incentives

ECD deemed winner of Beacon’s TN 2017 ‘Pork of the Year’ award

Press release from Beacon Center of Tennessee

In the 12th annual Tennessee Pork Report, the Beacon Center revealed that state and local government officials wasted more than $400 million of taxpayer money this past year.

The Pork Report highlights a combination of government mismanagement, incompetence, and outright fraud. The Beacon Center allowed Tennesseans to choose the infamous “Pork of the Year” award, and it really came down to the wire. After nearly 400 votes were cast, the “winner” of the award was the Tennessee Department of Economic & Community Development for their Industrial Machinery Tax Credit. The department took 34% of the vote in the public poll.

In one of the most inefficient instances of corporate welfare in recent years, Tennessee taxpayers paid a whopping $67 million annually for a mere 55 jobs per year from 2011-2014, which adds up to $1.2 million per job. Even if the program’s main goal isn’t to create jobs, it is not the government’s role to help buy equipment for some private companies on the backs of Tennessee taxpayers. The $14 million of tax dollars given to the Opryland Hotel to build a waterpark (that residents are not even allowed to use) came in a close second with nearly 32% of the vote. Former Rutherford County Sheriff Robert Arnold and the state Jobs4TN Program came in the 3rd and 4th with 19% and 15%, respectively.

The Beacon Center prints the Pork Report every year to make sure state and local governments are held accountable for how ineffectively they spend our tax dollars. The wasteful spending in this report should make Tennesseans’ blood boil. We hope that government officials will use this report to slash wasteful spending in 2018.

The 2017 Pork Report comes from state and local budgets, media reports, state audits, and independent research conducted by Beacon Center staff and scholars.

Note: The full 2017 “Pork Report” is HERE. Excerpt of some highlighted stuff as ‘nominated’ for Pork of the Year:

Jobs4TN: This state-based program has been taking millions of taxpayer dollars for years, spending more than $60 million in 2016- 2017 alone. This money then goes to a select few fortunate companies for their hiring and professional development needs, empowering government to pick winners and losers, and leaving left-out employers across the state to compete with these subsidized businesses.

Opryland Waterpark: The city of Nashville decided to give $14 million to Gaylord Opryland Hotel to construct a waterpark, and while taxpayers are footing the bill, the waterpark is open only to those staying at the hotel.

• Department of Economic and Community Development (ECD): ECD’s Industrial Machinery Tax Credit has doled out an astonishing $1.2 million in taxpayer money…per job. The tax credit has created just 55 total jobs at a cost of nearly $67 million.

• A Sheriff’s E-Cigarette Inmate Scheme: Former Rutherford County Sheriff Robert Arnold profiteered off a captive audience of local inmates who were sold e-cigarettes from Arnold’s company—earning him and his wife nearly $75,000 over the course of their scheme, which was later exposed by the Tennessee Comptroller’s Office.

Note: Arnold pleaded guilty to corruption charges and was sentenced to four years in prison. Randy Boyd, who resigned as ECD commissioner earlier this year, is running for governor.

ECD commissioner: Memphis Megasite needs another $72M in state funding

Economic and Community Development Commissioner Bob Rolfe says another $72 million in state funding is needed to complete work on the Memphis Regional Megasite, reports the Jackson Sun. That would push total state investment in the 4,100-acre site, so far unused, well past the $200 million mark.

Continue reading

Breitbart bashes ‘Strange’s swamp pal’ (Corker) for Alabama ‘sweetheart deal’

Breitbart News — headed by President Trump’s former chief strategist, Steve Bannon – is tying Sen. Bob Corker’s business dealings into its reporting on this week’s Republican U.S. Senate runoff primary in Alabama.

Breitbart is promoting Roy Moore over Sen. Luther Strange in the race. Corker is backing Strange and reportedly urged President Trump to personally campaign for Strange, as he did on Friday.

Referring to Corker as “Strange’s swamp pal” in its second report on the subject, the arch-conservative news service says the Tennessee senator “is set to receive more money each year from Alabama taxpayers from the sweetheart deal in an Alabama retail development arranged by a law firm that is a big donor to Strange’s Senate campaign than he receives from his salary as a United States senator.”

Continue reading

$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.

Continue reading

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.

Continue reading

New ECD initiative: Build a call center, hoping jobs will come to TN’s most economically-distressed county

News release from Department of Economic and Community Development

The Tennessee Department of Economic and Community Development (TNECD) announced today the launch of an open search for a company to establish operations in Hancock County as part of Project 95, a new initiative designed to bring resources from multiple state agencies to bear on Tennessee’s most economically distressed county.

Beginning with Hancock County, Project 95 is part of TNECD’s long-term strategy to eliminate all federally designated distressed counties across Tennessee by 2025.

Continue reading

Legislature approves subsidies for rural broadband service

The House has joined the Senate in approving Gov. Bill Haslam’s “Tennessee Broadband Accessibility Act,” sending it to the governor for his signature.

From WBIR’s report:

The bill (SB1215) provides $45 million over three years in grants and tax credits for service providers to help make broadband available to unserved homes and businesses. It also allows Tennessee’s private, nonprofit electric cooperatives to provide retail broadband service.

The third part of the bill makes grant funding available to local libraries to help residents improve their digital literacy skills.

About 34 percent of rural Tennesseans don’t currently have broadband access at recognized minimum standards, according to the state.

Here’s the Haslam administration press release praising passage:

Continue reading

‘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.

Continue reading

TN business incentive tally: $2.5B per year (double national average)

 

A study by the W.E. Upjohn Institute for Employment Research indicates Tennessee state and local governments provide more than $2.5 billion in business incentives annually. That’s nearly 1 percent of the state’s private-sector gross domestic product and makes Tennessee fourth highest in the nation, the study’s author, Timothy Bartik, tells The Tennessean.

In exchange for taxpayer support, businesses are expected to generate jobs and spur economic growth. State and local leaders point to success stories — new companies attracted by economic development packages. But there’s an inherent trade-off for the taxpayer. Grants and tax revenue could instead be directed to improve schools, fix crumbling highways and other key government functions.

The analysis, “A New Panel Database on Business Incentives…in the United States” leads to some key questions: how much is enough? And are the incentives designed to attract well-paying jobs, or dead-end work with little or no benefits? (Note: You can download a copy HERE.)

Bartik, a senior economist at the Michigan-based think tank, found that states with high levels of incentives don’t have significantly better economic performance than their neighbors.

“If incentives have an effect, it’s at best relatively modest,” he said.

Compared with neighboring states, Tennessee leads the way. Incentive levels are 91 percent lower in Virginia, for instance, and 82 percent lower in Georgia. As of 2015, Tennessee’s incentives are 105 percent higher than the national average.

The state stands out for its property tax abatements, the analysis found. In these deals, local governments typically agree to forgo property taxes if a company commits to creating a certain number of jobs and investing a certain about in capital. Because companies make annual payments in lieu of taxes, the arrangements are called “PILOTs.”

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.