It was bad enough several years ago that the Beech-Nut baby food company decided to up and leave its longtime factory in Canajoharie, but with the help of some lucrative local tax incentives and generous state aid, the company was at least persuaded to relocate in Montgomery County. Now, the company has failed to meet a variety of job-creation quotas it agreed to in exchange for roughly $35 million worth of local breaks ($2.5 million a year for 14 years) so the county is requiring it to pay penalties per the PILOT (Payment-in-Lieu-of-Taxes) agreement. Good.
The penalties aren’t enormous — just over $1 million last year, with another $1.25 million to $1.5 million likely next year — considering that the company fell at least 113 jobs short of its quota of 373 last year and is currently more than 200 shy of its goal of 471 for this year.
The problem, related to slumping baby food sales, is being blamed on a downward blip in the birth rate caused by the Great Recession. We’re sympathetic, but only to a point. After all, Beech-Nut got more than $9 million worth of assorted aid from the state to fix equipment damaged in the 2006 Canajoharie flood and to build its $124 million plant in the town of Florida.
It hardly seems unreasonable to expect the company to pay some taxes since it has been unable to live up to its end of the bargain. (As a result of the deal, the Greater Amsterdam School District recently received $585,000, while nearly $400,000 went to Montgomery County.)
We hope more municipal economic develop agencies adopt this approach, holding corporate welfare recipients accountable for their promises.