A judge in Georgia just invalidated a corporate give away to the electric car manufacturer Rivan, citing, among other things, that the local property tax waiver was not supported by the law, major portions of the agreement were unenforceably vague, no studies made regarding the costs to upgrade infrastructure or local services, and no analysis by bankers or economists.
So, the judge invalidated the tax breaks, which required judicial approval approval:
Last week, a very rare thing happened: A judge blocked a corporate subsidy deal, on the grounds that the officials who negotiated it didn’t do anything to ensure it would work out to the benefit of the state or local communities.
Rivian, the electric truck manufacturer, earlier this year announced a deal with the state of Georgia under which it will receive about $1.5 billion in public subsidies, the linchpin of which is about $700 million in property tax breaks. Incumbent Republican Gov. Brian Kemp has made the Rivian deal a key point in his re-election campaign this year. It was also one of those secret deals, where the beneficiary wasn’t known until it was too late, and part of the wider electric vehicle race to the bottom occurring in states across the country.
Everything was just chugging along, until, on Thursday, Morgan County Superior Court Judge Brenda Trammell rejected the part of the agreement that covered Rivian’s property tax breaks, agreeing with local opponents who said the state hadn’t done its due diligence to ensure the deal provided enough benefits to justify the cost. She also ruled that Georgia officials used a loophole to provide Rivian with its property tax breaks that isn’t actually legal. The property tax portion of the deal involves local communities floating some bonds in a complicated but common maneuver which requires judicial sign-off, giving Trammell the opportunity to stop everything in its tracks.
The 34-page ruling is a brilliant rebuke not just of this particular deal with Rivian, but of the corporate subsidy machine in general, and how it cranks out money for private concerns without guaranteeing public benefits. You can read the whole thing here.
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Ultimately, Judge Trammell found that Georgia officials “failed to put forward sufficient evidence demonstrating that the Project would promote the general welfare within the territory of the Authority,” which is the baseline work necessary for a subsidy deal to receive judicial blessing. Georgia officials and Rivian say they are looking at the possibility of an appeal.
Of course, the case could swing back the other way and a higher court could ultimately move Rivian’s project forward. But even if it does, this ruling is valuable for blowing the lid off of how corporate subsidy agreements are negotiated: Without public input, without adequate examination of the promises corporations are making, with too much deference to corporate leaders, and without taking into account the downsides for local municipalities. Economic development officials admitted, under oath, that they’re not doing anything to ensure the public investment is protected, or that local workers or residents see an upside from the state’s subsidy wheeling and dealing.
It was very refreshing, for once, to get a clear look behind the curtain, and have a public official step up and say those shenanigans won’t be allowed on her watch. More like this, please.
This is a good thing. There really should be federal legislation, and (dare I say it) action at the WTO to prevent these subsidies.
It won't happen though, big business owns both the Congress and the World Trade Organization.
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