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.
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.”
$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.
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.
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.
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.
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:
‘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.
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.
State putting $12M into St. Jude Children’s Hospital expansion
News release from the governor’s office
MEMPHIS, Tenn. — Tennessee Gov. Bill Haslam and Economic and Community Development Commissioner Randy Boyd on Thursday announced that the state of Tennessee, along with the city of Memphis, will invest in public infrastructure surrounding St. Jude Children’s Research Hospital in Memphis.
The state will invest $12 million in FastTrack funding to improve the public infrastructure surrounding the St. Jude campus in downtown Memphis, which will complement the research institution’s expansion efforts announced in 2015, and will eventually lead to the creation of 1,800 new jobs in Shelby County.
“St. Jude is known around the world for its research and treatment of catastrophic childhood diseases and is an anchor institution in our state and we are proud it calls Tennessee its home,” Haslam said. “It means a great deal to be able to assist this world-renowned facility by supporting public infrastructure needs that will help St. Jude not only create new jobs for Tennessee, but increase its capabilities to conduct life-saving treatment and research.”
