How Wal-Mart Short-Changes Communities

Wal-Mart’s recent attempt to shake down the Town of Cobleskill by demanding a reduction in its property assessment shouldn’t come as a surprise; it’s standard operating procedure for the retail giant. As the country slides deeper and deeper into recession, Wal-Mart counts on the fact that cash-strapped communities like Cobleskill won’t have the resources to fight back when they demand concessions on their property assessments, even when the local assessment is correct.

For a company that has become infamous for playing hardball with its vendors and with many of its employees, the thousands of municipalities in which Wal-Mart’s operate should not be surprised when they begin to receive similar treatment from the company. Even still, for many of the communities who don’t come out ahead in their dealings with the company, the consequences can be devastating. Many of these communities welcome Wal-Mart’s and similar big box retailers with open arms, precisely because these companies promise significant sales and property tax revenues. Communities see these developments as a way to increase economic development and help defray the increasing costs of providing services.

In the final tally however, most of these communities find themselves short-changed by such big box retailers. Stores like Wal-Mart almost immediately drain business away from local merchants rapidly transforming downtown business districts into ghost towns. Meanwhile, rather than helping to lessen the costs of providing services through additional tax revenues, Wal-Mart and other big box retailers consume far more resources than other businesses. However, for many communities the coup de grace comes when a company like Wal-Mart decides to further cut its own costs by challenging its local property assessment to the tune of millions of dollars. Needless to say, this can come as a major blow to small towns who after having hosted a Wal-Mart for several years usually have lost businesses who do pay their taxes and will continue having to provide expensive services to the local Wal-Mart.

However, it may be at the local level where communities stand the best chance at beating back these hardball tactics. Local governments need to be counseled by state agencies and non-profits on how to defend their assessments against challenges by companies like Wal-Mart. Defending assessments can be a costly and time-consuming battle for local assessors. However, if they have done their homework, and the assessments are correct, they should hold up in state proceedings.

Obviously, state real property services agencies, such as New York’s Office of Real Property Services have a vested interest in preventing companies like Wal-Mart from in essence gaming the system by intimidating small communities with a barrage of legal threats. The less that companies like Wal-Mart pay in local property taxes, the more the states have to pick up in financial aid to municipalities.

Another way for local communities to get what it they are owed from Wal-Mart is to support union organizing efforts. If the Employee Free Choice Act (AKA card check) becomes law, and most likely it will, Wal-Mart employees will be able to bring in a union like the Union of Food and Commercial Workers simply by having a majority of employees sign union cards.

This could be an invaluable tool for insuring that Wal-Mart’s largely poor, rural and female workforce earns a living wage and has access to decent benefits. It would also insure that more money stays in our communities as opposed to being sent down to Bentonville, Arkansas to enlarge the already obscene family fortunes of the Waltons.

With companies like Wal-Mart playing hardball with us, it makes little sense for members of the community, including local government to simply roll over. There are things that we can do, and must do, to play hardball right back at these corporate pirates. The first step is to realize that they are not our friends.