According to Good Jobs First and The Wall Street Journal, a large chunk of sales tax revenue gets redirected to retailers like Wal-Mart, a company that pockets an estimated $70 million a year in sales tax revenues.
At least that is the finding of a report released today by Good Jobs First, a nonprofit research group here in Washington:
Most of us don’t realize that in a majority of states with a sales tax, a portion of the money actually goes into the pocket of the retailer under programs set up by state and local governments. In this first-ever comprehensive national analysis of the subject, Good Jobs First finds that the public sector is losing more than $1 billion a year through these sales-tax diversions. A large share of revenue gets redirected to giant retailers such as Wal-Mart, a company we estimate pockets more than $70 million a year in sales tax revenues.
The state laws discussed in the report allow retailers to keep a portion of sales-tax revenue to offset the cost of collecting the funds in the first place, a reasonable enough excuse (especially since state governments are so flush with cash at the present). But does anyone really, and I mean REALLY, believe that Wal-Mart spends $60 million a year collecting sales tax? In this age of computer everything and electronic money transfers, I have a hard time believing it costs more than a fraction of that.
As it stands, many states have calculated a vendor compensation rate, which can be applied to a percentage of sales tax revenue to determine how much a retailer gets to keep for its trouble. As the WSJ reports, Good Jobs First has identified 13 states that impose no ceiling on the total amount retailers can keep. In states such as Illinois, Texas, Pennsylvania and Colorado that vendor compensation rate can be applied to the full amount of sales tax a company collects, resulting in substantial returns for companies like Wal-Mart. Good Jobs First has estimated the givebacks in these states - Illinois ($126 million), Texas ($90 million), Pennsylvania ($72 million), and Colorado ($69 million). Jesse Drucker at the WSJ kindly puts some perspective on those numbers - for example, the $90 million Texas gives away by not capping vendor compensation would cover the $82 million price-tag needed to fund that state’s primary pre-kindergarten program.
For what its worth, the Illinois Revenue Department was quoted as saying the state has tried to cap the compensation program, but relentless lobbying by the retail industry has so far kept legislators from making changes.
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Posted by Corey Himrod | Permalink
Remember back in June, when the FDA warned consumers about eating certain kinds of tomatoes coming out of Mexico due to potential salmonella contamination? And then expanded that warning to include certain peppers as well? All vendors of these products, including Wal-Mart were to halt the sale of such items.
Cheryl Grubbs is filing suit against Wal-Mart Stores, Inc, alleging that her husband, Brian Grubbs came close to death after eating several jalapeno peppers that were purchased at a Wal-Mart and tainted with salmonella in an article published today in LawyersandSettlements.com.
[An earlier version of this blog post mentioned that the FDA recall in question occured on June 25, 2008. This was incorrect: we apologize for the mistake.]
Tomato-Pepper Salmonella: Why the Grubbs are Suing Wal-Mart
Dolores, CO: “Truckloads of contaminated jalapenos were turned back at the border before we bought them at Wal-Mart,” says Cheryl Grubbs, “so why did Wal-Mart still have them in their store?” Her husband, Brian Grubbs, almost died from the tomato/pepper salmonella outbreak, and Cheryl is furious because his illness could have been avoided.
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Posted by Luke West | Permalink
Sam’s Club not in the cards [Longmont Times-Call (Col.)]
Wal-Mart still plans to build a Supercenter on the southeast corner of Colo. Highway 119 and County Line Road in the next couple of years, but a Sam’s Club isn’t in the plans anytime soon.
That doesn’t mean the company won’t build a Sam’s Club, but city officials are no longer trying to pin down the company on when.
“We don’t have the ability to compel somebody to build,” said Brad Schol, Longmont’s director of planning and development services. “Our hope is that they’re going to conclude that a Sam’s Club is warranted in a short period of time, but it doesn’t appear that their first phase includes that.”
Wal-Mart won’t get started on Longmont’s second Supercenter until the city completes improvements at County Line Road and Colo. 119.
The city planned to upgrade that intersection even before Wal-Mart submitted plans to develop the 46-acre site, city engineer Nick Wolfrum said.
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Posted by Tony Calero | Permalink
Well, first it was the tomato that was the culprit. Then tomatoes were deemed clean, and safe to eat again. Then, in a twist of culinary fate, a new villain in the salmonella outbreak showed its face - a spicy little number possibly originating at a farm down in Mexico. The jalepeno pepper. And now the tiny pepper has turned its capsaicin-spewing fury on Wal-Mart.
Actually, the complaint at issue was filed on behalf of Delores, Colorado resident Brian Grubbs against Wal-Mart and an unknown supplier, referred to in the complaint as “John Doe”. According to the lawsuit, the Grubbs family purchased jalapeño peppers from the Wal-Mart Supercenter in Cortez, Colorado in late June. Grubbs and his family proceeded to eat them over the next week. According to the Rocky Mountain News:
Samples showed he was positive for salmonella Saintpaul, and later the jalapeño peppers back at his house that he hadn’t yet eaten also tested positive for that strain of salmonella, the suit said.
“Consumers believe that retailers like Wal-Mart know the quality and safety of products they sell,” Marler said. “Retailers benefit from that trust, and must be held accountable for the products they sell.”
Salmonella is, of course, no fun at all - Salmonellosis illnesses from the Saintpaul strain began showing up in Texas and New Mexico in late April, and in early June the CDC linked those illnesses to raw tomatoes and issued consumer warnings. Those warnings were, of course, completely wrong - the list of possible culprits was first widened before eventually being narrowed to raw jalapeno and serrano peppers.
On July 30, the FDA confirmed the presence of salmonella Saintpaul at a farm in Mexico, both in irrigation water and on produce. The investigation is continuing.
Man sickened by jalapeños files first salmonella lawsuit [Rocky Mountain News]
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Posted by Corey Himrod | Permalink
Well, at least someone is getting paid.
Another day, another wage/hour class action is awarded judgment against Wal-Mart. This time it comes to us from Minnesota, where Dakota County District Court Judge Robert King Jr. ruled Monday that Wal-Mart broke Minnesota labor law more than two thousand million times over a six-year period by forcing employees to work without breaks and without full pay.
That is, in fact, not a typo. Two million times.
Judge King ruled that, in addition to penalties, Wal-Mart owes workers at least $6 million in back wages. In addition to penalties, you say? Ahhhhh, penalties...this is where it could get expensive for Wal-Mart, a company which, as the Northwest Arkansas Morning News reported last week, is already facing a whole plethora of legal woes. The violations at issue here carry a penalty of up to $1,000 each, which could be pretty pricey when you have two million of the darn things. According to Bloomberg’s math, which I am hardly in a position to disagree with, that puts the ceiling up around $2 billion. It probably won’t get that high, but it will be high, nonetheless...all I’m saying is, don’t be surprised if the next time you’re in Wal-Mart, a brand new copy of Guitar Hero costs...ummmmm...a million dollars?
A jury is expected to decide the amount of punitive damages and penalties in October, according to the judge’s order. And that could drive the amount Wal- Mart pays to hundreds of millions of dollars, said lawyer Frank Azar, whose Colorado firm was involved in the case and began fighting Wal-Mart in the 1990s.
Wal-Mart Faces $2 Billion Labor Law Trial, Judge Says [Bloomberg]
Wal-Mart Stores Inc. broke Minnesota labor laws, a state judge ruled, handing the world’s largest retailer its third-straight defeat in a wage-class action trial and the possibility a jury may order it to pay $2 billion.
The company required hourly employees to work off-the-clock during training and denied full rest or meal breaks in violation of state wage and hour laws, Hastings, Minnesota, District Judge Robert King Jr. held today following a non-jury trial. King ruled Wal-Mart broke labor laws more than 2 million times and ordered the company to give employees $6.5 million in back-pay.
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Posted by Corey Himrod | Permalink
Fifteen in-store Wal-Mart clinics unexpectedly shut down in Colorado on Friday, raising yet more questions about the hotly-debated facilities. The clinics were run by SmartCare, an independent clinic operator, and located in Wal-Mart stores across the state of Colorado. Neither Wal-Mart nor SmartCare gave reason for the unexpected closures.
This isn’t the first time Wal-Mart clinics have closed suddenly. In January, Wal-Mart clinic operator CheckUps shuttered all 23 of its Wal-Mart locations almost overnight. The company disappeared so quickly many of its staff were left unpaid. Amidst these troubles, Wal-Mart has also tried to open clinics under its own name, but with little success. The clinics - to be run by staff from Arkansas’ St. Vincent’s hospital - were slated to open in April 2008, but have yet to do so.
The sudden closings do little to allay consumers’ worries about the clinics. The Illinois State Medical Society expressed concerns in May, 2007, that the clinics are unregulated and unlicensed. Others raise issues with the clinic operators’ lack of experience in the medical field. The recent closings only serve to enhance the clinics’ “fly-by-night” reputation.
Making health care more accessible is important, but the quality of that health care is critical. As Wal-Mart expands its health care offerings and does more to keep employee health care expenses in-house, will doing things on-the-cheap really cut it?
SmartCare closes 15 Wal-Mart med clinics [Rocky Mountain News]
SmartCare Family Medical Centers on Friday unexpectedly shut its 15 in-store health clinics located in Wal-Mart stores throughout Colorado.
Wal-Mart had no prior notice, company spokesman William Wertz said.
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Posted by Alex Goldschmidt | Permalink
Site improvements being made for future Wal-Mart [Windsor Beacon (Colo.)]
There is a lot of large earth-moving activity taking place these days along Main Street between 15th and 17th streets.
While it’s a clear signal that commercial development is in the works, it will still be some time before we see completed buildings, developers say.
Windsor Land Company, which is developing a 56-acre parcel on the north side of Main Street in this area, is making on-site and off-site improvements (streets, sewer, storm drains and grading) to its seven lots in preparation for Wal-Mart and several other interested retailers.
Wal-Mart purchased 20 acres lots 1 and 4 last December. The retail giant is expected to break ground on its proposed 190,000-square-foot super center some time next year. However, town planning officials aren’t sure when.
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Posted by Alex Goldschmidt | Permalink
Wal-Mart lawsuit alive in Pueblo West [Pueblo Chieftan (Colo.)]
Pueblo West leaders have rejected a proposed settlement with residents who claim the officials violated the state’s open meetings law during negotiations over a Wal-Mart distribution center.
However, Butch Batchelder, president of the Pueblo West Metropolitan District board of directors, said the board is willing to compromise with the residents before their lawsuit finds its way back to district court.
The lawsuit was filed in 2004 by a group calling itself Pueblo West Citizens for Open Government.
The group claims the metro board violated the open meetings law in May 2002, June 2003 and November 2004 by agreeing behind closed doors to offer 160 acres of publicly owned land for the distribution center.
The group also claimed that then-president John Galusha violated the law by sending the Pueblo Economic Development Corp. a letter agreeing to offer the land as well as waiving $65,000 in wastewater and tap water fees and the requirement that the company install a traffic signal to serve the center.
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Posted by Alex Goldschmidt | Permalink
Wal-Mart claims to save people money. That would appear to be a lie. This arresting article from the Denver Post asserts that Wal-Mart charges more for groceries in low-income neighborhoods than in affluent neighborhoods. Despite the company’s claim as a resource for the working class, Wal-Mart’s pricing strategies appears to be anything but. If this article’s assertions are true, Wal-Mart’s pricing strategies are dishonest and shameful.
Much of this undoubtedly has to do with competition. Once Wal-Mart has driven out local competitors (and left a local economy depressed), the company is free to charge more for its products without fear of being undersold. This cycle of poverty and lack of access to resources is what makes Wal-Mart such an insidious neighbor. Working class communities should read this as a cautionary tale when considering a Wal-Mart, and be wary of the company’s promises of low prices.
Price disparity in groceries [Denver Post]
It’s not cheap being poor.
Few places reflect that reality more than the aisles of a grocery store, where prices seemingly increase daily as the economy teeters toward recession.
“It’s not very easy to make do right now,” said Kathryn White, a 58-year-old disabled nurse who relies on a small food-stamp stipend to offset high grocery costs.
“I just can’t look to buy something that costs $2,” she said. “I have my limits.”
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Posted by Research Team | Permalink
Sounding like a broken record, yes, but might as well get used to it. These wage and hour cases continue to proceed through the legal system, and there are no shortage of new cases popping up.
The Minnesota case is, in most respects, very similar to those class actions that have come before it. The claims are simple - workers have not been allowed to take mandatory meal or rest breaks, and then after the fact, timecards are being changed to reflect that the breaks actually were taken. Why is this important? Because we are seeing a pattern of Wal-Mart underscheduling employees, forcing fewer workers to do more work. The result is one has to work through one’s break. Generally breaks are unpaid, and because Wal-Mart has allegedly been subtracting break periods from employee time cards whether breaks were taken or not, the company has been getting a free hour’s worth of work per employee per shift. And that doesn’t include the charges that Wal-Mart hasn’t been paying employees for overtime.
Wal-Mart’s hourly employees weren’t paid for more than 8 million missed meal and rest periods and company managers falsely recorded breaks on time cards, attorney Justin Perl said today in closing arguments for a non-jury trial that began in September. The lawsuit, brought by four women on behalf of 56,000 Wal-Mart and Sam’s Club employees, claims the retailer violated Minnesota wage and hour laws.
These cases are starting to cost Wal-Mart some serious coin, and I’m not talking legal fees here. Wal-Mart lost a $172 million verdict in California in 2005 over meal breaks. A Pennsylvania judgment was increased last year to $187.6 million when the judge awarded additional damages, interest and attorneys’ fees. Add to that a 2004 class action in Colorado that settled for approximately $50 million, and that adds up to over $400 million Wal-Mart has been forced to pay because of its wage and hour practices. Attorneys in the Minnesota case are seeking over $50 million, so Wal-Mart is creeping ever closer to the half-billion mark, which they should be good for.
Wal-Mart Shortchanged Minnesota Workers, Lawyer Says [Bloomberg]
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Posted by Corey Himrod | Permalink
Civics teachers nationwide will be thrilled at the latest example of a state government borrowing tactics and ideas from the federal government. The Bush administration’s inspired use of raising the terror alerts for political gain has motivated States to apply fear tactics to ever-broadening purposes. Federalism in action!
Colorado recently initiated an Emergency Preparedness Program to create consumer demand for Wal-Mart products now that people are getting those recession checks.....I mean, to help prepare the citizenry to weather everything from pandemic disease to The Children of the Corn.
Who would have thought governmental fear-mongering would provide Wal-Mart with economic gain? Not Wal-Mart’s Emergency Management Center. They just care about the well-being of the people. And will, in concert with the state’s own public awareness campaigns, do everything in their power to explain that every single man, woman and child needs this kit. Available at Wal-Mart starting at $99.99.
“We believe this program will result in a significant increase in awareness about emergency preparedness among Colorado citizens,” said Beth Montgomery, senior manager of Emergency Management at Wal-Mart. “No matter if it is before, during, or after an emergency, it’s critical that Coloradans know they can rely on Wal-Mart and Sam’s Club to help them prepare. This program will help families to compete their kits as comprehensively and quickly as possible.”
Posted by Cass Brulott | Permalink
Many communities are eager to see a new Wal-Mart come to town, but few think of the effect the retailer will have if and when it leaves. This article from Minnesota’s St. Cloud Times gives a local perspective to the retailer’s global prospects. Visit Battle-Mart for more information about fighting Wal-Mart in your local community.
Wal-Mart’s exit is boon, bane for communities [St. Cloud Times (Minn.)]
An empty Wal-Mart building sits along a stretch of road in Little Falls and shoppers have been rerouted to a newer, bigger Wal-Mart down the street.
Its owners have taken care of the old building after the Wal-Mart Supercenter was built in August. It’s been repainted a shade of light green, masking signs of what once thrived there.
At any given time, about 300 to 400 former Wal-Mart stores sit empty around the nation, in some cases for as long as five to seven years, said Ken Stone, a retired professor from Iowa State University who has studied Wal-Mart for about 20 years. Those empty buildings can be a blight to a community and area businesses if they sit untouched for too long.
“It’s a real problem, there’s no question about it,” Stone said.
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Posted by Alex Goldschmidt | Permalink
Wal-Mart officials closed a deal earlier this week to purchase 20 acres of land along Main Street from Windsor Land Co.
The purchase price was not available.
The deal allows Wal-Mart officials to move forward with development plans to build a 190,000-square-foot Supercenter on the site that is located north of Main Street and east of 17th Street.Jeff Kaplinski, director of operations for Windsor Land Co., said Wednesday that his firm will begin making on-site and off-site improvements (streets, sewer, storm drains and grading) to Wal-Mart’s proposed 56-acre development in late January.
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Posted by Andrew Yonki | Permalink
Wal-Mart buys land in Windsor; developers plan to break ground next month [Greeley Tribune (Colo.)] 
After a divided town board and two resident groups on opposite sides of the fence, Windsor will get a Wal-Mart after all.
Jeff Kaplinski, director of operations for Windsor Land Co., which owns 56 acres of land between 15th and 17th streets west of King Soopers along Colo. 392, confirmed that Wal-Mart closed on some of that land Monday. That purchase includes two lots the big-box retailer has had its eye on for nearly three years.
“We will be putting a Wal-Mart in there,” Kaplinski said Monday in a phone interview. “We will probably break ground in January on (street) and other land improvements.”
The big boost to commercial tax revenue was long overdue, many in the community said.
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Posted by Andrew Yonki | Permalink
Wal-Mart specially designed for mountain town [Colorado Springs Gazette (Colo.)]
The Wal-Mart Supercenter opening Wednesday in Woodland Park is not your basic, boring big box.
The store’s browns and greens blend into the mountain landscape behind it, with timber and stone elements adding to a lodgelike atmosphere. Decorative shepherd hook lights illuminate the parking lot, and a life-size brass statue of a mule deer buck will greet shoppers.
Even some opponents to Wal-Mart’s presence in Woodland Park sprinkle a bit of praise on the design.
“It’s not as pretty as having elk wintering there and horses there all the time, but if you have to have a Wal-Mart, I guess this isn’t a bad-looking one,” said Roy Dickover, one of the leaders of a citizens group that quickly arose in opposition when Wal-Mart unveiled plans for a Woodland Park store three years ago.
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Posted by Alex Goldschmidt | Permalink
Super Wal-Mart: Fitting in or Causing Fits? [The Daily Camera (Colorado)]
It’s shiny, it’s new, it’s fun to take a look at. But it’s not about to become everyone’s one-stop shopping center.
That was the consensus Monday of about a half-dozen shoppers who were asked whether they would re-direct a substantial portion of their shopping dollar to Lafayette’s new 207,000-square-foot Wal-Mart Supercenter, which opened Wednesday.
The Supercenter, located on the west side of U.S. 287 between Baseline and Arapahoe roads, replaced a much smaller Wal-Mart store that had been on South Boulder Road for 20 years.
The new store now offers a tire and lube center and a full-blown grocery store, raising the level of competition among the three major grocery stores that all sit within a mile radius of the retail giant.
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Posted by Alex Goldschmidt | Permalink
Two articles express the difficulties cities and their residents face when deciding whether to approve big box development. Does a new Wal-Mart really mean more tax revenue and jobs for the local community? Or are sales and employees merely being shuttled to a new retail outlet at the expense of another?
Cities often approve development for retail establishments such as Wal-Mart because they anticipate a boost in sales tax collections, but that only becomes reality if the new store draws new shoppers from outside the city, or keeps locals from leaving to to spend their money elsewhere. If not, new stores would simply draw business away from existing stores, in effect “reshuffling” sales tax collections.
Although big-box stores often seduce cities with promises of new jobs and increased tax dollars, cities often lose out in the end… Jobs and tax dollars are lost when corporate competitors force out smaller stores or restaurants, and cities often have to invest thousands in road and sewer improvements to accommodate large developments.
Colorado Springs, CO, and Vallejo, CA, are facing similar situations. Both towns are attempting to balance $9+ million budget deficits, and fund most of thier services through sales tax collections. And both are wrestling with the question of whether big box development can be enough of an economic activity generator to offset the drawbacks brought with it.
Cities weigh effects of big-box stores [Contra Costa Times]
Big boxes can be a big headache [The Gazette]
Posted by Corey Himrod | Permalink
Broomfield OKs Wal-Mart center [Rocky Mountain (Colo.) News]
BROOMFIELD — The City Council this week approved the site development plan for a Wal-Mart Supercenter on the Barber’s Poultry property on 120th Avenue.
The 7-3 vote came just before midnight Tuesday after hours of testimony from Wal-Mart representatives, residents and council members.Councilmen Bob Gaiser, Steve Kaverman and Dennis McCloskey voted against the proposal.
The vote puts to rest what has been a contentious issue and gets the ball rolling on redevelopment of the north side of 120th Avenue.
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Posted by Beth Gostanian | Permalink
A vote of Littleton, CO citizens stopped Wal-Mart from building a Supercenter in their town. About 60% of people voted to keep the 187,000 square feet a park. Bentonville probably won’t give up entirely without a fight, but it’s clear: the majority of voting Littleton residents want to keep South Santa Fe Drive Wal-Mart-free.
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Posted by Alex Goldschmidt | Permalink
Littleton ringing up Wal-Mart vote count [Rocky Mountain News]
Littleton voters today will decide whether to block the building of a 24-hour Wal-Mart near a city park.
The results of the mail-in election are expected to be counted tonight.
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Posted by Beth Gostanian | Permalink
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