to raise these concerns now. Doing so doesn’t make anyone a “naysayser,” as people are sometimes labeled when they question government decisions. Rather it makes us thinking, taxpaying adults, interested in having a say in where so many millions of tax dollars land.
Here are five of the key issues raised by the GE deal:
- GE is coming here to make money. General Electric is good at making a lot of things – including money. It’s coming to Boston to do exactly that. If you peek beyond the headlines, you’ll learn that GE is in the midst of a major transformation into a technology and software company, and wants to be one of the top 10 software companies in the world by 2020. Moving its headquarters from an isolated suburban office park in Connecticut to the heart of one of the hottest city in the world for technology and software is something GE needs to do to execute its strategy. So, why should taxpayers get stuck with the tab?
- General Electric doesn’t need our money. In 2014, GE had $148 billion in revenue, more than $15 billion in profit, and more than $90 billion in the bank. Both GE and Gov. Charlie Baker have said that the $150 million relocation package was not the reason why GE chose Boston, and with the extraordinary amount of cash GE has in the bank, it is indeed hard to imagine that it could be. To put it in perspective, if you had $90,000 in the bank, a comparable deal would be worth $150. You’d take it if someone handed it to you, but it’s really just a giveaway.
- Tax incentives like these are not good deals for taxpayers. Last year, Baker tried to eliminate the Film Tax Credit. At the time, he said it wasn’t needed because the incentive wasn’t “the most fundamental piece of why someone chooses to make a film here,” and pointed to a study that showed the incentive created 730 jobs, but at a cost of $118,000 per job. In the case of GE, we’re talking about 800 jobs, at a cost of $187,000 a job – and the company has said the tax incentives aren’t the reason they’re coming here. If it’s a bad deal for taxpayers at $118,000 per job, it’s worse at $187,000.
- There are better ways to spend taxpayer money. The GE deal is a tale of two cities. The announcement that a company with $90 billion in the bank would get a $150 million taxpayer-funded relocation package came within days of the announcement that the budget for Boston schools may be slashed by $50 million, and that riders of the MBTA would face fare increases of up to $49 million. As ordinary working people are asked to tighten their belts to help close these gaps, how is it responsible stewardship of already scarce taxpayer dollars to give them to a highly profitable company like GE?
- There’s too much happening behind closed doors. It would be one thing if Mayor Walsh or Gov. Baker ran for office promising to lure corporate headquarters to Boston and to give out big tax incentives to sweeten the deal. In that case, it would be easier to understand the need for secrecy of the negotiations and deal terms. But they didn’t, which means that taxpayers are right to be concerned about what, exactly, our economic development strategy actually is. The specifics of the deal signed with GE should be released to the public, and our elected officials should explain their strategy going forward. Do they, as Mayor Walsh’s chief of staff says, plan to pursue more deals like these? On what basis, and in what planned fiscal timeframe? Taxpayers should not be kept in the dark.