Something smelly in the air

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My wife worked for American Airlines for a number of years, before the airline spawned the SABRE Group as a separate business. It was a good company, she liked her job, and we appreciated the flight benefits. I have no axe to grind with Tulsa's largest private employer, but I don't see the point in spending another $4 million in taxpayer dollars for the special benefit of one company.

Mayor Bill LaFortune has proposed adding a little over $4 million to his "Third Penny" sales tax plan, extending the duration of the tax by another month. The money would pay to build temporary hangars at Tulsa International Airport for the use of American Airlines' maintenance operation.

AMR, American's parent company, lost over $600 million in the last three months of 2005. Over the course of 2005, AMR lost $861 million. The loss in 2004 was $761 million. The company will be paying out an estimated $78 million in bonuses to upper management. AMR has $3.8 billion in unrestricted cash on hand.

The money LaFortune proposes to spend on AA is a drop in the bucket from the airline's perspective. So why this last minute push to add it to the Third Penny package?

Reason #1 is to try to salvage his plan to put a six-year renewal on the ballot for the general election. A majority on the City Council is leaning toward passing an 18 month extension of the current tax, to pay for projects approved in 2001 that haven't yet been funded. If that happens, LaFortune looks ineffective, and he loses the ability to sell his reelection based on the new projects in his plan. The AA subsidy creates a sense of urgency -- the claim will be made that if we pass only an extension to pay for already-approved projects, it may cost our city jobs.

Reason #2 -- it's a response to the story that he cost Tulsa jobs by snubbing the airline. He sent a deputy to a meeting with AA officials about bringing new maintenance work to Tulsa, while he went off to Mississippi with ORU students and members of Guts Church to help rebuild the hurricane-damaged town of Long Beach and to shore up his support for re-election with a segment of Tulsa's charismatic community. Kathy Taylor has said LaFortune being AWOL in this situation is the main reason she decided to run for Mayor.

Reason #3 -- he's hoping for the endorsement of the Transport Workers' Union (TWU) and the help of their membership with his campaign. LaFortune was heard today saying that the Firefighters' Union (which was early to endorse his re-election) would be helping him put out campaign signs, and he was hoping to get the TWU's help with that, too. (How will Republican voters feel about re-nominating a mayor whose primary base of support is the labor unions?)

Whatever LaFortune's reasons for wanting this, it's not wise to include the money in the Third Penny, which ought to be for basic infrastructure improvements. Nor should we be putting all our eggs in one basket; we need to cultivate other sources of jobs. And it shouldn't be the City of Tulsa paying for this alone. Many AA employees live in Owasso, Broken Arrow, and elsewhere in the region, and all stand to benefit from any growth in AA's local workforce.

This proposal ought to stand separately from any other ballot item. Mayoral candidate Don McCorkell has suggested using a general obligation bond issue to pay for the hangars. Others have suggested that the suburbs chip in their fair share.

Chris Medlock has pointed out that direct government subsidy of business is a losing game in the long run, and why should we single out one company and ignore other businesses that may leave the city? I think the subsidy is a bad idea, but even if it weren't, it still has no business being part of our city's essential capital improvements program.

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1 Comments

$4 million for hangar money = good.
to put it on the 3rd penny = bad.

i like McCorkell's idea.

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This page contains a single entry by Michael Bates published on January 27, 2006 10:52 PM.

What's the matter with the Miller? was the previous entry in this blog.

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