BIW WANTS MORE TAX RELIEF FROM CITY

Bath Iron Works in Maine where only Navy destroyers are built

Last night Mary Beth Sullivan and I went to the Bath, Maine city council meeting.  We had read in the local newspaper that Bath Iron Works (BIW), owned by General Dynamics, was going to ask for another round of public subsidy as they undertake expansion and modernization of the ship yard.  We learned that this item would not come up in the city council meeting until 9:00 pm after the regular business was handled.  We also learned that public comments would not be allowed in this "workshop".

Recognizing that we'd not be allowed to speak at the "workshop" we decided to make our five-minute comments during the allowed public comment period at the start of each meeting.

One thing we heard over and again during the regular city council meeting was that Bath does not have enough money to pave the roads in our city.  Local schools have also taken a hard hit in recent years as the state cuts back on its share of education funding.

During the "workshop" BIW's corporate lawyer John Fitzgerald complained about looming federal cutbacks in military spending.  He also reported that BIW now has more competitors across the nation.  "We need the City of Bath's help to meet the challenges," he said.  He also posed a veiled threat by saying, "There are real concerns about BIW's affordability.  BIW's partnership with the City of Bath is essential."

Following BIW's very sketchy and brief presentation in the "workshop" no questions were broached by the city council.  It was then stated that BIW would come back on September 4 for another "workshop" at which time they will give details of their request for tax relief by the city.

Here are the comments that I delivered early on in the city council meeting:

Public comment on BIW TIF Request

I am here to speak against the request by General Dynamics (which owns BIW) for the citizens of Bath to fork over another round of tax breaks for this very wealthy corporation.

BIW is seeking a tax break from the city known as tax increment financing for an expansion project, which would be completed in 2015, and they don’t even this time promise more new jobs.

This ongoing transfer of public funds to private corporations is corporate welfare that Bath, our state, and the nation cannot afford.

But sadly, tax dollars get shifted from schools and roads, from the needs of real people to the bottom line of the already well-endowed corporations. 

Corporations often trade corporate welfare for promises to hire more workers.  BIW is a classic example. After being given $197 million in state and local tax subsidies to modernize its Bath plant, employment went from nearly 7,700 in 1999 to below 5,200 in 2011.

Modernization often means increasing mechanization of production facilities, which ultimately translates to fewer jobs.  But hey, who is paying attention anyway?

Corporations pit community against community in a race to the bottom.

At the same time corporations like General Dynamics make massive profit and their top executives come away with big bucks.

Former General Dynamics CEO Jay Johnson’s annual compensation in 2011 was over $16 million.  Last year his compensation from General Dynamics was just over $18 million.

Current General Dynamics CEO Phebe Novakovic’s compensation, so far in 2013, comes to $6,887,772.

General Dynamics generated $2.6 billion, I’ll say that again $2.6 billion, in profits in 2011 on almost $33 billion in revenue.  The company's value (known as "market cap") as of 6/30/13: $29,858,000,000.

I was at a conference in Washington DC last weekend where I learned the world’s largest weapons corporation, Lockheed Martin, has built a hotel in Montgomery County, Maryland.  They got the state to pass a law that exempts L-M from paying the state hotel occupancy tax.  Then L-M tried to get the county to exempt them from their occupancy tax as well but public outrage halted those plans.

Not to be denied though L-M then went back to the state and got them to pass a law requiring Montgomery County to exempt L-M’s new hotel from their occupancy tax.  

The examples of corporate greed these days are numerous and outrageous.

The UMASS-Amherst Economics Department has done the definitive study on jobs created by government spending.  They found that $1 billion spent on domestic priorities (education, health care, home weatherization, creating clean energy systems, etc) will create substantially more jobs within the U.S. economy than would the same $1 billion spent on military production. 

So while we think that giving corporate welfare is good for Bath’s local economy the study shows that if we invested those same dollars in building rail systems for instance at a place like BIW we’d double the number of jobs created.  Military spending is capital intensive – all other spending is labor intensive.

The city council is likely to give General Dynamics everything they want.  I felt it was at least worth the effort to stand before you and offer good economic reasons not to do so. 

But the corporations rule our political system these days – you acknowledged as much when you recently unanimously agreed to pass a resolution calling for a ban on corporate money in our elections.

The facts are though that the public is growing tired of seeing our meager funds go for more corporate welfare. 

But when it comes down to the people versus corporate power we know who triumphs. 

It’s a sad commentary on our current state of affairs.  Democracy has been trumped by corporate power and profits.

Bruce K. Gagnon
212 Centre St

Bath

(207) 443-9502