We recently reported that taxpayers in Texas were subsidizing the construction of a 2 million square foot import facility for the world’s richest retailer to bring in more Chinese goods to displace American-made products. Now the story has gotten twice as bad. The 3 member School Land Board in Austin voted this week unanimously to buy another 238 acres of land, and build a second import center, which will be leased to Wal-Mart, and at the end of the lease, the two warehouses will belong to the taxpayers of Texas. But that absurd acquisition is thirty years away, so no political liability today. The original $80 million investment, using public funds from the Permanent School Fund (PSF), has now grown to $100 million. A total of 4 million square feet of buildings will make this the largest Wal-Mart distribution center complex, with thousands of tons of Chinese merchandise flowing into America via the port of Houston. As icing on Wal-Mart’s cake, the City Council in Baytown tossed in another $177,000 in city funds to pay for the water and sewer lines to the import center. Because the PSF is non-profit, the land will generate absolutely no property taxes. But officials boast that Wal-Mart will pay at least $500,000 a year in inventory and equipment tax revenue. Wal-Mart will also pay rent into the PSF for 30 years, with an option for two five year extensions. Assuming the development is worth $100 million, it is estimated that this deal amounts to a $70 million tax break for Wal-Mart, based on current property tax rates. That amounts to the largest public subsidy Wal-Mart has ever been given — a subsidy that gives it another competitive advantage over smaller firms that could never play in Wal-Mart’s corporate welfare league. A member of the Goose Creek School District told the Fort Worth Star-Telegram that his school district would have received far more income out of the deal if the land and building were owned by Wal-Mart and paying property taxes, rather than a tax-exempt organization. “It’s one of those things that could have been done differently,” the school board member told the newspaper. “I still think it’s a sweetheart deal for them.” Earlier reports indicated that at the end of the lease Wal-Mart would buy the buildings, but now the 2 enormous buildings will end up on the public rolls, a potential burden to Texas taxpayers. And the new jobs local officials are boasting about appear to be a transfer from California, where a recent dock strike and high labor costs stimulated Wal-Mart to transfer operations to the port of Houston. Wal-Mart claims to have similar import facilities in Georgia, Virginia and California. Most of these facilities were built with public funds — but the Baytown welfare project may be the Daddy of all corporate welfare for Wal-Mart.
For earlier stories of a similar nature, search this database by “corporate welfare.” For the story of Wal-Mart Virginia/China connection, see the book “The Case Against Wal-Mart.” Search also by “Shopping for Subsidies”.
