Archive for Friday, April 18, 2008

8 companies exceed job projections

Businesses that receive tax breaks produce more positions than expected

April 18, 2008

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City leaders generally are comfortable that the community is getting a good bang for the buck from companies that have received tax breaks from the city.

A new report from the City Clerk's office found that the eight companies that have received tax abatements from the city have produced more total jobs than originally was expected.

"I think the community has come out ahead," said Mayor Mike Dever, who also heads the city's Public Incentives Review Committee, which reviews the performance of companies that receive tax abatements.

The committee on Thursday unanimously approved its annual report, finding that all eight companies receiving tax breaks are in compliance with the city's economic development policies.

The new report found that in total the companies had exceeded their job creation projections by 87 full-time jobs and 123 part-time jobs.

"In general, people are living up to their projections," said City Commissioner Boog Highberger, who also is on the review committee.

Not every one of the eight companies, however, produced more jobs than projected. DST Systems - a financial services company - had 42 fewer full-time jobs than it projected when applying for the abatement in 2000. But the company has 108 more part-time jobs than it projected.

The committee did agree to send DST leaders a letter requesting more information on the company's shift to part-time employees.

Several companies produced more full-time jobs than projected. Packerware/Berry Plastics produced 116 more than projected, Amarr Garage Door Group added 27 more than projected, and Allen Press had 20 more than projections.

The report also viewed wage information from the companies. Those results varied widely. Amarr Garage Door Group topped that list, with 91 percent of its job categories paying a wage equal to or greater than the Lawrence average for that same type of job. DST Systems was at the bottom of the list with only 33 percent of its job categories meeting that standard.

But the review committee said it wasn't entirely comfortable with those numbers. City Clerk Frank Reeb told commissioners that it was often difficult to get good Lawrence wage average, and that it wasn't always easy to ensure that job categories were being fairly compared.

City commissioners are expected to review the report in coming weeks.

Comments

Richard Heckler 6 years, 11 months ago

Do existing business owner/operators realize their tax dollars are being used to support putting them out of business? Average wage is not the community goal. The goal is for all employees to have a real wage at a living wage rate or better.Do taxpayers enjoy picking up the tab for corporations?Corporate welfare make local developers projects more personally profitable? Is this the job of the taxpayer or fair use of their tax dollars?Shouldn't Lawrence government be talking Impact Fees and/or Excise Taxes on new development?If a corporation wants to remain quiet about leaving a community in favor of locating to Lawrence is that the type of company Lawrence should be seeking? Won't this company also screw Lawrence taxpayers and employees in the end?New Rules Project - Retail - Curbing Corporate Welfare - Bans on Tax Abatements www.newrules.org/retail/vetoarizona.h... href="http://www.newrules.org/retail/veto.html">http://www.newrules.org/retail/veto.html

somebodynew 6 years, 11 months ago

Wow !! Are all the haters asleep this early ?? Is Merrill on vacation ??? I can't belive it is almost 7am and there are not pages and pages of cut and paste about how bad this is for all of us.It is also a little surprizing that LJW would print a positive article about this. Good work.Unfortuately I agree with Solomon and am sure the rants will soon begin.

jafs 6 years, 11 months ago

Interesting.I remember an article stating that most, if not all, of the companies receiving abatements were not living up to their end of the bargain - I wonder which is true?

Oracle_of_Rhode 6 years, 11 months ago

From this article, DST sounds like a lousy employer, paying bad wages and limiting folks to part time work. I would rather not be subsidizing this type of scheme with my tax dollars, especially when companies fall short on their rosy promises. http://www.nytimes.com/2008/04/18/business/18hours.html?hp

just_another_bozo_on_this_bus 6 years, 11 months ago

What's to rant about? If they are truly meeting expectations, then this is good news. Certainly better news than giving out corporate welfare with absolutely no expectations of a return on the taxpayers' investment, which is what folks like Solomon apparently prefer.That said, this should be reviewed carefully to make sure that compliance isn't high merely because expectations are too low. And I think DST has some explaining to do.

vegetablegirl 6 years, 11 months ago

Great report on these companies. There has been a lot of banter about abatements, maybe this shows the companies do really intend and try to meet their committments.

Richard Heckler 6 years, 11 months ago

March of each year taxpaying citizens aka voters should be provided a list of projects to approve certainly those with tax subsidies attached. Housing,light industrial and retail projectsThis could be looked upon as a tool to curb the appearance of corruption.

Raider 6 years, 11 months ago

DST IS a lousy company to work for. They pay terrible wages, and work you into the ground. I worked for then in the late 90's, in downtown KC. They are truly a company that belives their employees are disposable, and all they care about is the bottom dollar/share price.

jafs 6 years, 11 months ago

Good point, RC.But the real question is whether the companies are living up to their end of the agreements that were made when the abatements were provided.The last article I saw on this subject stated that most of them were not - which is correct?It also included a quote from Mayor Hack that she wasn't interested in being too picky about enforcement of these agreements.

Confrontation 6 years, 11 months ago

I know two people who work full-time for DST. Both started out in the $11.00 per hour range for a low-level position. They also get 100% of their medical insurance cost covered ($400 deductible range). However, the place is very strict and has no problem counting it against you if you use your sick days. Why give sick days if they're going to count against you? http://www2.ljworld.com/news/2006/jun/23/boston_financial_ready_grow/http://www2.ljworld.com/photos/2006/jun/23/100762/

gccs14r 6 years, 11 months ago

Just because a company reports more jobs than expected does not mean that more people work there. It can mean that fewer people were let go.

Terry Jacobsen 6 years, 11 months ago

We have considered going to the city to seek tax abatement for a large expansion of our business here in town. But after looking at the possible 50% abatement and then looking at all the reporting criteria and requirements, we feel that it would cost us more than to just pay the taxes that we owe. We are talking about adding 50-75 jobs to our business all of which will pay more than $11.00 per hour. Some as high as $20.00 per hour. We pay a good portion of our employee's health insurance costs and have a 401K retirement plan. Of course we are a people and machinery business so we probably don't fit the "perfect" business for Lawrence criteria that Mayor Dever thinks is best for Lawrence. I think I would just as soon pay what I owe and not be beholding to the city for anything.

twaldaisy 6 years, 11 months ago

I thought Amarr just laid off a bunch of people last month?

BigPrune 6 years, 11 months ago

What Lawrence should do is offer a free building to some high wage ($20.00 an hour minimum) employer that employs 500 or more people. Some of the associated companies that supply this high wage employer would surely locate in Lawrence to be close. Run an ad in the Wall Street Journal. Stay away from the low wage recruitment - it will only bring additional trailer parks on the fringe of town and piss off the KU tax abated state employees who have a need to vocalize their opposition to any type of tax abatement (even though they are paid by the citizens and KU doesn't pay taxes). We will become an elite community.

jafs 6 years, 11 months ago

Again, which is correct - did these companies produce the amount/kind of jobs they promised as a part of their agreements with the city or not?If not, then the city should re-evaluate and change the abatements accordingly.The city enters into tax abatement agreements (which I am generally against on principle) based on an analysis that the city will benefit. This is only true if the companies do in fact provide at least the amount/kind of jobs agreed upon.If they do not, then the city is not benefiting, and should adjust the tax abatements accordingly.The fact that economic conditions change is true, but is not a reason not to adjust any incorrect situations. Cities need taxes to operate, and lower tax collections will result in a lowering of income for the city and a lower quality of city services. They're talking about cutting various programs as it is due to lower salex tax revenue.I'm still wondering whether these companies lived up to their end of the agreements or not??

jafs 6 years, 11 months ago

Again, which is correct - did these companies produce the amount/kind of jobs they promised as a part of their agreements with the city or not?If not, then the city should re-evaluate and change the abatements accordingly.The city enters into tax abatement agreements (which I am generally against on principle) based on an analysis that the city will benefit. This is only true if the companies do in fact provide at least the amount/kind of jobs agreed upon.If they do not, then the city is not benefiting, and should adjust the tax abatements accordingly.The fact that economic conditions change is true, but not a reason not to adjust any incorrect situations. Cities need taxes to operate, and lower tax collections will result in a lowering of income for the city and a lower quality of city services. They're talking about cutting various programs as it is due to lower salex tax revenue.I'm still wondering whether these companies lived up to their end of the agreements or not??

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