St. Tammany Bureau writer in a Times Picayune article dated 7/14 Louisiana Governor Jindal announced that Globalstar, a Silicon Valley company that provides satellite telephone and data services, is relocating its headquarters to the Covington area in Louisiana. According to Jindal and Globalstar the company is committed to: relocating or creating more than 150 jobs in the area by the end of 2011, an additional 50 by the end of 2013 and then 300 more by the end of 2019. Globalstar noted, most if not all of the initial jobs likely will come about through relocations from Golbalstar's California office. In other words, not new hired employees.
The following is what Louisiana gave up to secure the relocation of Globalstar. Louisiana Economic Development committed to proving Globalstar with $4.4 million in expected relocation costs, as well as $3.7 million to offset the cost of leasing the Covington area building, previously the Bruno Wink Office Complex. In addition, Globalstar officials said they were enticed by the state's recently enhanced Digital Media Incentive tax credits that give a tax credit of 35% for payroll expenditures for digital media labor in the state and provide a 25% tax credit for certain other qualified expenditures.
That $8.1 million plus the 60% tax credits to a profit making private company continues the transfer of wealth from the average citizen to those companies who can afford to pay their own way. That loss of state revenue at the time of record state budget deficits and higher unemployment, layoffs, more state projected budget deficits in the coming years and budget cuts is truly astounding. It has been reported here before how the $7-8 billion in state incentives to businesses contained in the state budget are not evaluated on a regular basis by the governor or the legislature to see if the incentives are working.
The 350 jobs that Jindal and Globalstar says will be created by 2019 is a myth and ignores the fact that in the last two weeks the LSU system, UNO and Southern University announced budget cuts that will lay off workers that exceed 350 people. Jindal says those revenue cuts were necessary because of Louisiana's revenue shortfall. What a hypocrite. One should also note that the Louisiana Department of Labor on its website stated from December 07 when the recession officially started through May 2010, unemployment in Louisiana was up 3.1%. If you listen to Jindal he says all is rosy in Louisiana.
The bottom line in this sad announcement is that corporate welfare given to Globalstar will not reduce the cost of their products or service to the consumer nor will it go toward innovation. It will go to increase their profits which in turn will go to increase the bonuses of their CEO and other executives. History has already taught us that. Once again Louisiana has given away its natural competitive advantages and future state revenue in favor of the corrupt ideology of business and elected officials.
The Louisiana Workforce Commission says June unemployment in Louisiana was 8.3%, up from May's 7.1% and also up from 7.8% in June 09. With $7-8 billion in Tax incentive and other give aways of state revenue, one would think Louisiana would be adding jobs at record numbers. After the ribbon cutting for this new announcement I can see the executives of Globalstar sitting around laughing how they pulled another one off, this time on Louisiana governor Bobby Jindal.
The problem is the people of Louisiana, the average workers are paying the price.
