by James A. Bacon
Wow, big economic development news for the City of Norfolk! In the past week Governor Terry McAuliffe has announced two deals: Norfolk Southern will spend $8.2 million to accommodate 165 employees in its corporate headquarters, and Movement Mortgage will invest $2 million in a deal that will net 200 new jobs. Too bad citizens will never know if the public subsidies in support of those deals were justified.
The Norfolk Southern jobs are being relocated from Roanoke, where the railroad company continues to dismantle the remnants of its old Norfolk & Western Railway presence. The Movement Mortgage jobs are part of a larger relocation of the mortgage company’s operations center from Virginia Beach.
To facilitate the transfer of jobs from Roanoke to Norfolk, McAuliffe approved a $1.925 million grant from the Governor’s Opportunity Fund to “assist Norfolk with the project.” The nature of that assistance is not detailed in the press release, nor is any “assistance” that Norfolk is providing Norfolk Southern. The press release made no mention of Norfolk competing with any out-of-state jurisdictions for the investment, nor did it provide any other justification for the subsidy.
To facilitate the transfer of 550 existing jobs from Virginia Beach to Norfolk, as well as the addition of 200 new jobs, McAuliffe approved a $600,000 grant from the Governor’s Opportunity Fund to “assist Norfolk with the project,” plus employee training through Virginia Jobs Investment Program. The press release did not specify the nature of the assistance to Norfolk, although it did state that the city was in contention with Arizona, North Carolina and South Carolina for the project.
Bacon’s bottom line: There is no way to tell from the substance of these press releases whether the Commonwealth of Virginia, in facilitating the transfer of jobs from one Virginia locality to another, is engaging in corporate welfare or not. The press release announcing the Norfolk Southern deal provides no justification whatsoever for the nearly $2 million subsidy. The press release announcing the Movement Mortgage deal does mention competition from three other states, but there is no way for citizens to know how serious that competition was, nor whether the company was just playing one state off the other to get the sweetest subsidy it could for a decision to stay in Hampton Roads anyway. State and local officials will not comment because the details involve proprietary information and cannot be disclosed.
Here’s a suggestion: If corporations want to tap public funds, then they waive any non-disclosure rights so citizens can evaluate the merits of the subsidy. In some instances, the subsidies might be warranted in order to snag an investment Virginia would lose otherwise. In others, the public might be giving away money unnecessarily. In either case, citizens have a right to know. Lacking right to know, taxpayers are entitled to the presumption that they are being shaken down.
For another view: Meanwhile, spurred by the Norfolk Southern announcement, the Richmond Times-Dispatch makes a related point on how Virginia governors take credit for job creation when very little credit is due.
