Report: Wal-Mart growth often subsidized by taxpayers

[ This story supplements another recent story on the way in which tax payers subsidize the Wal-Mart Empire. –BL ]

June 3, 2004 | Elizabethton Star

by Thomas Wilson

Wal-Mart Stores have enjoyed more than $1 billion in economic development subsidies from state and local governments across the United States, according to a new study released by a Washington, D.C.-based research group.

Good Jobs First, a research group monitoring state and local job subsidies, found 244 cases in which Wal-Mart retail stores or the distribution centers that service them have received state or local economic development subsidies. The subsidies amounted to just over $1 billion according to the report released Sunday.

The study, the first comprehensive national examination of subsidies received by the giant retailer, found more than 240 cases in which the construction of new Wal-Mart facilities was assisted by public resources. In addition to 160 retail outlets, the study found subsidies at 84 of Wal-Mart’s distribution centers, representing more than 90 percent of the network of huge warehouses the company has built to facilitate its rapid expansion.

The subsidy deals for individual distribution centers ranged as high as $46 million (with an average of $7.4 million), while for retail outlets the largest was $12 million (with an average of $2.8 million). The study was funded in part by the United Food & Commercial Workers International Union, but researchers said the union played no role in the research or analysis.

Wal-Mart plans to open more than 300 new or expanded stores in the United States in 2004, the largest number of which will be supermarket-discount store hybrids called supercenters. One of those new supercenter developments is located in Elizabethton.

The Wal-Mart Real Estate Trust paid $2.8 million last year to purchase the 24.75-acre property on West Elk Avenue that included the North American Rayon Corporation building. The property was appraised at $2.3 million in 2002 according to the Carter County assessor of property’s office.

The study found two Wal-Mart developments in East Tennessee had received government subsidies.

The company’s Midway, Tenn., distribution center located in Greene County
received a total subsidy of $5.4 million. The Greene County government provided $2.4 million for water and sewer improvements as well as $750,000 for an access road funded by the state the GJF study found. The county and state government also provided $250,000 in job training funds. Greene County gave a 10-year tax abatement worth $2 million the study reported.

In Shelbyville, a Wal-Mart distribution center which opened in 2001 received a total subsidy $2.5 million. The state provided a $750,000 grant for sewer work as well as a $500,000 Community Development Block Grant for a water tank and water lines.

County Mayor Dale Fair and Elizabethton City Manager Charles Stahl both said Wednesday they were unaware of any government subsidies extended to developers for construction of the new Wal-Mart Supercenter’s construction on West Elk Avenue.

“They were not asking for any kind of special privileges,” said Fair of the new Wal-Mart’s development.

The individual subsidy deals listed in the GJF study averaged $4 million. The GJF report reads that although that amount may seem small compared to incentive packages provided to individual auto plants and other large factories in recent years, the difference is in the quantity of the deals. “Even a large manufacturer would be unlikely to open more than one or two major facilities in a given year; Wal-Mart has on occasion opened several dozen stores in a single day,” the study contends.

Wal-Mart reported annual revenues of $258 billion for 2003. The company’s net profit for the past year exceeded $9 billion.

“Wal-Mart presents itself as an entrepreneurial success story, yet it has made extensive use of tax breaks, free land, cash grants and other forms of public assistance,” said Philip Mattera, research director of Good Jobs First and principal author of the study.

Wal-Mart subsidy deals were found in 35 states, with the largest number in California, Illinois, Missouri, Texas and Mississippi. In total dollar terms, Louisiana, Florida and New York also ranked high. Although comparative data are not available, the study found Wal-Mart likely receives state and local subsidies from more jurisdictions than any other corporation in the United States.

The types of subsidies reportedly given to Wal-Mart projects included access roads and utility lines, tax increment financing, sales tax rebates or exemptions, property tax abatements and tax-exempt bond financing.

In addition to documenting subsidies actually awarded to Wal-Mart projects, the study describes those situations in which local citizen groups successfully opposed plans for public assistance to the company. “The fact that Wal-Mart often proceeded with such projects without subsidies suggests that the company did not seek the assistance out of financial need,” Mattera said.

While all of the distribution center subsidies went directly to Wal-Mart, some of the public assistance for retail projects was given through the developers of shopping centers in which Wal-Mart stores serve as anchors the study reports.

“Given the poor quality of the jobs that tend to be created and the role that big-box stores play in contributing to sprawl, we suggest that states prohibit subsidies to retailers such as Wal-Mart unless strict conditions are met,” LeRoy said.

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