Potential billions for Amazon draws criticisms from legislature

Potential billions for Amazon draws criticisms from legislature

Author: Stephen Caruso/Tuesday, November 20, 2018/Categories: News and Views, Pittsburgh, Philadelphia

Despite a $4.6 billion offer, having two cities on the public shortlist and the decision to plant two locations instead of one, Pennsylvania did not land online retail giant Amazon’s second headquarters.

Both Philadelphia and Pittsburgh were named as finalists for the project earlier this year, which would have led to $5 billion in private investment and 50,000 jobs before the Amazon decided to split HQ2 between two locations.

However, the multibillion dollar incentives, combined with many local concessions, prompted bipartisan politicians to sound off with their displeasure with the offer.

Specifically, the state was prepared to create a new program, where personal income tax collected from qualifying employees could be redirected back to the company’s location as grants. The program could last for 25 years total.

The program was suggested in a letter signed by Wolf and every General Assembly leader.

Spread over the full 25-year suggested term, the $4.5 billion offered in grants — $100 million was offered specifically for transportation — would average out to $180 million a year for Amazon.

The number struck Rep. Seth Grove (R-York) as the new starting point for negotiations over taxes.

“I think the governor raised the bar for tax reform,” Grove said. “If he's willing to give [$180] million let’s actually reduce rates by [$180] million [a year] and grow all the businesses, not just one.”

However, Wolf defended the program as an attempt to find collaborators in investment in education or transportation.

“Where we need good public goods, we need good partners,” Wolf said.

He also downplayed Pennsylvania losing out altogether, saying it had nothing to do with the state’s oft-criticized business climate.

Amazon ended up choosing Northern Virginia and New York City for its new locations. The result, while some found predictable, also left some officials feeling miffed that the state missed out.

The final announcement also ended the long running public records battles for Philadelphia and Pittsburgh’s bids for HQ2 that, especially in the Steel City, led to appeals and concerns over transparency.

In the end, Pittsburgh and Allegheny County offered another $2.1 billion of its own money for $6.7 billion total. The bid included free land and taking some of Amazon’s local taxes and placing them in a fund that Amazon would have some say in using.

While many activists have jumped on HQ2 bidders for their offers, from failed candidates like Pittsburgh to successful ones in New York, local officials felt concerns were unwarranted.

“Whether you lived in Monroeville or Bloomfield, none of your existing tax dollars that go to pay for road paving or police was going to go to Amazon,” Allegheny County Executive Rich Fitzgerald said.

However, some newly elected members of the county’s delegation weren’t happy with the offer, like Rep.-elect Summer Lee (D-Allegheny).

Lee, who beat incumbent Rep. Paul Costa (D-Allegheny) in the May primary, had issues up and down with the offer, from Amazon’s previous behavior in Seattle to its treatment of workers at locations across the country.

But while Grove had even noted that he and his new colleague would use the offered incentive money differently, Lee was comfortable staking down the same ground as her ideological opposite.

“When you look at a fiscal conservative, you have to acknowledge how many freebies huge corporations get,” Lee said.

In Philadelphia meanwhile, the city was prepared to offer $1.1 billion in tax increment financing to Amazon for a total incentives package of $5.7 billion.

Mayor Jim Kenney described the process as a “stellar effort” and likewise downplayed that the city missed out, instead looking at the miss as a baseline for seeking other corporate investments.

But the offer also drew criticisms from some, like Sen. Anthony Williams (D-Philadelphia), who was unsure if the company matched up with Philly’s economic needs and warranted such a high investment.

“We were advancing a lot of money that may not have helped us advance the work base indigenous to Philadelphia,” he said.

But at least one lawmaker is already thinking about what the state’s multi-billion dollar offer means for budget’s to come.

“If we were able to come up with it for this, then certainly we can come up with it for children,” Lee said.

Stephen Caruso is the Harrisburg bureau chief at The PLS Reporter. Have a question, comment or tip? Email him at stephen@mypls.com.

Atiya Irvin-Mitchell contributed reporting from Pittsburgh, Marco Cerino contributed reporting from Philadelphia.