A new report from a non-profit research group, Policy Matters Ohio, says that Ohio taxpayers over the past year offered Wal-Mart financial assistance totaling $10 million to build 2 food distribution centers and 1 eyeglass manufacturing plant. The study, “Wal-Mart Special: Ohio Tax Credits to America’s Richest Retailer”, says that this corporate welfare came as part of a loose process from the Ohio Tax Credit Authority. For example, in the town of Washington Court House, in Fayette County, Wal-Mart was given a job creation tax credit for 10 years estimated to be worth $2.6 million in the first year alone. To help the world’s largest retailer dominate its smaller rivals with an 880,000 square foot food distribution center, state taxpayers also tossed in $500,000 in roadwork, $200,000 in a training program, and $400,000 in community development block grant funds. In the town of Columbus, in Franklin County, Wal-Mart will lease a 120,000 s.f. building to manufacture and distribute eyeglasses. The job creation tax credit there is worth about $2.2 million for Wal-Mart. In a third location, Island Creek township, in Jefferson County, taxpayers are giving Wal-Mart a $2.8 million tax break on their food distribution center, plus $600,000 in road work, $483,600 in infrastructure grants, and a $650,000 warehouse equipment sales tax exemption. The Policy Matters Ohio study suggests that these projects did not meet the legal test that “receiving the tax credit is a major factor in the (developer’s) decision to go forward with the project.” The report suggests that this candy store of corporate welfare was not necessary to get Wal-Mart to locate in Ohio. In the Jefferson County distribution center, “the company announced its intent and started building the distribution center months before its job creation tax credit was approved.” Ohio appears to have violated its own guidelines for these tax breaks, which say “the project must not have already started at the Ohio site, or have been publicly announced to be undertaken at the site prior to approval by the Authority.” In the Washington Court House project, the report concludes “the Tax Credit Authority appears to have stepped around the intent of the law in determining the credit was a major factor in Wal-Mart’s decision to invest in Ohio.” In fact, the store was “already half built” before the agreement on a tax credit was signed. The Policy Matters Ohio report says “the process of awarding tax credits needs to be tightened.” The group says the Ohio Tax Credit Authority “should enforce its guideline not to award incentives when projects already have been publicly announced or begun. It also should consider very carefully whether to award incentives to distribution centers, many of which need to be located in a large state like Ohio.” The study found that Wal-Mart’s statements about why the tax credit was important to their decision to locate in Ohio was not a public record, and the study found that such explanations should be part of the public record for any citizen to obtain. Not only did Ohio taxpayers contribute to Wal-Mart’s bottom line at the state level, but at the local level as well. In Jefferson County, Wal-Mart got an “enterprise zone” agreement which gave the company a 100% exemption on personal property tax on machinery, inventory and equipment for 10 years, and a 60% tax exemption on improvements to their building for 10 years. These givaways were worth $3.6 million in savings to Wal-Mart — savings the company can use to gain a competitive advantage over local businesses not big enough to qualify for this welfare. In Washington Court House, the city financed more than $1.1 million of public infrastructure, and gave Wal-Mart a deal on land costs. Smaller firms help subsidize their larger rivals by contributing taxes to the state and local authority. The smaller companies are forced to subsidize the very companies that are puting them out of business.
For a copy of the Policy Matters Ohio study on Wal-Mart, go to policymattersohio.org, or contact sprawl-busters.com. For other examples of questionable state and local tax freebies to big box retailers, search this database by the words “corporate welfare”. See also “distribution center” for other stories about communities fighting these enormous out-of-scale projects, which change the entire nature of the communities they come to overshadow.
