Monday, June 9, 2008

Katrina Aid Funneled to KC-30 Team

Though it went largely unnoticed at the time, in June 2006 Alabama Gov. Bob Riley reserved $255 million in tax-exempt financing, for the construction of the yet unbuilt KC-30 tanker assembly center in Mobile.

This money was part of the federal Gulf Opportunity Zone Act, Public Law 109-135, which President Bush said, when he signed it in December 2005, was meant to help the citizens of the Gulf Coast to put their lives back together and rebuild their communities in the wake of the devastating hurricanes that hit the region earlier that year.

As the Mobile Register reported at that time:
The allotment for the airport authority -- $105 million for Northrop Grumman Systems Corp. and $150 million for EADS North America and its affiliates -- is the largest approval thus far, and represents 12 percent of the financing available to Alabama, according to figures provided by the governor's office.
At that time this allotment concerned some taxpayer watchdog groups, who said that priority should be given to hurricane-related projects:

"The intent of the GO Zone Act was to rebuild properties that existed before Katrina hit, and not to give these sweetheart bonds away to multi-national defense companies that can afford to build on their lonesome," said Keith Ashdown, vice president of policy for Washington, D.C.-based Taxpayers for Common Sense.

The state is using "Katrina to sweeten the pot for these companies," he said.
We have since searched the tanker taxpayer crusaders Citizens Against Government Waste releases and the entire web using a number of key phrases (including CAGW, "Go Zone", bonds) and found that they have been strangely silent on this government give-away. This omission is somewhat glaring since the Congressional Budget Office estimated that the GO Zone Act's tax-exempt private activity bonds will cost the federal treasury $1.6 billion.

As you might imagine, not everyone in the state of Alabama was happy with Gov Riley's largess being showered on the KC-30 team. The then Lt Gov. Lucy Baxley denounced the decision because she claimed it was put ahead of funding to replace Katrina-damaged schools.

On top of the $255 million in tax exempt financing, the KC-30 team also received a $120 million package of incentives from the state and local governments.

Are we the only ones that think the KC-30 team being given Katrina aid to fund their tanker assembly plant, which allowed them to lower their bid proposal costs to the detriment of others in the competition, is wrong? If not, be sure to show up to protest the groundbreaking of the Brookley Field facility in Mobile on June 28th.

One would think that given the tens of billions of dollars in European subsidies EADS gets, it would not have to ask the state of Alabama or Uncle Sam for tanker contract handouts. For EADS it certainly looks as though being the Governor's new favorite son has its privileges.

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