In what has become as predictable as summer monsoons in Arizona, another company has filed for bankruptcy after being wooed with millions in taxpayer incentives – the second in Arizona in as many years.
GT Advanced Technologies, which relocated to the vacant First Solar building (another rent seeking corporation) after securing a $10 million Grant from the Arizona Commerce Authority (ACA) and millions more in property tax breaks and tax credits, filed for Chapter 11 bankruptcy last week. The “Apple Deal” was suppose to be economic boon for Mesa, investing in a factory that was going to create 700, high-paying jobs. Now it looks like it may be over before it even gets started.
If you recall, the announcement of Apple’s purchase of the First Solar building was met with all the fanfare of a victory parade. Gov. Brewer, Mayor Scott Smith, Sen. Bob Worsley and scores of other politicians and executives from the ACA nearly broke their arms patting themselves on the back for what they described as a “coup.” Not even a year later, the entire project has collapsed, and the out-of-state company is now in a fight for its survival in bankruptcy court.
If this sounds familiar, it should. Just last year, Suntech Power Holdings shut down their Goodyear plant – their only plant nationwide – just over two years after their grand opening, eliminating about 100 jobs. This was after receiving as much as $3.6 million in state and federal tax breaks, and a half million from the City of Goodyear for “job training.”
This is hardly the first time these types of crony capitalist efforts have failed. We should all be familiar by now of the stories of Solyndra, Fisker Automotive and others – companies that took in hundreds of millions of taxpayer money, only to lose it all and file for bankruptcy a short time later. As I wrote in an earlier post, Arizona was very fortunate to miss out on the Tesla plant in Nevada – costing taxpayers $3 billion and then some – and the SolarCity plant in Buffalo, NY – costing taxpayers $750 million. Both companies (under the same ownership) have already taken in hundreds of millions in taxpayer incentives, have massive debts, and are burning through cash. Neither company has ever posted a profit.
Additionally, this debacle should also put to rest the idea of letting the ACA engage in speculative investing with taxpayer money. The Goldwater Institute has put together a great resource about our very own Department of Crony Capitalism – the Arizona Commerce Authority. Unsurprisingly, the ACA is rife with conflicts of interest, and lack of accountability controls. It should hardly be a revelation that the former Department of Commerce, long a safe landing spot for well-connected political consultants and donors after an election, should not be a conduit for corporate welfare.
It’s time to put crony capitalism to rest in Arizona for good. There is only one thing that should be deciding winners and losers in our economy, and that’s the free market.