Gunpowder Chronicle posted on January 6, 2008 10:00 PM | Rating:
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One of O'Guvnah's favorite tools to spur "economic development" when he was Mayor of Baltimore was the use of tax abatements and property tax breaks to prompt corporations to keep their headquarters (or at least major operations) in the City of Baltimore.
The reasoning was that by keeping these large businesses in the city, you would spur the economic activity that surrounds them -- restaurants, bars, service companies, contractors, etc. You may also encourage employees to relocate to the city, thereby increasing the city's income tax take.
It was a good theory, but did it really work? I don't think so. Let's look at one company -- the former Sylvan Learning Systems, Inc., then headed by Doug Becker and Chris Hoehn-Sarinc.
(Full disclosure: I was an employee of a SLS subsidiary, eSyvlan, from 2000-2002).
Sylvan Learning Systems in the late 1990s was on a huge roll as the nation's largest provider of K-12 tutoring services. It was just beginning to get into post-secondary educational markets. By 1999, they had sold their ProMetric testing division, and used that money to create Sylvan Ventures, which was an investment vehicle to create new technologies for their core business.
They were also looking to leave Baltimore City for more affordable digs, with a big eye on Columbia.
And then the State and City stepped in with over $10 million in tax abatements, and millions more in tax breaks for SLS promising to hire over 1000 new employees and constructing a new headquarters downtown among the key promises.
They constructed a new headquarters, but they never hired those employees. In fact, Sylvan Ventures was closed down and taken private. SLS was split into two companies -- educate, inc. (to handle k-12 tutoring) and Laureate Education, to handle the post-secondary education.
Shareholders -- and more importantly, company officers -- made millions of dollars on the transaction. But the promises to the city and state were never fulfilled. So did Sylvan pay the money back?
Nope.
And Baltimore (and Maryland) taxpayers are on the hook for those breaks and abatements. O'Guvnah (then just little O'Mayor) perpetrated a huge fraud on taxpayers in this state.
Are we due for more? Is this going to be the pattern moving forward as O'Guvnah tries to make his bones for higher office? Is this more of shuffling the peanut under the cup?
O'Guvnah's "leadership" style has always been a street game of hide the peanut. He did it with CitiState, crime statistics, economic statistics and so on. He's done it to the state.
We will let him continue to do it?