Subsidizing the Low Road: Economic ... - Good Jobs First

Executive SummaryAn analysis of Baltimore’s economic development efforts reveals a recurringhistory of high costs, low benefits, and a lack of safeguards to ensure that taxpayerinvestments really pay off in family-wage jobs and an enhanced tax base. Unlike moststates and many big cities, Baltimore has no job quality standards, or laws requiringsubsidized companies to pay a certain wage or to provide healthcare. The pattern isespecially troubling today, as the city increasingly employs local tax expenditures –foregone future revenues – instead of federal or state dollars to finance developmentdeals.The analysis also finds pervasive process problems. Baltimore’s privatized systemfor initiating deals – through the Baltimore Development Corporation (BDC) – affordstaxpayers little opportunity for input as deals are shaped, and often only perfunctorychances to analyze or comment before they are formally authorized by the Board ofEstimates or the City Council. The BDC’s records are secret, exempted from theMaryland Public Information Act. More broadly, citizen organizations have fewmeaningful ways to engage in and influence long-term priority-setting. Citizenparticipation is also discouraged by budget reporting systems that make the city’seconomic development spending difficult to discern.In past decades as Baltimore City’s manufacturing base eroded, it aggressivelypromoted tourism and the redevelopment of the central business district. In the 1970sand 1980s, Baltimore successfully transformed the Inner Harbor into a popular touristdestination. However, the city neglected to enact standards to ensure that the newtourism jobs were of high quality. As a result, low wages and part-time hours are soprevalent that all but three of the city’s non-managerial tourism job titles pay less thanthe federal poverty line for a family of four; many pay far less.The need to ensure that tourism subsidies create public benefits is criticalbecause the costs are so high. Government bodies have spent $2 billion in building andmaintaining the city’s tourist facilities since the 1970s, and hundreds of millions morein subsidies to tourism-related businesses. Costs will remain high, because to remaincompetitive as a destination, Baltimore, like other places, will have to make biginvestments to constantly reinvent itself.The Maryland Stadium Authority (MSA) built two sports stadiums in Baltimore inthe 1990s, for the Orioles baseball team and the Ravens football team. Consistent witha large body of literature that finds such facilities are poor deals, academic studies findthat Baltimore’s stadiums are not breaking even fiscally. A study by the BrookingsInstitution estimates that Camden Yards generates approximately $3 million forv