The County's spin, of course, is that there "was nothing Montgomery County could do to retain Discovery." Discovery is a content company! They need to be near other content and advertising companies in New York! Aren't taxes terrible in New York City? Isn't the cost of living even higher in New York City?
Ah - but there's the key point. Discovery's move isn't about New York in the end. Analyze Discovery's public statements, and you find there's no certainty as to how many jobs are going to New York City. Some key high-level positions had already been moved to Discovery's current New York base of operations. Some positions at Scripps in Knoxville will also be moved to New York in 2019.
Scripps already has over 1000 employees in Knoxville doing a lot of the business and administrative jobs that many Discovery employees are doing now in Silver Spring. Again, read Discovery's statements carefully - they don't mention x-number of jobs moving from Silver Spring to Knoxville (or to New York). It could be that Montgomery County not only suffers the shame of losing one of its few Fortune 500 companies, but almost certainly also winds up with hundreds of unemployed Discovery workers as a result. Knoxville will gain all of the jobs Discovery needs from Silver Spring, but not likely all 1300.
Knoxville has everything Montgomery County's elected officials keep telling us we don't need - lower taxes, suburban living, and highway infrastructure. Discovery's press release noted "infrastructure" as a key reason they chose Knoxville. It's very easy to see why:
|Discovery's new HQ in|
Knoxville is right at an
interchange with I-40
|Discovery's new Knoxville HQ|
is only 18 minutes by car from
Tennessee has no income tax. Property taxes are about half of what they are in Montgomery County, even on a million-dollar home. The Volunteer State's sales tax rate is 7%. There is no estate tax, and after a recent change in Tennessee's tax law, the "Hall Tax" on interest and dividend income is being phased out by 2021. The latter change is simply the capstone on why Tennessee's tax structure is so business (and worker) friendly. Robin Ficker was absolutely correct yesterday when he cited taxes as a factor in the Discovery move.
When you consider that neither Discovery, nor New York Gov. Andrew Cuomo, cited any specific number of jobs moving to New York yesterday, the picture becomes more clear. Some key positions may well move to New York, and Cuomo and Mayor Bill Blasio can celebrate winning the "global headquarters."
But Discovery is the real winner here. By moving the real nuts-and-bolts of their company to Knoxville, they and their employees (however many actually get moved) will both save bigly on their annual tax bills. Significant layoffs that would have been bad publicity for the company in Silver Spring now get hidden and deodorized by a "big move" and merger.
Montgomery County, as usual, is the real loser. Not only has no major corporation relocated its headquarters here in twenty years, but now we've lost one of the few Fortune 500 companies we had. We've lost the taxes Discovery and many of their employees paid.
This is a major financial blow to Silver Spring, as well. Residential buildings continue to replace workplaces in downtown Silver Spring at a rapid pace. There are now fewer workers eating lunch at restaurants as a result. Residents of new apartment buildings in Silver Spring are dining out for lunch in downtown Washington, Tysons, and other growing job centers in Northern Virginia. Turning the Discovery HQ into an apartment building won't help matters.
|Discovery's new low-rise,|
suburban office park campus
in Knoxville (Google Maps)
|It looks more like Rock Spring|
than downtown Bethesda -
adjacent water bodies included
|Single-family homes on|
tree-lined streets near the
new Discovery HQ in
Knoxville (Google Maps)
Montgomery County can lower its taxes. After throwing record amounts of money at Montgomery County Public Schools in recent years, and the results only getting worse by the year, we know spending money is not the solution to the decline in our public schools. Wasteful spending was epitomized last year by the Council spending over $20000 on a security camera system I was able to find for less than $1000 online - including installation. Imagine how many other un-itemized expenditures like this one there are in the operating and capital budgets, and the potential for cuts becomes crystal clear.
Attempts to blame Gov. Larry Hogan for the Discovery debacle only open the door to blaming our County Council for the loss. "The first County Council to lose a Fortune 500" certainly has a nice ring to it. When apologists say, "We were going to lose Discovery no matter what the incentive package was," they are actually correct. Without a business-friendly tax system, without a new Potomac River crossing to provide an 18-minute trip to the airport, without a functioning and complete master plan highway system, and without elected officials who understand international business in the 21st century, Montgomery County is always going to be the loser.