The District is the worst in the nation at making sure the taxpayer subsidies it gives companies to create jobs for local residents do just that, a new report has found.
The report, published Wednesday by the nonprofit, nonpartisan Good Jobs First, scores how well states monitor and enforce local job creation programs that receive money from those states. The District scored four points out of a possible 100 while neighbors Maryland and Virginia ranked among the nation’s top five states.
The District received such a low rating because just one of the five programs surveyed in the city actually kept tabs at all on the returns of job creation subsidies, said Thomas Cafcas, one of the report’s authors. He said that unlike Maryland and Virginia, the city does not have clear, established rules on how to qualify for a subsidy.
“It’s sort of whatever the whim of the city council and the mayor’s office is, that’s what usually gets written into law,” he said. “Also when a property tax break happens in D.C., it’s usually that the name of the company gets specifically written into the law. I’m not sure you’ll find that in any other state.”
A spokeswoman for Mayor Vincent Gray said Wednesday that the city was making “good progress in tracking jobs incentive compliance,” citing a new electronic database where employers can enter their updated employment data to be sent immediately to the city.
A recent high-profile example of D.C.’s trouble that was when the real estate company CoStar was lured by tax breaks to move from Bethesda to the District in 2010. The city council passed legislation granting the company $6.1 million in breaks if it hired 100 D.C. residents. The break was in addition to a $19 million high-tech-company subsidy.
CoStar then sold the building one year later in 2011 for $101 million — more than two times what it paid when it first moved to D.C.
“There was nothing really to justify the subsidy,” said Kwame Boadi, an analyst for the DC Fiscal Policy Institute who was critical of that deal. “An economic subsidy is, in theory, supposed to close some sort of gap that exists in the market.”
Cafcas said the city’s lack of tracking doesn’t mean jobs aren’t being created, but the lack of transparency in the city’s dealings raises questions in a climate that recently saw former Councilman Harry Thomas Jr. plead guilty to funneling city funds to himself.
“Whenever there’s money going into private hands and not being properly disclosed and no performance expectations and no measures to enforce those expectations, you’ve got a problem and it’s opening the door for backroom dealings,” he said.
