Gov. Bill Haslam’s administration has touted its ability to give taxpayers more bang for their buck when it comes to economic development by leveraging increasingly smaller grants for projects that promise more jobs than deals under previous governors.
But, reports The Tennessean, the administration deviated from that pattern when it doled out $30 million to Eastman Chemical Co. in May. Eastman has promised to pump $1.6 billion of its own money into renovating and expanding its facility in Kingsport, where the publicly traded company has operated since 1920. The chemical manufacturing company is the largest employer in northeast Tennessee and one of the largest in the entire state.
But Project Inspire, as it has been dubbed by company executives and public officials, comes with relatively few predicted new jobs considering the state’s investment. Eastman has promised 300 new jobs, which comes out to $100,000 in taxpayer incentives per anticipated job.
During his first two years in office, the Haslam administration has spent an average of $3,104 in incentives per new job, a statistic the Department of Economic and Community Development has highlighted in its annual reports as evidence the program is being run more efficiently than in the past.
ECD spokesman Clint Brewer acknowledged that Commissioner Bill Hagerty used the incentives-per-job metric to track how efficiently the department is operating. But Brewer said the Eastman package compared favorably to other incentive deals when considering the state’s relatively small contribution to the overall project. The $30 million in taxpayer funds amounts to just 1.9 percent of the overall $1.6 billion project, and by that measure Brewer said taxpayers are still getting high value for their investment in Project Inspire.
Eastman Chemical employs 6,750 workers in Tennessee, plus 2,500 contract workers and has 6,200 retirees drawing pension and retirement benefits. The company, which has deep political connections, has flexed its muscle by spending significantly on state legislative campaigns in recent election cycles. It also employs Tom Ingram’s firm, The First Group, to represent its interests in Washington, D.C.
Ingram helped Haslam with his 2010 election campaign and has been personally paid by Haslam to advise him while he was governor. Last week, Haslam said he is putting Ingram back on his campaign payroll after complaints that Ingram lobbied other state officials at the same time he worked as his personal adviser.
…As is often the case in economic development packages, there were whispers of Eastman looking to move some of its operation outside Tennessee. State Rep. Tony Shipley, R-Kingsport, said he heard other states were trying to woo Eastman. Shipley said even losing a fraction of the workforce, or missing out on the 300 new jobs, would have seriously hurt the community.
When the incentive deal was announced last month, Haslam told local media that he didn’t want to be the governor when Eastman decided to expand somewhere else.
Asked whether moving facets of its operation out of Kingsport was an option, Eastman spokeswoman Kristin Sturgill said “it always makes sense to consider options before making a large investment.”
News release from Beacon Center of Tennessee:
NASHVILLE – The Beacon Center of Tennessee today released its eighth annual Tennessee Pork Report, exposing more than $511 million squandered by state and local governments over the past year. The annual report published by the Beacon Center, the state’s leading free market think tank and taxpayer watchdog, is the only one of its kind in Tennessee.
Examples of wasteful spending outlined in the 2013 Pork Report include:
•A corporate welfare deal gone sour, costing taxpayers $95 million after Hemlock Semiconductor closed its plant and laid off hundreds of workers;
•$73 million in improper unemployment benefits, including cash paid to existing state workers and the deceased, of which only $15.3 million has been recouped;
•Wasteful film incentives to Hollywood elites totaling $13.5 million;
By Erik Schelzig, Associated Press
NASHVILLE, Tenn. — Tennesseans drawing unemployment benefits will soon lose a weekly $15-per-child allowance as part of a new law signed by Republican Gov. Bill Haslam.
The Department of Labor and Workforce Development said Friday that the change will help bolster the state unemployment trust fund, which could lead to a reduction in unemployment taxes paid by businesses.
According to the department’s projections, ending the allowance for dependent children in the budget year beginning July 1 will save the state $40 million per year.
Lawmakers created the child allowance in 2009 in order to qualify for a nearly $142 million federal stimulus grant. Now that that money had been spent, the Republican-controlled Legislature earlier this year passed a bill to end the program. It passed 66-23 in the House and 24-5 in the Senate.
“That benefit was nice while it lasted and while it was being paid for with federal dollars,” said Sen. Jack Johnson, R-Franklin, a main sponsor of the bill to make the benefit changes.
Tennessee is a strong in manufacturing, but production growth is limited by Tennesseans’ relatively low level of educational achievement, says a Ball State University study. From the Commercial Appeal’s brief story: The 2013 Manufacturing and Logistics Report Card, an analysis from Ball State’s Center for Business and Economic Research (CBER), grades all 50 states on factors that lead to success.
Tennessee received these other grades: Logistics, B+; Human Capital, D-; Worker Benefit Costs, B+; Tax Climate , C; Expected Liability Gap, B; Global Reach, B; Sector Diversification, B; and Productivity and Innovation, C-.
“This year the state saw the scorecard register improvements in tax climate and the expected fiscal liability gap,” ” stated Ball State’s Michael Hicks, CBER director and economics professor.
“These two changes suggest that Tennessee will see improved prospects for manufacturing. Still, the only real constraint to making goods in Tennessee remains the quality limitations of the workforce.”
The report is available at: cms.bsu.edu/academics/centersandinstitutes/bbr/currentstudiesandpublications
Department of Labor and Workforce Development Commissioner Burns Phillips has fired Fiscal Services Administrator Ron Jones effective Wednesday, reports The Tennessean. Jones had been in charge of the department’s operating budget of more than $250 million, while overseeing facilities, procurement and telecommunications, according to a biography on the state government website.
Former commissioner Karla Davis chose Jones for the role in July 2011.
Davis, and two other top officials she hired, resigned in mid-March, just days before publication of auditors’ sharp criticisms of the department, which failed to monitor fraud and delayed sending checks to thousands of out-of-work Tennesseans.
Hiring in Davis’s administration has led to two lawsuits charging that leaders discriminated against white employees by forcing them out and hiring black replacements. Davis and three hand-picked officials who have since resigned are black.
News release from governor’s office:
NASHVILLE – Tennessee Gov. Bill Haslam today announced Burns Phillips as the new commissioner of the Department of Labor and Workforce Development.
Phillips had been serving as acting commissioner of the department, after coming over from the Department of Finance and Administration (F&A) where he was managing director of customer-focused government initiatives administration-wide.
“I am very grateful to Burns for taking on this role,” Haslam said. “He has both public and private sector experience and has served in multiple departments at the state level, and I appreciate his willingness to continue serving at Labor and Workforce Development.”
Phillips, 64, received both a bachelor’s and master’s degrees from Middle Tennessee State University, and he earned his law degree from the Nashville School of Law in 1978.
He worked in the Budget Office of F&A early in his professional career before working in medical sales and marketing in the private sector. In 1991, he founded a surgical instrument company that conducted business in the United States and 30 other countries.
“I am deeply honored that Gov. Haslam has given me this opportunity to serve Tennesseans,” Phillips said. “I am committed to the people and to the work of Labor and Workforce Development, and I will continue to build upon the foundation we have established at the department.”
Phillips and his wife, Sally, live in Nashville and have two children and four grandchildren.
Tennessee labor officials are shutting down a federally funded rapid response team that had been used to provide quick assistance to employees caught in the midst of mass layoffs across the state, reports The Tennessean. The elimination of the unit, which had been in operation for about a decade, comes despite the strong protest of some members of a state workforce advisory board. That board had refused to approve the change at a meeting last fall, and charged that the state’s last-minute change failed to comply with federal notice requirements.
Jeff Hentschel, a spokesman for the state Department of Labor and Workforce Development, said some of the seven members of the team already have been given layoff notices, while others will be formally notified shortly. All will be off the state payroll by June 18.
He denied that the state violated the federal notice requirements, saying the state has the right to amend its annual plan prior to submission to the U.S. Department of Labor.
The job of responding to mass layoffs will now be delegated to 13 regional workforce agencies across the state. Hentschel said the $568,000 in cost savings will be allocated to those regional agencies, “who will absorb the rapid response duties and responsibilities.”
The state recently laid off an additional 125 employees who provided career job services at centers across the state.
Guy Derryberry, a member of the executive committee of the state Workforce Development board, said the elimination of the response team was inserted in the state’s annual plan just two days before the panel was scheduled to vote on the overall plan.
Derryberry also charged that draft minutes of the board’s Sept. 13, 2012, meeting incorrectly state that the panel approved the revised plan, even though they expressly refused to act on the change.
…Hentschel defended the omission, stating that the minutes were intended to be summaries of board action and not “a transcription of all language contained in a meeting.”
The elimination of the unit, whose employees have a combined 145 years of experience, has sparked a letter-writing campaign to state legislators and the governor charging that the last-minute changes were the result of recommendations from an out-of-state consultant brought in by the recently departed top management at the labor agency.
In fact, the disputed minutes quote former Deputy Labor Commissioner Alisa Malone as thanking the consultant, Mary Ann Lawrence of the Center for Workforce Learning, for her assistance in developing the plan.
Lawrence, according to the minutes, was present for the September session.
Earlier this year, the state of Tennessee halted payments to Lawrence’s company, which collected $1.1 million in fees through the Department of Labor and Workforce Development despite being cited in two successive state audits for contracting irregularities.
Two veteran state employees have been promoted to top posts within the Tennessee Department of Labor and Workforce Development, where they’ll be tasked with correcting problems uncovered in a recent audit, reports the Tennessean. The department named Dustin Swayne as deputy commissioner — the agency’s second-in-command — and Linda Davis as administrator of the Division of Employment Security, which oversees unemployment claims.
The changes come within weeks of abrupt high-level resignations and the publication of auditors’ sharp criticisms of the department, which failed to monitor fraud and delayed sending checks to thousands of out-of-work Tennesseans.
Three leaders resigned in mid-March: former Commissioner Karla Davis, former Deputy Commissioner Alisa Malone and Turner Nashe, former assistant administrator of employment security. The audit came out March 28.
NASHVILLE, Tenn. (AP) — The commissioner and deputy commissioner of Tennessee’s Department of Labor and Workforce Development have resigned.
Gov. Bill Haslam announced the resignation of commissioner Karla Davis for family reasons in a news release on Monday. Haslam’s spokesman David Smith said the deputy commissioner, Alisa Malone, also resigned, although he did not provide a reason.
Haslam named Burns Phillips as acting commissioner. Phillips serves as a managing director in the Department of Finance and Administration.
Haslam said Davis has served as commissioner since the beginning of the Haslam administration. Prior to that she served as director of Urban Strategies Memphis HOPE, overseeing programs for U.S. Department of Housing and Urban Development.
Haslam said he was grateful to Davis for her service.
— Note: The Haslam news release on Davis’ resignation is below.
International Paper wants $56.9 million in tax breaks over the next 15 years and, if it doesn’t get them, threatens to move jobs out of its Memphis facility, according to the Commercial Appeal.
(If given the tax breaks) the company commits to retain 2,274 high-paying jobs in Memphis, add 101 new ones and invest $115.7 million, including construction of a fourth office tower at its East Memphis corporate headquarters.
The company has filed its application for a retention PILOT, or payment in lieu of taxes. The Economic Development Growth Engine (EDGE) for Memphis & Shelby County is to vote on the application Wednesday.
International Paper’s application detailed the company’s options if the EDGE board were to deny the tax break.
“Move a significant number of its high-paying jobs from Memphis to Ohio, where it currently owns facilities which could house these workers — a decision that could also presage Memphis’ loss of additional existing jobs to Ohio, as well as the loss of future growth to Ohio …,” the application states.
A second option would be to move International Paper’s corporate headquarters to a newly constructed campus outside Tennessee. “This is the lowest cost option for IP …,” the document states. There’s been some speculation the company was considering a move to DeSoto County.