Conway is joyful about Hewlett-Packard's decision to use the city for a service center that could employ 1,200 people making about $20 an hour.
Though neither state nor company officials would provide details about the jobs, the expected rate of pay is good — better than that paid most beginning Arkansas school teachers — and the office park setting indicates clean jobs.
Good as the news is, we should not be so needy that we prostrate ourselves before corporate giants.
Corporate welfare is an automatic given nowadays — even in cases where raw materials, trained non-union labor, low utility rates, transportation alternatives and the like were the real deal-makers.
Arkansas contributed $10 million for the Hewlett-Packard building in Conway and the city is going to throw in $5.2 million for infrastructure. The private Conway Development Corp. is providing $1.2 million worth of land and the city will lease the land and building to H-P (for how much, no one is willing to say). The city is granting an estimated $200,000-a-year property tax cut, though the new jobs will bring more children and expense to an already financially strapped Conway school district.
H-P also will qualify for the standard sales tax exemption on equipment purchases; a (secret) state income tax credit, and a rebate equal to 5 percent of payroll for 10 years. This last could be worth $24 million or more, but the precise terms, again, are a state secret.
Estimate a $50 million welfare dole and it would appear Arkansas gave about the same as New Mexico did to get a similar facility. In Arkansas, it'll take a good 10 years for the state to recover its investment through income and sales taxes.
This may have been a good deal. But we'll never really know for sure as long as the details are secret. Why are they secret? Not to forestall open bidding or for competitive reasons. The deal is done. They are secret just because that's how it's always done.
Speaking of the dangers of open bidding: Arkansas communities competed to cut each other's throats to get this installation. How good is that? We also don't know if H-P operations elsewhere were consolidated out of existence to create this regional center. We don't care much about Bangalore, of course, but it's useful to remember the human dimension. Conway could be Bangalore one day, perhaps before the state gift is recouped.
Many states have begun disclosing more information about economic development incentives. It is the only way to provide accountability to the people — taxpayers — who provided the money. So far, little information has been forthcoming in response to my Freedom of Information requests here. I did learn that H-P has agreed to some repayment of the $10 million should its plans not materialize, but no further specifics.
Public accountability wasn't the only casualty in this deal. Arkansas Economic Development Director Maria Haley told the Conway paper that this deal might have been queered by an early “irresponsible” news break three days before the official announcement. That's utter nonsense. Her comment was meant to be a warning to the local newspaper and others not to get too nosy, lest they be viewed as anti-development. Better to burn a U.S. flag than be branded that way.
I'm happy for Conway. But any publicly financed deal whose components include disdain for both public accountability and the free press is not exactly a bargain.