Wal-Mart dislikes being portrayed as a welfare queen, yet the company continues to take welfare from local cities and towns, while running up enormous profits. The latest welfare score comes in Frisco, Texas, where the city council recently approved $2.5 million in tax breaks to the world’s largest retailer. The 200,000 s.f. Wal-Mart supercenter was described by the Frisco Enterprise newspaper as a “gold mine” for the city — even though no economic impact analysis was ever done. The City Manager told the newspaper that Wal-Mart will generate $50 million in annual sales, which is about half right. Under the agreement, Frisco taxpayers will lose a half-cent sales tax break over the store’s first 10 years, equaling $250,000 per year. The city also gave away its thoroughfare, water, and sewer impact fees. Wal-Mart agreed to pay for the costs of upgrading the roadways near the site, including deceleration and turn lanes, median cuts, street lights, and traffic signals, amounting to about $702,000. But the retailer had to make such improvements in order to get traffic to their store, so these improvements serve only that retail site. The City Manager in the next town over, Little Elm, said he would have preferred having Wal-Mart in his town. “We’ll benefit tremendously from it,” the official said. “Certainly we would have preferred to have the sales tax benefit but we’ll get traffic from that (development) that will hit several (Little Elm) shops at that intersection.” Frisco’s director of planning and development told the newspaper that he had been working with the developer since 2004. “Our city is very fortunate Wal-Mart selected Frisco,” he said.
Officials in neither city did their due diligence. If they had, they might have paused before handing over major tax subsidies to Wal-Mart. The retailer certainly does not need public welfare to build its stores, with $10 billion in profits last year. The use of public funds to subsidize Wal-Mart hurts the rest of the business community that did not receive any handouts, and which may be adversely affected by Wal-Mart. Local officials do not realize that retail projects are usually a zero sum game: open a Wal-Mart supercenter, close a couple of smaller grocery stores. In addition, as Wal-Mart opens more supercenters, it continues to abandon its discount stores. Texas has the distinction of being the state with the most “dead” Wal-Mart stores. The retailer uses the euphemistic term “dark stores” to describe buildings it has abandoned. Cities like Frisco and Little Elm help create more dark stores in Texas. A study last year by Good Jobs First suggests that Wal-Mart gets more than $1 billion a year in welfare payments from local and state taxpayers, with little or no added value from Wal-Mart. For similar stories, search Newsflash by “welfare”.
