In the first part of KCBD NewsChannel 11's investigation, we shed light on the Lubbock Economic Development Alliance's incentive program, which provides money or other rewards to businesses for job creation and capital investment.
Local businesses who did not receive any incentives are upset that their own tax money is being given to their competitors.
According to Spartan Watchdog Group member Mikel Ward, this is an optional tax that voters repealed long ago. Three cents have been added to everyone's property taxes for nearly 20 years.
"We're all paying both sales tax and property tax to fund this thing," said Ward.
$4.8 million of LEDA's revenue is generated through taxes. Approximately $3.6 million is generated through the 3¢ property tax. In 1992, 84% of voters helped to repeal the tax.
"When David Langston came in as Mayor," said Ward, "basically, that Council just rolled that 3¢ over into the budget."
This past year, 16 companies received incentives from LEDA, adding up to more than $2.5 million.
"We have about $28.7 million in capital investment that's now taking place, resulting in $120 million in economic impact," said LEDA CEO John Osborne.
The issue many local businesses have, such as Beck Steel Inc. Vice President John Beck, is that 1/3 of the money LEDA dishes out is paid for by the 3 cent tax everyone pays for, yet only some businesses receive.
"I know a number of local printers have been upset with us with the fact that we incentivized a deal with a local printer that's been in business for over 20 years, but they fit all the project guidelines," said Osborne. "At least that company can continue to grow and expand."
Beck said he wasn't even given a chance to see if his company was qualified.
"No one from LEDA has ever called this office," said Beck.
Osborne said they have met with local printers to make sure the incentives do not hurt other local businesses. "
"We have been meeting with a number of our local printers over the last 6 weeks or so to find out what type of shortage they feel like they're going to have as a result of Copy Craft expanding," he said.
Ward says Market Lubbock Inc. was set up by the Council in 1995 to use this money without voter approval. Osborne said that LEDA works harmoniously with the group to promote the incentive program. Without the group, there would be stricter guidelines.
"If you were to have both of those funds go into LEDA, then we would have a greater restriction as a result of the sales tax you see," said Osborne.
Ward said, "There has never really been a positive vote of the public, no matter how much money they threw at it, for open ended economic development," said Ward. "It often amounts to nothing more than bribery or extortion."
For years this tax has been 3¢. This coming year, it will be reduced to 2.951¢, a reduction of 0.049¢ per $100.
The salaries and benefits for LEDA and Market Lubbock Inc. employees add up to $1.6 million. This does not include bonuses. NewsChannel 11 requested the official documents to see where all of the incentive money is spent.
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