Over the years, Wal-Mart has taken advantage of public tax incentives to write down some of the costs of its distribution center infrastructure, and the cost of building stores. This is a form of tax-subsidized corporate welfare. Wal-Mart does not need such tax giveaways to build its projects, but local, county and state officials frequently will pass out tax breaks as if they were pain-killers for developers. The latest give away is in the city of Mankato, Minnesota. This community of nearly 37,000 people describes itself as “a regionally focused municipal organization.” The city claims to be the 14th Most Livable “Micropolitan” City in America, with a trade area population of more than 300,000 people. The City says it is best known for its rivers, lakes, ravines, bluffs, natural prairies and forested areas” with its “breathtaking landscapes… steeped in historic significance.” But soon Mankato will simply be known as “the Wal-Mart Distribution Center exit,” as the city says farewell to its small town “peace of mind and quality of life.” The Mankato Free Press ran an eye-catching headline this week: “Wal-Mart Paying Elevated Taxes.” The retailer’s huge distribiution center should have been half-built by now — but construction on the facility has not even started. But four years ago, Wal-Mart agreed to begin paying taxes to Mankato and Blue Earth County for the distribution center, as if the project was still on schedule. The original timeline called for the distribution center to be half built by 2008, which meant a tax bill in 2009 of $264,980. Last week, Wal-Mart wrote out a check in that amount to Mankato and Blue Earth County. In 2010, Wal-Mart will pay a full year $529,960 tax bill on its property. But the taxpayers of Mankato and the county will not see a penny of this money — because Wal-Mart’s payment goes into a fund to pay off $5.3 million in infrastructure improvements done to the site to make it work for — Wal-Mart. In fact, for the next nine years, Wal-Mart will be the sole beneficiary of these tax payments, which are being invested back into the roads, water, sewer and other site costs that Wal-Mart should have paid for directly. It will not be until the tenth year of the project that city and county taxpayers will benefit at all from the taxes Wal-Mart is paying. The city’s Community Development Director told the Free Press that the distribution center was on Wal-Mart’s 5 year plan — clearly a significant delay in the facility. In the meantime, city and county taxpayers can rest assured that their taxes are helping to benefit Wal-Mart, rather than going to education, police and fire protection, or other public needs. Wal-Mart thus is not paying “elevated” taxes. The taxpayers are foregoing almost a decade of taxes to help underwrite Wal-Mart’s costs.
City officials explain that this facility will supply Wal-Mart supercenters with food, so the timetable for the opening of the distribution center depends on how quickly Wal-Mart can get its existing discount stores expanded into superstores with a full-line grocery. The Mankato distribution center will be a refrigerated facility. Wal-Mart currently has 42 supercenters in Minnesota — more than it has in the whole state of California. The company still has another 19 discount stores that have not yet been converted into supercenters. Readers are urged to email Mayor John Brady of Mankato, Minnesota at [email protected] with the following message: “Dear Mayor Brady, It is hard to fathom why the city and Blue Earth County felt that a huge Wal-Mart distribution center needed a huge infusion of public welfare to make a go of it. In 2009, Wal-Mart had net profits of $13.4 billion, which means it is in far better shape financially than the taxpayers of Mankato or Blue Earth county. There was no economic need to throw $5.3 million at Wal-Mart to get this project done. The company should have been able to finance the facility without turning to the taxpayer for help. This is another Free Market Bailout by taxpayers. Other smaller businesses in the county do not get these tax breaks, which re-direct money out of the general fund of your city and county, and into Wal-Mart’s site. Think of how much that $5.3 million could have benefited your local schools, your police department, county roads, and fire protection. With little justification, you have transferred millions of dollars away from local needs, to replace money that a very rich corporation did not need. The city should ask Wal-Mart to renegotiate its deal, and end this subsidy was soon as possible, so that Wal-Mart pays for the infrastructure improvements on the site that benefit their bottom line. Mankato should make a commitment to its voters that corporate welfare at their expense will never happen again.”