LeRoy, Cafcas, McIlvaine, Tarczynska & Mattera (Good Jobs First): Creating Scandals Instead of Jobs | The Failures of Privatized State Economic Development Agencies

Executive Summary:

Three years ago, newly elected governors in several states, most notably Wisconsin and Ohio, decided that the best way to create jobs was to transfer economic development business-recruitment functions to “public-private partnerships.” These experiments in privatization have, by and large, become costly failures.

Privatized development corporations have issued grossly exaggerated job creation claims. They have created “pay to play” appearances of insider dealing and conflicts of interest. They have paid executives larger salaries than governors. They have resisted basic oversight.

State officials cannot say they weren’t warned. In January 2011, Good Jobs First published a report entitled Public-Private Power Grab in which we noted that this approach had already been tried in more than half a dozen states and the track record was far from impressive. In the last three years, the story has grown demonstrably worse, with major problems in both new and old privatized development corporations.

We document here again numerous cases in which the public-private partnerships (PPPs) have become embroiled in scandals involving misuse of taxpayer funds, conflicts of interest, excessive executive pay and bonuses, questionable subsidy awards, exaggerated job-creation claims, lack of public disclosure of key records, and other accountability abuses.


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