How does the secrecy surrounding economic development incentives help the corporations receiving them and hurt the taxpayers financing them?
Consider the John H. Harland Co., which got a $1 million taxpayer grant for its 400-job check-printing plant in Glen Burnie.
Maryland legislators approved Harland's deal on June 3, 1997, after the company threatened to consolidate operations in Wilkes-Barre, Pa., instead of Maryland. Gov. Parris N. Glendening announced that Harland's project had "moved forward, thanks to assistance from the state of Maryland." It would "create and retain good, family-supporting jobs," he said.
But here's what Glendening didn't tell Marylanders:
n The jobs may have been good, but they weren't nearly as good as Harland said they were when it applied for incentives and got the support of the Department of Business and Economic Development.
n Harland never even contacted Pennsylvania's economic development department about putting its plant there.
n Harland's project didn't just "move forward" when it secured Maryland's $1 million. It was almost finished. Harland officials were so confident of getting the money that they signed a lease and began construction of the Anne Arundel facility six months before legislators voted on it.
"You mean we just rubber-stamped it?" said Sen. Leo E. Green, a Prince George's County Democrat who sits on the Legislative Policy Committee. "Obviously, nobody ever told us that."
It was Oct. 24, 1996, when Maryland officials sent a formal letter of intent to Harland laying out their tentative offer of $1 million, plus a $100,000 training grant.
"We understand that John H. Harland Co. intends to pay an average of $12 per hour," then-Maryland economic development secretary James T. Brady wrote in the letter to Harland General Counsel John C. Walters. Walters signed the letter.
But the true value of the jobs tied to Harland's incentives turned out to be nowhere close to $12 an hour.
Harland's production jobs paid an average of only $8.98 an hour, according to a letter sent to legislators in May 1997. The most valuable production jobs paid $10.80, and even if management jobs were included, total average hourly pay was $10.37.
More than 70 of the positions paid only $7.50 an hour. That's $15,600 a year, or less than the poverty level for a family of four.
It is against Maryland law, punishable by up to five years imprisonment and a $50,000 fine, to knowingly make a false statement in any incentives application or other document furnished to the Department of Business and Economic Development.
Harland eventually supplied accurate pay data to Maryland. But the information came to legislators two weeks before they had to vote on the incentives. By then, construction of the facility was almost finished.
Harland executives also told Maryland economic development officials that, without special giveaways from Maryland, they might put their jobs in Wilkes-Barre instead of in Glen Burnie. Internal memos at the Department of Business and Economic Development refer to "the project's competition in Pennsylvania," and DBED told the Legislative Policy Committee that, "had the competing site in Pennsylvania won, the ... jobs ... would have been lost."
But if Pennsylvania was a competitor, economic development officials there never knew about it.
The Sun filed a request under public information laws to examine Pennsylvania's files on its negotiations with Harland. "There is no file on Harland that we can find," said Lauren Cotter, spokeswoman for Pennsylvania's economic development department.
Harland officials denied that the company bluffed about the possibility of expanding in Wilkes-Barre, and they said Maryland's incentives were critical in luring their plant.
"Wilkes-Barre was right up there," said spokesman John Pensec, because Harland already had a facility there. But, he added, "We never got to that stage" of contacting Pennsylvania. "We were investigating both that and Baltimore and decided very early on that Baltimore was where we wanted to stay."
The $12-an-hour figure, Walters said, was an "estimate" of what Harland paid nationally that included benefits and was bound to change. "All sorts of numbers ... were floating around" on construction costs, worker head counts and other data in the early stages of Harland's project, he said. "You pick any point in time and you have an estimate of what you think the numbers are going to be, but they change."
Actually, Harland was supposed to provide health-care benefits "in addition" to the $12 an hour, according to the letter Walters signed. And because the company already operated a plant in Howard County, it knew about labor costs in Maryland.
State legislators said the lack of disclosure by Harland is disturbing and prompts questions about the quality of other incentive deals.
"How much legwork is done on these things?" said state Sen. Edward J. Kasemeyer, a Howard County Democrat on the Legislative Policy Committee. "You're under pressure to get rid of so much money [in annual incentives appropriations]. Why do you do it? How do you do it? I don't feel real good about the whole process."
Pub Date: 10/13/99