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$2.5B in annual TN business subsidies, outcomes often unknown

Tennessee state and local governments provide more than $2.5 billion in subsidies such as grants, tax breaks and tax credits to businesses each year, but there’s often little public information provided on whether the taxpayer money is working to produce promised jobs.

That’s the bottom line of reporting by the state’s four largest newspapers  — The Tennessean, The Commercial Appeal, Knoxville News Sentinel and (Chattanooga) Times Free Press — published this weekend.

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Latest ECD incentives: $28M to Finnish tire maker, $22M to South Korean appliance firm

The state of Tennessee is providing a $28.42 million grant to a Finnish tire manufacturer and grant of $22.3 million to a South Korean appliance manufacturer to support the companies opening of new facilities within the state, reports the Times Free Press.

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Hagerty takes oath as U.S. ambassador to Japan

Nashville businessman Bill Hagerty, a former Tennessee commissioner of economic development, Thursday took the oath of office as U.S. ambassador to Japan in a ceremony at Eisenhower Executive Office Building next door to the White House, reports Michael Collins.

His wife Chrissy and their four children were by his side… Vice President Mike Pence introduced Hagerty, who was greeted by the crowd with loud cheers and a double thumbs-up. Pence then administered the oath.

“I look forward to the challenge before us,” Hagerty said in brief remarks afterward.

… Pence said Hagerty has spent a lifetime working to strengthen ties between the U.S. and Japan, including a stint living in Japan on a three-year assignment as a consultant.

President Donald Trump’s choice of Hagerty as ambassador demonstrates the ties between the two countries remains strong, Pence said.

… To Hagerty, Pence said: “Bill, given your integrity, your very good leadership and your distinguished history, the president and I are confident you will excel in this new role to help make the extraordinary friendship and alliance between the United States of America and Japan even stronger.”

 

Haslam headed to Europe for a week

News release from Department of Economic and Community Development

NASHVILLE – Tennessee Gov. Bill Haslam and Department of Economic and Community Development Commissioner Bob Rolfe will travel to Europe from June 26 to June 30 for an economic development trip designed to strengthen ties with European businesses and increase foreign direct investment (FDI) in Tennessee.

During the weeklong trip, Haslam and Rolfe will pitch Tennessee’s advantages to a number of European businesses interested in establishing operations in the Southeast U.S. The trip will include stops in the United Kingdom, the Netherlands, Sweden, Finland and Germany.

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‘Nashville,’ taxpayer-supported TV show, gets another season

CMT announced on Monday there will be a sixth season of the TV show Nashville, which has now received about $57 million in subsidies from state government and Nashville, reports WSMV.

Last year, the show was canceled by ABC and picked up by CMT. It’s now CMT’s top-rated show, and taxpayer money has helped keep it alive.

“I can tell you unequivocally the show Nashville is not a good investment for taxpayers,” said Mark Cunningham with the Beacon Center of Tennessee.

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Trump picks Bill Hagerty as ambassador to Japan


The White House announced Thursday that Bill Hagerty, former commissioner of Tennessee’s Department of Economic and Community Development, will be nominated as U.S. ambassador to Japan by President Trump.

Excerpt from the Japan Times report:

Hagerty, 57, who as director of presidential appointments helped select Cabinet members and other administration personnel, is expected to assume the diplomatic post following Senate approval. He will succeed Caroline Kennedy, who left Tokyo in January.

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Study finds business tax credit costs TN $1.2M per job

An independent firm has found that Tennessee taxpayers forgo $1.2 million each year to subsidize a single job through the state’s largest business tax break program, reports The Tennessean.

Chicago-based consulting firm Anderson Economic Group was retained to do a study of business tax credits because of a provision inserted into legislation enacted in 2015. The newspaper obtained a copy of the report, which says Tennessee loses $142 million per year in revenue because of tax credits.

Businesses that received the Industrial Machinery Tax Credit actually hired fewer people, on average, than their peers in the few years after taking the credit, the consultants found. When taking into account a ripple effect – how much the additional spending affected other parts of the economy – the annual impact came out to an additional 55 jobs per year.

That particular credit cost the state an average of $66.7 million per year from 2011 through 2014, or $1.2 million per job.

“The results show that, on average, the industrial machinery credit does not have a significant effect on employment,” the authors wrote in the report “The Economic Impact of Business Tax Credits in Tennessee.”

One explanation for the meager job growth could be that companies are automating job functions and buying expensive equipment that doesn’t require many workers to operate.

“At first, that sounds like a really bad thing,” said Fox from the University of Tennessee. “Having said that, it’s important to recognize that appropriate investment in Tennessee companies is key to Tennessee’s future.”

…Besides employment, the credit generates an annual average of $7.4 million in additional economic activity and $2 million of worker earnings, the consultants found.

…The second-largest business tax break in Tennessee is the Jobs Tax Credit, which cost the state an average of $52.1 million annually from 2011 to 2014. It gives companies a credit of $4,500 per job, with enhancements depending on how much a company invests in the state and where it locates.

Consultants found the jobs credit had a broader economic impact. When taking into account the ripple effect, the jobs credit generated an average of 600 jobs per year, according to the report. That equates to about $87,000 per job.

Randy Boyd exits Haslam cabinet; will seek ‘ways to best serve our state’

News release from the governor’s office

NASHVILLE – Tennessee Gov. Bill Haslam today announced Department of Economic and Community Development (ECD) Commissioner Randy Boyd will return to the private sector February 1, serving as chairman of Radio Systems Corp., the business he started in 1991.

During Boyd’s two-year tenure as commissioner, the state has been recognized as first in the nation for advanced industry job growth, first in foreign direct investment, and second in the growth of household median incomes. ECD has also set several records and generated nearly 50,000 new job commitments and nearly $11 billion in capital investment in the state.

Boyd joined the administration in 2013 as a special advisor to the governor for higher education, helping create the state’s Drive to 55 initiative, the Tennessee Promise and Reconnect programs and other initiatives to increase the number of Tennesseans with a postsecondary degree or certificate to 55 percent by 2025.

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Haslam, Boyd plan journey to Germany

News release from Department of Economic and Community Development

NASHVILLE – Tennessee Gov. Bill Haslam and Economic and Community Development Commissioner Randy Boyd will travel to Germany from Oct. 31 to Nov. 4 in an effort to build and strengthen ties with the country’s business leaders as well as increase foreign direct investment opportunities (FDI) in Tennessee.

In addition to meeting with German executives who already operate businesses in Tennessee, Haslam and Boyd will pitch the state’s advantages to a number of German companies interested in setting up operations in the Southeastern U.S.
Tennessee ranked No. 1 nationally for job creation resulting from foreign direct investment in 2015, according to IBM-PLI’s 2016 Global Location Trends report.. Tennessee ranked No. 1 and No. 4 in IBM’s Global Local Trends report in 2014 and 2015, respectively.

…There are 103 German-owned companies in Tennessee that have invested nearly $5.3 billion throughout the state and employ almost 14,000 Tennesseans. Germany is the second-largest source of FDI in Tennessee, behind only Japan. FDI from German companies accounts for more than 15 percent of the total $33.4 billion that foreign-owned businesses have invested in Tennessee.

Note: This is a shortened version of the news release. The full release is HERE.

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Former Knoxville News Sentinel capitol bureau chief Tom Humphrey writes about Tennessee politics, government, and legislative news.

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