Report: Privatized State Development Agencies Create Scandals Instead of Jobs

Arizona, Florida, Indiana, Michigan, North Carolina, Ohio, Rhode Island, Texas, and Wisconsin Examined

WASHINGTON, Oct. 23, 2013 /PRNewswire-USNewswire/ -- Three years ago, four newly elected governors decided to outsource economic development functions to "public-private partnerships" (PPPs). Joining a handful of other states' PPPs, these experiments in privatization have, by and large, become costly failures characterized by misuse of taxpayer funds, conflicts of interest, excessive executive pay, questionable subsidy awards, exaggerated job-creation claims, lack of transparency, and resistance to oversight.

Those are the cautionary conclusions of a study issued today by Good Jobs First, looking at eight states with existing PPPs and another one proposed.  "Creating Scandals Instead of Jobs" is available at www.goodjobsfirst.org. It is a follow-up to a study issued in February 2011.

"We conclude that privatizing a state development agency is an inherently corrupting move that states should avoid or repeal," said Greg LeRoy, executive director of Good Jobs First and lead author of the study. "Taxpayers are best served by experienced public-agency employees who are fully covered by ethics and conflicts laws, open records acts, and oversight by auditors and legislators."

The study was released today at a press conference that also featured: Wisconsin State Senator Mark Miller; Dan Krassner, executive director of Integrity Florida; and Donald Cohen, executive director of In the Public Interest.

The report covers:

  • Enterprise Florida facing questions about shortfalls in the job creation and controversies over executive pay and bonus.
  • Lavish executive pay and other issues at the Arizona Commerce Authority. 
  • The Wisconsin Economic Development Corporation, with unauthorized spending, failing to track loans and executive turnover.
  • JobsOhio receiving secret private monies and winning legal exemption from review of its finances by the state auditor.
  • The Indiana Economic Development Corporation with continuing criticism over its job creation claims.
  • The Rhode Island Economic Development Corporation with the biggest economic development scandal in state history: 38 Studios.

Based on this pattern of abuses, the report concludes that the privatization of economic development agency functions is an inherently corrupting action that states should avoid or repeal. With a soft economy and the "economic war among the states" already dominated by corporate interests, taxpayers are best served by experienced public-agency employees covered by ethics and conflicts laws, open records acts, and oversight by auditors and legislators.

Contact: Greg LeRoy, goodjobs@goodjobsfirst.org, (202) 232-1616

SOURCE Good Jobs First



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