The $59B owner of a Tarrant landfill wants tax-free funding. Is that ‘corporate welfare?’
Tarrant County commissioners took some heat this week from hawkish residents who questioned why Republic Services Inc. — a multi-billion-dollar waste disposal company — wanted tax-free funding for a project at its Arlington landfill.
Isn’t that “corporate welfare” for the company that owns and operates the landfill, they asked during a commissioners meeting. The residents also brought up concerns about the environmental impact of the project and the public notice for the funding.
The decision before the commissioners Tuesday was to approve a $13 million tax-exempt revenue bond for Republic Services. The $13 million bond is part of a larger, $133 million bond package for the company issued by the Mission Economic Development Corp. in the Rio Grande Valley city of Mission. Republic Services, a Phoenix-based solid waste management company, has a market capitalization of just over $59 billion.
A revenue bond is a form of municipal debt that is repaid by revenue from a project. For this particular bond, Republic Services will be required to repay the Mission Economic Development Corp. using revenue from its waste removal services, but it will not have to pay any taxes on the debt.
Tarrant County would not provide any funds to the company, nor would it be liable for the bond in any way. However, commissioners had to sign off on the portion of the bond that will be used at Republic Services Arlington Landfill in order for the full package to be approved, per documentation provided by the commissioners court.
That, however, did not stop residents from accusing the county of helping give a highly profitable corporation government handouts. Republic Services reported a net income of more than $453 million in the first quarter of this year.
“It seems to me like a $13 million donation of revenue bonds from the county is the kind of corporate welfare which might have been spent on something like child care or education or health care or filling the potholes on Granbury Road,” said Fort Worth resident Jeralynn Jackee Cox, who said the bond goes against the political ideology of the Republicans on the court.
“I keep waiting for the day when this will be a body who seem to be the fiscal conservatives that you claim to be,” she said.
What is ‘corporate welfare,’ and does the revenue bond fit the description?
The Texas Public Policy Foundation, an Austin-based non-partisan think tank, defines corporate welfare as government favor of a business “in the form of direct subsidies, tax credits, or favorable regulatory schemes,” and adds that the term is sometimes referred to as “economic development.”
The revenue bond for Republic Services fits the description of a “soft form” of corporate welfare, according to James Quintero, policy director for the foundation’s Taxpayer Protection Project.
“The public is right to be concerned about a system that allows governmental entities to issue tax-exempt bonds for the benefit of a particular private sector enterprise,” Quintero said in an email exchange.
Such arrangements between the public and private sectors often lead to political favoritism, unequal taxation and the misallocation of capital, he said.
“This instance raises a broader question about the appropriateness of government-directed economic development programs,” Quintero said. “That is, whose interests are well-served when public authorities, like [the Mission Economic Development Corporation], facilitate special tax treatment for select companies? Is it the general public who wins, or a favored few?”
Corporate welfare policies have a wide range of harmful economic effects, according to a 2019 report published by the Mackinac Center for Public Policy, a Michigan-based think tank dedicated to advancing principles of free markets and limited government.
“There is broad consensus among academic economists that these programs are wasteful at best and actively damaging to a state’s economy at worst,” the report states. “In addition, they encourage cronyism and corruption by creating high stakes for the winners and losers of such policies.”
Other issues residents had with the revenue bond
Residents who spoke at Tuesday’s commissioners court session not only had problems with the substance of the bond, but also with the procedures that led to its approval and the possible effects to the area where the landfill is located.
“While I’m sure it was just a bureaucratic mistake, this item was not properly posted for the public hearing,” said Lon Burnam, a former Democratic state representative from Fort Worth.
This mistake led to no one calling in to a telephonic public hearing that was held on April 12, he said.
Documentation provided by the county shows that a representative for the Fort Worth Star-Telegram attested to the fact that a notice of the public hearing placed by Mission Economic Development Corp. ran in the April 5 edition of the newspaper.
But a review of the April 5 print edition this week found that the notice never actually ran. This was due to a technical error, according to Tony Berg, chief revenue officer for McClatchy, the Star-Telegram’s parent company.
“We regret the error and are taking steps to ensure this does not happen again,” Berg said.
Because of the error, county officials notified the commissioners Thursday that they will need to consider rescinding their 4-0 vote to approve the revenue bond for Republic Services because of the lack of public notice.
Concerns over what the project entails
The environmental impact of Republic’s project was also brought up as an area of concern by some residents on Tuesday.
“It is my understanding that this area was an early African American settlement and has meaning for this community,” said Fort Worth resident Linda Hanratty.
The landfill is near the first African American community in Tarrant County, according to Tarrant Community College. Mosier Valley was founded in the 1870s by former slaves.
She recognized the importance of solid waste disposal and the county’s need for more space for it, but urged county commissioners to provide more specifics on what the project would entail.
“This consent agenda item does not elaborate, as we’ve been told before, about how the $13 million allocated to Tarrant County will be used, nor does it discuss any potential adverse impacts on the surrounding population,” she said. “I think that we owe it to the residents of that area, and people concerned about that area, which holds meaning for them, to know exactly what Republic plans to do.”
This story was originally published June 7, 2024 at 5:30 AM.
