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City Council passes economic incentives ordinance, debates living wage

Friday, October 2, 2009 by Josh Rosenblatt

On Thursday morning, the City Council voted to approve an ordinance establishing an enhanced review process for economic incentive proposals. The ordinance requires the implementation of a formal cost-benefit analysis to determine the costs of any economic incentive agreement proposals and a timeline to increase opportunity for citizen review and comment prior to the Council’s taking action on any proposals.


Though the ordinance passed unanimously, the debate wasn’t without controversy. Members of Austin Interfaith, one of the stakeholders that worked with City Manager Marc Ott on recommendations for the proposed ordinance, spoke at the Council meeting about concerns they have with the city’s approach to economic incentives.


Group spokesman Fred Krebs, pastor of Prince of Peace Lutheran Church, said Austin Interfaith is calling on the Council “to pass an ordinance that requires any company receiving city tax abatements to relocate to Austin to pay a living wage of 18 dollars an hour with benefits, a career track, and a strategy to hire locally.”


“According to numbers released last week,” Krebs said, “Austin has a poverty rate of 17 percent and a child poverty rate of 22 percent and an uninsured rate of 25 percent. And what’s most shocking of all is that these rates are higher than most of Texas and the national average. Austin is becoming the poverty capital of Texas.” (These numbers come from a U.S. Census Bureau report on Austin’s economy from January 2007 to November 2008.)


Krebs went on to say that he and his colleagues don’t want Austin tax dollars subsidizing companies that would bring low-wage jobs into the city, for fear that this would deplete the middle class and explode the rolls of those living below the poverty line. “Council, are we going to perpetuate poverty by giving incentives to companies that do not pay living wages,” he asked, “or do we want to set a higher standard for wages and invest in training a skilled workforce to lift people out of poverty?”


Council Member Sheryl Cole responded by saying that while she agrees that everyone in Austin should have health benefits and livable wages, she is “concerned that we still have people in this community who are unemployed and underemployed who are only qualified to receive low wages, and for us to adopt a policy that totally excludes them from incentives troubles me.”


Responding to Austin Interfaith Strategy Team member Minerva Camarena Skeith’s claim that it would be better to lure more high wage rather than low wage jobs to the city, for the reason that the city doesn’t need more of the latter, Cole said, “The unemployment rate in the African-American community is upwards of 30-40 percent, especially among African-American males. And statistics for the Hispanic community are worse than that. And then when we talk about people who actually use social services, it’s worse than that. So [I don’t agree with] the premise that we have enough low-paying jobs.”


Speaking in favor of the ordinance, Dave Porter, senior vice-president of economic development for the Austin Chamber of Commerce, argued that though he sympathized with the concerns of Austin Interfaith, the time isn’t right to add new restrictions to the city’s policy on economic incentives. With the country in the midst of a recession, he said, the most important thing for the city is to create new jobs and foster economic growth, a task made more difficult by the fact that other cities have been willing to provide better incentives than Austin in the recent past.


“To show you how the game has changed during this recession,” Porter said, “this past April we competed with San Antonio for a 1400-person operation called Medtronic. They’re a large medical technology firm in Minnesota that was looking to relocate. 1400 jobs, with an average wage of $32,000 a year plus benefits. Those were good jobs for 1400 families in Austin. But what San Antonio did was not only offer tax abatements—they put cash on the table–$2.3 million from the city of San Antonio. Bexar County put another 2 million in. Plus money from CPS Energy. That’s what we’re competing with.


“We’re not attracting low-income jobs or low-wage jobs; these are good jobs. We welcome the debate, but if we put further restrictions on this policy that’s so seldom used, we’re not going to be using it at all. We should have this debate at a different time. Now, we need to be attracting jobs and immediate income for families. We need to be aggressive.”


Interfaith spokeswoman Skeith said the group hopes to have language for a new incentives ordinance ready by Nov. 15.

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