If you’re a taxpayer and you like beef jerky, I have good and bad news. The good news is that Jack Link’s is expanding the production facilities at its corporate home in Minong, Wisconsin. The bad news is the expansion is being “made possible” with a $365,000 federal grant to Minong for infrastructure upgrades.
The money comes from the Department of Housing and Urban Development’s Community Development Block Grant program. Curiously, the state’s Wisconsin Economic Development Corporation doesn’t mention in the press release that the money is coming from federal taxpayers:
The Village of Minong will receive a $356,000 Community Development Block Grant for Public Facilities for Economic Development from the Wisconsin Economic Development Corporation (WEDC) to help finance utility improvements that will facilitate the expansion of Link Snacks, Inc. Link Snacks’ expansion is expected to create 70 full‐time jobs over the next three years…
The Community Development Block Grant program is a versatile financing tool for general‐purpose local units of government in need of funds to undertake needed infrastructure and public building projects. The program is designed to enhance the vitality of a community by undertaking public investment that contributes to its overall community and economic development.
The WEDC was created by Republican Gov. Scott Walker to replace the state’s Department of Commerce and is modeled after Gov. Mitch Daniels’ Indiana Economic Development Corporation. Like the IEDC, the WEDC dispenses corporate welfare and engages in what I derisively call “press release economics.” Given that the press release doesn’t mention that the money came from the federal government, and thus makes it look like the Walker administration is responsible for the “job creation,” I’d say that the WEDC has learned well from its cousin in Indiana.
The bottom line is that it is not a proper role of the federal government to fund local infrastructure projects for the benefit of a business. The bureaucratic inefficiency alone of laundering money through three levels of government (from federal to state to local) is reason enough to terminate the Community Development Block Grant program. Unfortunately, the CDBG program creates a win‐win situation for politicians at all levels, which means that taxpayers are going to keep losing unless enough voters come to realize that robbing Peter to pay Paul’s company isn’t good economics.
See this Cato essay for more on fiscal federalism and this essay for more on the community development subsidies.