$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.

Excerpt from the main story, as it appears in The Tennessean:

(M)any officials and agencies do not track or disclose the number of jobs created by subsidy deals

That lack of accountability means taxpayers and leaders can’t effectively decide whether individual subsidy deals are a good investment or if the money would be better spent on education, infrastructure or another jobs program.

Excerpt from the main story (there are several sidebars) as it appears in The Tennessean:

After reviewing hundreds of pages of records, the findings show: 

-It is impossible to gauge whether some of the deals were a good value because local agencies awarded businesses multimillion-dollar property tax breaks without calculating the actual loss of tax income to government coffers.

-There is no accountability for some companies that received incentives but don’t report their hiring progress to local economic development boards or the state Department of Economic and Community Development.

-A group of companies getting subsidies from Tennessee’s main grant program, FastTrack, fulfilled about 80 percent of all jobs committed. Some exceeded their hiring expectations, but nearly 40 percent said in 2016 they had fewer than half of the jobs promised.

… Local officials celebrate when businesses announce they’re coming to town but often fail to hold the companies accountable for their promises.

“How do you expect the cheerleaders to be the cops?” said Greg LeRoy, executive director of Good Jobs First, a Washington-based liberal watchdog group that advocates for more economic development accountability. “Political value is right here, right now. Why would I spend time on tracking outcomes?”

The three biggest subsidies, as listed in the Times Free Press:

$800 million: Volkswagen

Chattanooga’s Volkswagen plant has received more than $800 million in federal, state and local incentives in the past decade, making it the most richly awarded business ever in Tennessee and one of the most subsidized among U.S. automakers.

$600 million: Nissan

Nissan has been awarded at least $600 million in government subsidies in Tennessee since 2000. Its Smyrna plant, for instance, received a $98.3 million property tax abatement by Rutherford County in 2010.

$400 million: Hemlock Semiconductor

The solar materials manufacturer was awarded more than $400 million for its failed Clarksville plant, including roughly $245 million in cash and infrastructure bonds. The plant shuttered in 2014.