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Should states compete for stimulus?

TEXT OF STORY

Bill Radke: The federal government is spending huge amounts of stimulus money
to help states dig out of this recession and create jobs. But it's never that simple, is it? Michigan Radio's Jennifer Guerra reports the stimulus competition is having unintended consequences.


Jennifer Guerra: Let's say your friend has a brand new litter of puppies at her house and they're up for grabs. Problem is, you're not the only one who's interested. So, you show up with a box of fancy dog treats. Someone else shows up with a box of fancy dog treats, squeaky toys and chewies. Game over. The other guy walks home with most of the puppies, you leave with one.

That's essentially what happened between Kentucky and Michigan, but instead of puppies, they were interested in lithium-ion automotive battery facilities.

Eric Schreffler: We put the amount of money on the table that we felt was a) going to bring them to Michigan, and b) make a bold statement.

That's Eric Schreffler. He's with the Michigan Economic Development Corporation. After Kentucky ponied up $200 million in incentives to lure essentially one battery facility, Michigan put up $400 million in incentives to lure in four battery facilities.

That's because each state is on a mission to become the next automotive battery capitol of the world. And since the Department of Energy has over $2 billion in Recovery Act money to spend on the development of these types of automotive batteries, states may be even more willing to woo those battery companies with huge incentives.

States have been waging job wars against each other for decades. But Greg LeRoy says this time around it's different, because states can spend recovery money to patch up their budgets and free up more state money for incentives. LeRoy is with the watchdog group Good Jobs First.

Greg LeRoy: At the end of the day, what it really means is that there's less money available to improve schools, or to maintain roads, or to provide college scholarships and create other opportunities for people in the future.

Armond Budish is the Democratic Speaker of the House in the Ohio legislature. He's won some job wars, he's lost some. Either way, he hates it.

Armond Budish: What a company will do is play one state against another until they get the best offer. But as long as those are the rules of the game, Ohio's going to compete and compete well.

Ohio just lost a company it's had in town for more than 100 years to Georgia. Georgia offered the company $96 million in incentives to relocate.

I'm Jennifer Guerra for Marketplace.

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