Search This Blog
History tells Caddo to reject more Elio funding
Ouachita Parish’s citizens once got fooled. Are Caddo Parish’s far behind?
Or also draw on the experience from Ouachita. It didn’t work there, it’s unlikely to work in Caddo. Parish commissioners need to have to good sense to tell Elio it will make sure the infrastructure is adequate, and beyond that leave be any thought of transferring more taxpayer resources.
Months ago, the concept automaker Elio Motors announced they would purchase and manufacture vehicles in Shreveport’s former General Motors facility. The car has only one wheel in the rear but projects a base price of only $6,800 for an predicted miles-per-gallon gasoline performance of 84. It claims it has gotten 13,000 preorders already, has interest from foreign countries in it, and that it would churn out as many as a quarter of a million of them a year.
However, the company has let it be known that it is having trouble raising money from private investors. Further, it cast its eyes to Shreveport because it was turned down by state and local governments in Michigan for funding. Already, Louisiana has promised it access to state tax incentives that could be worth as much as $150 million over a decade when its starts production, and Caddo Parish provided up front assistance of $1 million on ten times that in lending.
But now the company may be back for more from the Parish Commission. This spring, commissioners apparently discussed the idea of backing the project to an unknown amount, in an unknown way. Some insist that if the parish assists in any additional way it would not be direct cash infusions or lending, even has the amount to get the company going there could run into the tens of millions of dollars.
Yet in regards to this question Commissioner John Escude made reference to royalty monies the parish has collected over the past few years totaling $50 million, about half of the annual budget (which, largely thanks to the royalty boom has seen expenditures increase 25 percent in the past five years even as most governments everywhere have had to retrench in spending), as a means of subsidizing Elio in some way. Before he or anyone else on the Commission get any ideas, they need to review recent history, understand the markets, and come to grips with what the basic purpose of government is.
Only four years ago a concern then called V-Vehicle, also with promises of energy-efficient autos, proclaimed it would spend hundreds of millions of dollars to produce its car in Ouachita Parish. It claimed to have raised $100 million from private investors, but then asked government for hundreds of millions more in incentives. The state promised $134 million and sent some initially, but Ouachita and Monroe and West Monroe went a step further by providing aid tied to raising property tax rates 1.8 mills to fund nearly $12.5 million.
Narrowly the vote succeeded, but under the condition that the aid be limited in duration and if the deal fell through any tax collected would be refunded. Naturally enough, that happened when Democrat Pres. Barack Obama’s Department of Energy – which freely had lent larger sums to concerns hawking even more dubious energy-efficiency that went belly-up – hesitated on shelling out $321 million in taxpayer loans this case, perhaps as a jab to Republican Gov. Bobby Jindal, despite intense lobbying by insiders and by Louisiana politicians. Regardless of the reason, the plug was pulled on by then what had become rechristened as Next Autoworks and it’s still looking for backing. Ouachita Parish then had to begin refunds, with no interest, of the additional property taxes taken.
That the marketplace did not wish to invest adequately in Next, or hasn’t in Elio, nor did in another pipe dream car maker Fisker that proved unworkable enough to take federal taxpayers for almost $200 million should tell the Commission something if its members aren’t too dense – that these ideas are unlikely to be successful. If an investor with personal means wished to throw away money on a long shot, by all means. But it is certainly horrendous judgment, if not criminal, to put taxpayers’ resources at such risk.
After all, government is not there to serve as a venture capitalist. It’s not commissioners’ money, it’s the people’s. If nothing else, experience next door in Bossier City should forewarn, which threw away tens of millions on a parking garage for landlord that went into bankruptcy and (with Bossier Parish and the state) on a high-tech office building that has hardly created any new jobs, both of which aren’t even close to paying back what was put in. Government needs to let the private do what it does best and not interject itself as a competitor.
Posted by Jeff Sadow at 12:15