Liberty had previously assured the Boston City Council at a public hearing that the company has absolutely no intention of pulling its headquarters operation out of Boston, so that loss was never a risk. As to “job creation: I testified, as I had written, that, in return for about $40 million in City and state tax waivers, Liberty is promising to create, at its 2500-employee Boston headquarters campus, an average of 30 jobs annually for the 20-year term of the tax break — barely 1% hiring growth that will be invisible in a company this size, and indeed, under one-fourth the number of jobs Liberty has created annually (125) since 2004 WITHOUT any tax break. Yes: with the tax break, Liberty will hire 75% FEWER employees than it hired without the tax break.
And of those, only 20% will likely go to Boston residents, per the current pattern. So, the City of Boston is giving Liberty a 20-year tax break totaling an estimated $16-$20 million to hire six Boston residents a year. SIX JOBS A YEAR: INVISIBLE! At a million dollars a year, that’s about $165,000 per job per year (I wonder if any of the jobs will even pay that much). Mr. Bialecki wrote in an internal memo that subsidies should not exceed $30,000 a job, which is a federal standard.
I pointed out in my testimony that when he was running for office, candidate Deval Patrick said to me personally, and admitted in the Boston Globe, that tax breaks don’t influence significant business decisions, and that a business relying on tax breaks is a business going out of business. Yet the state corporate gravy train continues and indeed accelerates.
Of course, Liberty Mutual, #86 on the Forbes 100, is far from needy, so flush with cash that it will fund the $340 million tower to be subsidized out of its current assets without even needing a loan. It takes in $30 billion a year, with a net annual profit of about $1 billion. And two of its buildings, in the “blighted” Back Bay, already have tax exemptions under Chapter 121A here and here, for an annual tax saving of some $7 million. This TIF is just a little more icing on the Liberty cake, a golden handshake for its $27-million-a-year CEO.
But it is significant money in terms of the city and state public services it could fund. (I ask again: where are the library advocates? the parks advocates? the schools advocates? None were at this EACC meeting.) The Governor closed the Ferguson Industries for the Blind to save $867,000 a year, eliminating 25 jobs. At any time, but especially at a time when public services are being slashed to the bone, a subsidy like this one should not even be considered.
Patrick, who evidently arranged for this approval in a closed door deal along with Boston Mayor Tom Menino, will now have to defend his record on corporate welfare. We will not be fooled again.
I invite the Governor, the Mayor and the Boston City Councilors who voted for this TIF (only Turner and Yancey voted against it), to explain their decision here.
And I invite all the other gubernatorial candidates to state their positions on this and similar tax breaks here.