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Back in February, Kansas legislators approved a $1.2 billion corporate subsidy package for an as-yet-still unnamed corporation. Many members of the legislature signed non-disclosure agreements preventing them from divulging the proposed recipient of that taxpayer largesse.
Events this week show why the corporation in question hasn’t come out from behind the curtain in Kansas, even though more than two months have passed: It’s likely pushing for a massive incentive package across the border in Oklahoma, too, ginning up a bidding war between state legislators who can’t even say what they’re bidding on, because everyone is signing NDAs left and right.
This is a textbook example of why non-disclosure agreements in economic development deals need to be banned. There’s a race to the bottom happening in front of our faces, but local stakeholders who might be opposed to the deal don’t even know what they’re arguing against.
On Monday, Oklahoma Gov. Kevin Stitt introduced a measure to provide some $700 million in incentives to an unnamed corporation, for a new facility dubbed “Project Ocean.” He admitted he signed a non-disclosure agreement preventing him not only from identifying the beneficiary of those hundreds of millions of dollars, but from even divulging how many jobs it has promised to create. Oklahoma’s House Appropriations Committee chairman signed one too, as did the mayor of Pryor, Oklahoma. And there are likely more.
All that secrecy has been combined with a massive rush to pass the bill into law, because the corporation in question is supposedly going to decide SO SOON where it will locate. The bill made it through committee (with some major changes) just hours after Stitt proposed it, and passed the full state House a day later. It may be through the state Senate by the time you read this.
It’s apparently the “worst kept secret” in Oklahoma that all this money is chasing a Panasonic electric vehicle battery plant, which is the same thing the $1.2 billion Kansas earmarked for an unnamed corporation is supposedly for, according to local journalists. If that’s true, this would be by far the largest U.S. subsidy Panasonic has ever received, dwarfing the $102 million it was gifted by New Jersey in 2011.
If all the reporting fingering Panasonic is true — and I have no reason to think it isn’t — the corporation’s game plan is clearly to play the two states off against each other in order to bid up the largest incentive package possible, while using a slew of NDAs to keep pertinent details out of the public eye until it’s too late for them to make a difference.
Making matters worse, Panasonic would be building batteries for Tesla, another massively subsidized corporation, as well as Canoo, which received its own NDA-covered subsidy deal from Stitt and Oklahoma legislators last year. There’s layers upon layers to the NDA abuse here.
As Democratic State Rep. Collin Walke rightly said during the “debate” over the Oklahoma bill, “How am I supposed to go back to my constituents and say, ‘I gave away three-quarters of a billion dollars to a company that I don’t even know their name?’ Is that responsible?”
Indeed, Panasonic has weaponized NDAs to push for massive subsidy deals on an exceedingly short timeframe, in multiple states, while circumventing any realistic public effort to question them, never mind oppose them outright. Ceding to its whites is the definition of irresponsible.
Even if it’s a badly-kept secret that Panasonic is the recipient, opponents still have to take into account that it could be some other corporation, and can’t argue about specific details such as job and investment numbers, or even the location of the plant in question, because of the NDAs. Lawmakers in the two states can’t get together and swap notes in order to protect their own state budgets.
Meanwhile, Panasonic has perfect information about what both Kansas and Oklahoma will offer it in terms of public monies, where its proposed plants will be, what sort of investment it actually intends to make, and what other promises it has extracted from lawmakers regarding regulations or whatever else.
It’s outright corruption, in front of our eyes, that is treated as totally normal.
Compare this NDA-covered nightmare in the plains to what happened in California this week: Instacart applied for a $21 million tax break through a program called California Competes. Applications are public, so it was public knowledge that Instacart was in line for a taxpayer-funded payout.
Turns out, some folks, particularly labor unions, were not very happy with Instacart receiving public money to support a business model built on low-paying, labor-law-circumventing jobs, while it has $1 billion in reserves in the bank. So they publicly protested and Instacart withdrew its request — which is exactly how it should work. Public scrutiny led to the right outcome for the taxpaying public.
Every time one of these NDA boondoggles happens, I feel more sure we’re taking on the right fight at the right time. If you haven’t yet, please head over to the Ban Secret Deals coalition website and sign the petition, learn how to spot secret deals, and find which organization in your state is on board with helping us end this nonsense. Or suggest new state partners who would be good to join us!
If you want to go even deeper on this issue, I joined my former colleague Rebecca Vallas and Illinois State Sen. Robert Peters on the Off-Kilter podcast to talk about the launch of the Ban Secret Deals campaign and why secrecy in incentive deals harms everyone. You can give it a listen here.
Kansas and Oklahoma are showing exactly why we need to do this now. Let’s make it happen.
This post initially appeared in a slightly different form on the author’s Substack, Boondoggle, on April 20, 2022.
Pat Garofalo is the author of The Billionaire Boondoggle: How Our Politicians Let Corporations and Bigwigs Steal Our Money and Jobs, the Boondoggle newsletter, and the director of state and local policy at the American Economic Liberties Project.
