I read today that there's a report going around saying that the state of Ohio has offered Sears Holdings Corp. $400 million to move its headquarters from suburban Chicago. That's a pretty big chunk of change.
It reminded me that the state of Wisconsin recently extended a bribe of its own to Spectrum Brands:
On Tuesday, the former Rayovac Corp. announced a deal with the state to invest $40 million in its Wisconsin operations, hire 60 new staffers immediately and keep its headquarters in Madison through 2016.
For help, Spectrum Brands is receiving an interest free, $4 million forgivable loan from the Wisconsin Economic Development Commission.
If Spectrum follows through on its plans and maintains at least 470 full-time employees in Madison until Oct. 1, 2016, it doesn't have to pay the money back.
So, is any of this $4 million interest-free, forgivable loan taxpayer money? Or is the private side of WEDC ponying up the bill? I'm thinking the former. Yet, it was not long ago that our illustrious governor said, "The state’s broke. Local governments are broke. They don’t have anything to offer." So we're broke yet we still have $4 million to lend at 0% interest and it may just end up being a gift.
One thing I don't like about Mike Ivey's article is that it doesn't say what happens if Spectrum is unable or unwilling to follow through on its plans. So, if they fall short for whatever reason, what then? Does the state simply get its money back? Money that could have been put to another use to grow the economy. I sure hope that, if Spectrum can't uphold their part of the bargain, that the state at least gets our money back with a little interest.
Another aspect of the article that bugs me is its lack of context. Did Spectrum ask for a loan? Did the company threaten to leave the state if no financial incentives were put on the table? Ivey notes that the company is on the "rebound from a 2009 Chapter 11 bankruptcy reorganization." It laid off 29 people this past June and posted a fiscal fourth quarter loss. But look on the bright side. It's full year loss was only $75.2 million.
Not having been a business or economics major in college, it is possible that I am missing something here. Perhaps Spectrum is just having some post-bankruptcy teething pains and is really on track to a healthy future. But considering that the company currently has 420 employees here in Madison and is being given $4 million to keep 470 jobs here for a few more years, I see the state basically subsidizing 50 of those jobs to the tune of $80,000 apiece. Can that $4 million be spent in a way that would enhance Wisconsin's economic future beyond 2016?
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