Get more from Visa for in­cen­tives

Austin American-Statesman - - VIEWPOINTS -

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Thurs­day, the pub­lic and the Austin City Coun­cil will have a chance to weigh in on $1.6 mil­lion in tax in­cen­tives the city of Austin has ten­ta­tively of­fered Visa Inc. The item is listed as one for pos­si­ble ac­tion, so the coun­cil could vote the same day.

The city’s anal­y­sis con­cluded the tax in­cen­tives deal with Visa would gen­er­ate nearly $7 mil­lion more in city tax rev­enue and util­ity pur­chases over 10 years than the com­pany and its em­ploy­ees would re­quire in city ser­vices. Like other in­cen­tives deals, it sounds like a win for tax­pay­ers and a win for Visa. But there are le­git­i­mate ques­tions about whether Austin is get­ting its money’s worth when grant­ing tax in­cen­tives. The New York Times re­ported this week that the state of Texas has awarded more in­cen­tives than any other state. Texas dis­pensed $19 bil­lion a year un­der Gov. Rick Perry, the news­pa­per re­ported. Since 2007, Austin has awarded more than $14.2 mil­lion in tax in­cen­tives. The largest sin­gle tax in­cen­tive deal for $8.6 mil­lion was given this year to cash-rich tech­nol­ogy gi­ant Ap­ple Com­puter.

The ques­tion about whether tax in­cen­tives to lure jobs are adding value to Austin or mostly en­rich­ing the com­pa­nies that re­ceive them, and there­fore, de­tract­ing from the city’s over­all wel­fare, is one that should be de­bated as the city moves for­ward in re­vis­ing its tax in­cen­tives poli­cies. For now, we urge the City Coun­cil to strengthen the Visa deal for the folks who are sub­si­diz­ing it — Austin res­i­dents. There are things the coun­cil can do to make it bet­ter. Start by en­sur­ing that a cer­tain per­cent­age of jobs go to Austin work­ers. Also, work out an agree­ment with Visa to part­ner with lo­cal en­ti­ties to train col­lege grad­u­ates for the jobs be­ing cre­ated. The city could and should pro­vide for ex­emp­tions, but the city should set strin­gent re­quire­ments for an ap­pli­cant to ob­tain them.

Un­der the pro­posal, the city would award in­cen­tives over 10 years to the global credit card and pay­ments gi­ant, which in turn would lo­cate a global in­for­ma­tion tech­nol­ogy cen­ter in an ex­ist­ing build­ing at 1230 Re­search Blvd. in North­west Austin.

The com­pany’s in­cen­tives ap­pli­ca­tion says Visa would agree to em­ploy more than 800 work­ers at the Austin site by the end of 2017, with an av­er­age salary of more than $113,000. Of those, 794 would be new jobs and at least 70 per­cent would be filled with lo­cal hires, ac­cord­ing to the com­pany. Visa would spend $18.7 mil­lion for im­prov­ing the build­ing and an­other $8.7 mil­lion for pur­chas­ing busi­ness equip­ment. Perry al­ready has of­fered the com­pany $7.9 mil­lion from the Texas En­ter­prise Fund, also pub­lic dol­lars. If Austin City Coun­cil mem­bers do ap­prove the deal, Visa still would have to ap­prove it.

Austin is com­pet­ing with lo­ca­tions in Colorado and Vir­ginia, ac­cord­ing to the Greater Austin Cham­ber of Com­merce. Even so, the city’s econ­omy is grow­ing, and more than two dozen com­pa­nies have moved to Austin this year with­out tax in­cen­tives.

A ma­jor flaw with Austin’s in­cen­tives rules is that they don’t re­quire that a cer­tain num­ber/per­cent­age of new jobs gen­er­ated by com­pa­nies that re­ceive tax in­cen­tives go to Austin res­i­dents. Even worse, the city does not track that fig­ure, which could be ac­com­plished by an­nu­ally sur­vey­ing com­pa­nies that get tax deals. So the city does not know how many of the jobs be­ing gen­er­ated are ben­e­fit­ing Austin work­ers. Visa, for ex­am­ple, says 70 per­cent of the 794 new jobs would be filled “lo­cally.” Many take that to mean those jobs would be filled by Austin res­i­dents. But the city’s def­i­ni­tion of lo­cal hir­ing in­cludes five coun­ties: Travis, Wil­liamson, Bas­trop, Hays and Cald­well. So while Austin taxes pro­vide the in­cen­tives that gen­er­ate jobs, there are no re­quire­ments that the com­pany hire Austin work­ers.

City of­fi­cials will tell you that their sur­veys of com­muter pat­terns in­di­cate that 60 per­cent of peo­ple who work in the city live in the city. But that is an av­er­age that is based on both pub­lic and pri­vate sec­tor jobs, in­clud­ing com­pa­nies that don’t get city tax in­cen­tives. The city could get a far more ac­cu­rate fig­ure by sur­vey­ing compa- nies that get such in­cen­tives.

Though Austin has many work­ers with the skills Visa would re­quire, the city es­ti­mates that the de­mand is greater than the avail­able sup­ply. That of­fers an­other op­por­tu­nity for the city and Visa to work to­gether with Austin Com­mu­nity Col­lege or an­other en­tity to cross train peo­ple with col­lege de­grees so they have the skills to fill Visa jobs.

Few will blame the coun­cil for try­ing to ne­go­ti­ate a bet­ter deal for Austin tax­pay­ers — even if Visa balks.

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