Corporate Welfare and Cronyism in Bethlehem
Election day was a quiet affair in most communities, but in Bethlehem residents used the a local election to protest the appearance of cronyism in connection with a new corporate welfare program.
Outside Bethlehem City Hall, a handful of city residents waged a write-in campaign for an unusual albeit illegal candidate — Martin Tower.
City residents Barbara and Steve Diamond and their friend, Sonja Walker, were encouraging voters to write in the name “Martin Tower” instead of voting for City Council President J. William Reynolds.
The residents are particularly upset with Reynolds because he took donations from the owners of Martin Tower and didn't recuse himself from the first reading of the ordinance to rezone the property.
What does Martin Tower (the former home of Bethlehem Steel) and rezoning have to do with corporate welfare? Bethlehem is one of two cities in Pennsylvania with a special City Revitalization & Improvement Zone (CRIZ). These zones are designed to attract development by letting developers keep state and local tax revenue generated inside the zone. Martin Tower sits in a CRIZ.
The Pennsylvania Independent reports that the owners of Martin Tower originally planned to build residential communities, but after the CRIZ was established they began lobbying city council to rezone the property for retail stores–potentially increasing the property's value by millions.
It’s impossible to prove the presence of political favoritism, or a quid pro quo, at play in Bethlehem.
But it’s certainly true the developers stand to gain handsomely from the rezoning, and it’s true they donated to three of the members of the City Council responsible for making that decision.
The CRIZ program is giving untold power to local council officials to determine the winner and losers in the local economy. This special treatment for a few comes at the expense of the many. Even those on a left, like Stephen Herzenberg, executive director of Keystone Research Center, agree corporate welfare is unfair. Herzenberg says:
Anytime you have a very targeted subsidy for a business or one industry, there are going to be issues with whether that targeted subsidy lends itself to political favoritism, or at least the appearance of political favoritism.
There's a simple solution: It's time to end these corrupting programs. If Pennsylvania eliminated the nearly $700 million of corporate welfare subsidies the corporate income tax could be lowered from 9.99 to 7.2 percent, attracting genuine business investement. Now that's a fairer way to revitalize communities.