Is the Tesla deal worth it for Austin?

Tomorrow the Travis County Commissioners Court may vote to grant Tesla major tax breaks to set up a massive manufacturing facility in eastern Travis County. Tesla already secured a much bigger tax break from the Del Valle School District, but it is also seeking breaks from its county taxes. 

This is a big deal. This could be an opportunity for thousands of good-paying jobs that don’t require college degrees — something that will be particularly welcome as we try to claw our way back from a recession that has disproportionately impacted low and middle-wage service workers.

Like many (perhaps most) other corporations, Tesla is run by an entitled narcissist who gets what he wants by bullying and lying. That’s certainly a relevant factor when assessing Tesla’s stated commitment to being a good community partner, but it shouldn’t be a deal-breaker. I’ll take good jobs from a bad person. 

Tesla’s mega-douche CEO Elon Musk. Credit: Wikicommons

What we’re offering Tesla 
The original proposal was that Tesla would get an 80% property tax rebate for the first ten years and a 65% rebate for the next ten. That has since been restructured to now say: 

70% rebate for the first $1.1 billion invested
75% rebate for investment between $1.1 billion & $2 billion
80% rebate for investment beyond $2 billion

I assume Tesla plans on investing more than $2 billion and this is therefore a vastly improved deal since it will guarantee the company an 80% tax break in perpetuity. In a memo, county staff defends the new proposal: 

If Tesla invests the original amount ($1.1 billion) the restructured deal is essentially a wash with the original proposal; above that amount is a net gain for the community, both in terms of jobs and economic activity, and fiscal gains for the County.

What we get in return
County staff has estimated that the Tesla property will generate $8.8 million in tax revenue for the county over the first ten years of the deal assuming a $1.1 billion investment. However, the total could be much higher if the investment and the corresponding land value is higher.

Whatever happens is certainly a marked improvement from the $6,400 a year that the county is currently getting from the unused property. However, we shouldn’t be comparing what Tesla offers compared to what the vacant land offers. We should be comparing Tesla’s offer to what that land could offer. In other words, what is the chance that, if not for Tesla, one or more other employers would occupy the land in the near future?

It’s unlikely that another use would rival Tesla in size and jobs, but it might still be something that generates more tax revenue than the vacant land. What’s the opportunity cost to the county of putting a 70-80% property tax break on that land forever? 

Tesla has agreed to “build a road that serves as a flood evacuation route for the residents of Austin’s Colony,” the residential area to the east.

But I don’t see any discussion of what the likely impact of the factory will be on the surrounding infrastructure. In addition to the thousands of car trips that the employees will add to nearby roads, notably FM 969 and FM 973, the constant arrival and departure of trucks transporting parts and vehicles will no doubt be a burden on the roads, which are not cheap to repair. 

Workers rights
Tesla has committed to paying all workers $15/hr. But I don’t see any language that would prevent them from getting around this requirement via contract workers. Although there is language about construction worker pay, there should also be provisions to ensure that other workers who are likely to be contracted (food service, maintenance, custodial) are paid a living wage. 

Finally, you know that if it were City Council Tesla were dealing with, Greg Casar and others would be putting pressure on the company to take a “neutral” stance in response to union organizing and not try to discourage workers from unionizing. Even better, the company could agree to voluntarily recognize the union once more than half of the workers sign a union card, as opposed to forcing a secret ballot election. The concessions contractors at the airport, for instance, agreed to such a deal. 

So far there has not been a similar push from the sleepy commissioners court. Tesla’s representatives have skated around the question of labor relations by stating that it’s up to workers whether they want to unionize. No shit. That’s the law, which Tesla has a history of disregarding

The near total absence of unions in Texas is not a good thing. It’s a very bad thing that contributes to our high poverty rates and nation leading rate of worker deaths. “Progressive” local governments should do what they can to help workers get a seat at the table. 

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