By Jackie Faye February 9, 2015
Over the weekend, the New York Times published the first installments in a multi-part series on investment in New York City luxury real estate by investigative reporter Louise Story, which is getting a lot of attention across the media landscape. (It has even been translated into Chinese and Malay.) Last week, I interviewed her about her last big project, “The United States of Subsidies.” That three part series covered the $80 billion in tax incentives that states, counties and cities pay out each year to lure companies to set up shop there—or just to stay put.
“The United States of Subsidies” arose out of a 10-month investigation that began with a couple of seemingly simple questions: if demand for Fresh Direct facilities could erupt into a bidding war between New York and New Jersey, how much were local governments actually paying out for this kind of thing nationwide? And was it paying off in the way it was supposed to? Coming up with answers turned out to be surprisingly difficult: Story examined over 1,800 records in the process.
The series went on to win a Bartlett & Steele award, and two years later, it continues to be cited by consultants and analysts in their development recommendations to state and local governments, as well as by local residents attending and speaking at city council meetings, Story says. And she continues to follow the story, watching for new deals that seem interesting.
A graduate of Columbia Journalism School, Story has had an illustrious career in the just nine years since she joined the New York Times as an intern in 2005. (At the end of her internship, the paper ran a version of her Columbia master’s thesis on the front page.) She was one of the lead New York Times reporters chronicling the financial crisis of 2008, including one project that was a finalist for the 2010 Emmy Awards and another that was a finalist for the 2009 Pulitzer Prize in Public Service. She has also been a finalist three times for the Gerald Loeb Award, and Huffington Post named her one of their Game Changers for 2010.
I talked with Story about the genesis of the “The United States of Subsidies” series, the process of collecting the data that would allow her to write it, and the impact it has had. An edited excerpt of that interview is below. You can read part one of Story’s series, “As Companies Seek Tax Deals, Governments Pay High Price,” here. Part two, “Lines Blur as Texas Gives Industries a Bonanza,” can be found here. And part three, “Michigan Town Woos Hollywood, but Ends Up With a Bit Part,” here. Or explore a New York Times database of her raw data, here.
Jackie Faye: How did you come up with the idea for this story?
Louise Story: At the time that I started this project it was the beginning of 2012 and there was a bidding war between New York City and New Jersey for some facilities for Fresh Direct, a grocery delivery service. Both sides were offering lots of money to lure the company there, and obviously since they had already been here it wasn’t going to be a whole lot of new jobs.
My editors and I were talking, and one of my editors said, ‘You know you see this all the time, all over the country, what does it add up to across the country?’ and I said, ‘Oh, I’ll get right back to you later today with that.’
I thought I could probably just look a figure up, and I started looking around, and talking to all kinds of researchers, and government people, and I found out that there was no figure in existence on how much this costs states and cities because they did not report it to any central entity. I realized just answering that question would be useful in the discussion of incentives.
Faye: Who was the first person you called to talk to about it and why?
Story: I called a number of academics who had studied incentives and then I started calling lots of federal agencies that I thought maybe would have a figure. For instance, the census does a report on city finances, and that would be a logical place if they reported these to report it to, so I talked to people there and it turned out they ask a lot of other stuff about tax revenues, but they don’t ask them how much they are foregoing in tax revenues for tax breaks specifically for companies, and they don’t ask about cash grants.
I knew I would not be able to put in every single figure, because I would not be able to get the figure from every single city in the country, but I thought how would I go about at least putting a floor on this thing.
What I realized is generally in each state, there would be between two to five agencies that would handle each state’s programs. If I could identify the program, I could go to each agency. The problem is how do you know what to ask for if you don’t even know what they offer – each state offers different programs, and to get these figures you have to go in and specifically ask about the tax credit by a specific title.
What I found is that most states have a website, which is public, where they are trying to recruit companies to come. On that website, they talk about all the different incentives they offer because they are trying to recruit companies. That was a great starting place.
For each state, I said what are they advertising to the world as reasons to come there and what incentives do they give out. I started recording all the programs that they had in a spreadsheet, and then with the specific names of those programs, I researched which agency in the state administered it, and then went to that correct agency and did interviews, filed FOIAs, and put in different email requests to get the cost figures.
Faye: How long did you spend working on the story?
Story: The whole project I worked on for 10 months, but it took four months to get these cost figures.
Faye: With so much data, how did you decide where to focus the story? What made you decide to lead with General Motors?
Story: My data findings drove which stories I told. The first story I told I set with General Motors because they are the company that had gotten the most in recent years, and also automobiles is one of the top industries in general.
The second day, I told the story through Texas because Texas gives out the most incentives of any state.
The third day, I told it through the movie industry. Now they are not the number one industry for incentives, but they are in the top half dozen, and that is a little surprising to people.
Faye: Were there any key interviews that shaped your research?
Story: You know, some people really stick with me. Particularly people who had long running concerns over incentives.
There is a man who is featured in the first story, the GM story. He is a local lawyer from Michigan who had raised concerns about GM’s incentives there going back to the early ‘90s. Because what happened over and over again in Michigan is they were given incentives to create jobs, but then they would close the factory, or shrink the factory, and the jobs would be lost, but they would have already gotten the incentives. Basically, the towns would be out of luck.
This attorney fought many times to try to stop them from being able to close factories, or in other ways hold them accountable for this money they were receiving.
In Texas, I interacted with a number of workers who worked at Amazon’s warehouse facility there. Amazon had gotten huge incentives to be down there in Texas, but these worker’s jobs weren’t that great.
It is one thing to say we are going to give a bunch of tax breaks to create jobs, but you got to pause and say well what kind of jobs? How much are these people being paid? How are these people being treated? Are these the jobs that we really want, or are these jobs that would have been here without the incentives.
Faye: Was there an ah-ha moment in your reporting?
Story: The biggest thing was when I figured out how I could quantify it. I was really trying to get a figure showing what it costs the state. When I started going to the states, they started saying because of taxpayer confidentiality we can’t give it to you for all the companies. Then, I had this insight that, wait a moment, I’m really trying to get the one-year cost figure, I could get costs from the states in aggregate without forcing them to identify the companies. When I had that insight that there was another way to come at the data I think it allowed me to come up with something really useful and different from what had been out there.
Faye: Did you have to do any interviews off the record?
Story: No, this was really the kind of project that all the questions absolutely should be answered on the record. We are talking about public money here. I had to be persistent and stay on these offices. In the end it was 1,800 programs I was getting figures for, and each one was often its own request. So that was a lot to keep track of.
Faye: What has been the impact of the story so far?
Story: I think the biggest result is that there is a real rise in awareness around the fact that incentive money is not just free. If a state or city is giving a tax break to create jobs, yes, the jobs may be great to have, but the money is coming from somewhere. It could mean lower school budgets and so on. You really need to make sure the cost and benefits are worth it.
I get emails from all over the country from people going to their local city council hearing to hear about a company that might come to town, and they tell me they are going to speak up at the council meeting, and they are going to refer to our series on this.
I think it has provided food for thought for a lot of people and a little bit of a backing for them to ask the kind of questions that people were not asking before.
It is pretty easy for people to assume more jobs are definitely good, when in fact those jobs may not come, they may have come without the incentives, or they may not be worth it.
Faye: With a big, in-depth investigation like this, will you continue to follow the story, to see if there is anything new to report on?
Story: I think it is a really important area. I just got an email about an incentive deal in Austin that looks like it might be worth probing. I think there are stories that are ongoing stories. Some stories don’t end.
Faye: How was this project similar to or different from the other business writing you do?
Story: This is the biggest amount of data collecting I’ve done and also it is really unique for a news organization to create an original database and put it all online as a service to readers.
Jackie Faye will graduate from Columbia University with a MA in business journalism in 2015. Previously, she reported in Norfolk, VA at Newschannel 3 (CBS), Raleigh, NC, at NBC-17, Columbia, SC at WIS (NBC), and Oklahoma City, OK. She has a decade of experience in journalism. Media General honored her coverage of drug shortages in 2012. After her report aired, a federal class action lawsuit was filed on behalf of cancer patients who could not access lifesaving chemotherapy drugs. She is a graduate of Georgetown University’s Institute of Political Journalism.
This entry was posted on Monday, February 9th, 2015 at 1:54 pm. It is filed under Behind the Story, Q&As and tagged with General Motors, state corporate incentives. You can follow any responses to this entry through the RSS 2.0 feed.
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