AUSTIN, Texas–One of three pizza parlors in Taylor, north of Austin, is getting more than $200,000 in taxpayer money as an incentive to expand operations. The handout came after a Texas A&M Engineering Extensive Service report found that there were was a “lack of youth activities/hangouts” in the city north of Austin. The award comes with new criticism heard statewide on such programs. Critics charge that “economic incentive” programs represent taxpayer dollars being used to “pick winners and losers.”
The city council voted for the corporate subsidy to entice the Mr. Gatti’s chain of restaurants to open a “Gattiland” franchise, which is billed as an “eater-tainment” location.
Ancira told Breitbart Texas the cash is going to a “long-time Taylor business. Mr. Gattis has operated in Taylor since the 70’s, with the current owners operating the business since February of 2000.”
Texas cities can hand out taxpayer dollars as incentives to entice business under Chapter 30 of the Texas Local Government Code. The law states that its purpose is to “stimulate business and commercial activity in the municipality.”
Ann Glenn owns the Mr. Gatti’s franchise in Taylor with her husband. She told Breitbart Texas that she and her husband thought the funding was “only fair” after learning that the city council “gave Applebee’s some land and money” to open a new business in town. Applebee’s is a national chain of casual-dining restaurants.
Glenn said, “We thought, ‘why not try it?'” She said the new facility will provide space for “birthday parties and school parties” that had not previously existed in Taylor.
“Economic incentive” programs are coming under increasing fire around the state for their potential to be abused amid charges of ineffectiveness and cronyism. Both the Republican and Democratic gubernatorial nominees, Greg Abbott and Wendy Davis, have expressed concerns about the programs.
At a recent hearing on state-level programs, the president of the Texas Economic Development Council told lawmakers that the state “didn’t invent this game of incentives. But for us to win projects, we have to be in it.” According to the Houston Chronicle, he referred to the incentive programs as “necessary evils” and “almost indecent.”
While the state’s grant of $40 million to Toyota to locate a manufacturing facility in Texas has been held up as a positive example by incentive advocates, the Chronicle noted that “Toyota has confirmed the $40 million grant was not a major factor in its decision.”
Bill Peacock of the Texas Public Policy Foundation told lawmakers that job growth does not come from government investment.
“Texas should reduce or eliminate current economic development programs while restraining growth in overall government spending and regulation,” Peacock testified. “This is the path toward expanding the prosperity of all Texans.”
Christopher Paxton, a policy analyst for Empower Texans, says economic incentive policies end up letting politicians “pick winners and losers” and often results–as is happening in Taylor–with “existing businesses’ seeing their taxes used to fund a competitor.”
“If this seems unfair and arbitrary, it’s because it is,” said Paxton. “The role of the city government, of any government, shouldn’t be to give certain businesses in a community a taxpayer-subsidized advantage over competitors. Government should be about ensuring a level playing field in the market, not distorting it with advantages for friends and the politically-connected.”
Michael Quinn Sullivan is president of Empower Texans and a founding member of the Breitbart Texas team. He can be found on Twitter: @MQSullivan.