City Council members have questioned their authority over the Lubbock Economic Development Alliance and are in the process of examining what control they have over their business contracts.
LEDA is projected to receive about $7.5 million in tax payer revenue for the 2012-2013 fiscal year; about $1.7 million of it goes towards financial incentives to bring jobs and businesses to the City of Lubbock.
"That looks a little out of balance to me," said Mayor Glen Robertson, "that it takes $8 million to give away $1.5 million."
Regardless, Mayor Robertson is not against giving local companies financial incentives; he merely wants more caution to be exercised during the process.
"I think it probably took the problems we had with the printers and the steel companies to bring this to light to get people willing to face this issue," said Mayor Robertson.
Some of those problems included claims of market inflation.
"There's no doubt it's affected us as the City of Lubbock," said Mayor Robertson. "There were several call centers years ago, that inflated the age of call center. People we had call centers paying $13, $14 dollars an hour. As a result, LP&L and their customer service department faced an extremely high turnover rate because we can't compete. We were not paying the same wages they were paying in the private sector."
Last year, 564 new jobs were announced. If businesses follow through with all the jobs they promise to create, 1/5 of the incentive money is then provided to those companies over the course of five years.
To verify that companies do not hire and fire employees to simply receive incentives, LEDA relies on their outside accounting firm, Robinson Burdette Martin & Seruight, L.L.P., to oversee the businesses that receive incentives are held accountable.
"That's why we have this separate accounting firm," said LEDA President and CEO, John Osborne. "They don't just look at the Texas Work Commission Reports; they look at W2s, which has people's names on it, they're looking at pay stubs, which have people's name on it and they're able to follow through and look at all these different reports that are available to them to really as much as possible to ensure that these new hires are appropriate and they weren't somebody that was previously let go."
According to the Texas Comptroller of Public Accounts, the City of Lubbock ranks 2nd in population for the cities in Texas that receive funds through sales tax for economic development. However, Lubbock received significantly less taxpayer funds compared to some cities with a smaller population. For instance, in 2010, Lubbock's population was 229,573 and received $7.493,756.00 in tax payer revenue. Amarillo is documented with a population of 190,695 in 2010, yet received $20,010,897.00 in tax payer revenue.
The City Council is in the process of undergoing legal counsel to examine what role they can play in LEDA's future spending and budget contracts. The issue is expected to be discussed publicly sometime this November.
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