James B. Treece
James B. Treece
News Editor

Texas politicians: Be careful what you wish for and what you hand out

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Texas politicians are exchanging high-fives over Toyota’s decision to relocate its U.S. headquarters to Plano. It’s undoubtedly a great boon to the state. But will it really prove so good for the politicians’ careers?

At a news conference Monday, the Dallas Morning News reported:

Plano Mayor Harry LaRosiliere hailed Toyota’s move as a “great day for the state of Texas, a terrific day for Collin County and the Dallas-Fort Worth region, but a fantastic day for the city of Plano.”

LaRosiliere said [Gov. Rick] Perry, Lt. Gov. David Dewhurst, House Speaker Joe Straus and the Dallas Regional Chamber “brought this project to fruition.” Plano officials became involved in the discussions three months ago.

While the Texas Enterprise Fund offered Toyota $40 million, the mayor declined to discuss the incentives Plano is offering until May 12, when the City Council is to vote on the package.

Watch the money

According to Bloomberg, the $40 million alone would be the second-largest economic incentive given by Texas, the biggest being $50 million given in 2005 to a biotechnology joint venture formed by Texas A&M University and Lexicon Pharmaceuticals.

So Texas is forking over $10,000 per job, giving the money to a company that a) is sitting on $34 billion in cash and marketable securities and b) never tried to play one state against another in a bidding war for the headquarters. The state money isn’t so much an inducement as an after-the-fact thank you.

Keep an eye on the money. Some sources say that when the all state and city funds are added in, we’ll be talking the mid-nine figures.

Whatever the amount is, when it is revealed May 12, the political backbiting will begin.

Been there

We’ve been down this road before. In the late 1980s and early 1990s, states and municipalities dangled millions in front of Japanese and German automakers looking to build assembly plants in the United States.

In many, perhaps most, cases, the payments paid off for the state and the local economy. The millions Kentucky invested to lure Toyota’s plant to Georgetown, for example, was a terrific investment. It drew not just the automaker but eventually dozens of Toyota’s suppliers to the state, with massive economic ripple effects.

But throwing money at a company is not necessarily healthy for politicians in the short term.

In many of those same cases, a state or local politician got voted out of office after an opponent was able to attack the incumbent for giving away the store and overspending on the incentives.

Election backlash

The governor of Kentucky was term-limited, but the anointed successor lost in the wake of the giveaways to Toyota. The governor of Indiana lost after what was then Subaru-Isuzu Automotive got a bundle. The mayor of Flat Rock, Mich., lost in the election following the arrival of Mazda’s factory there. See a trend?

I’d be especially nervous if I were a Texas elected official or economic development officer being asked for money to incentivize the move of a Toyota supplier -- whether a parts supplier or, say, an ad agency -- from Southern California to north Texas as they follow in Toyota’s wake.

That company is likely to make the move anyway. Any money given to it is just icing on the cake -- and an attack line handed gratis by the incumbent to the challenger in the next election.

You can reach James B. Treece at jtreece@crain.com.

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