Silicon Ranch — the company with ties to former Gov. Phil Bredesen’s administration — has applied for a solar tax break that is sure to fan the flames of debate over the economic development incentive’s future, reports the Nashville Business Journal.
The company’s founders include Bredesen and major economic development players from his administration, Matt Kisber and Reagan Farr. They spearheaded the passage of the tax break in 2010 aimed at encouraging the fledgling solar industry.
In the 2012 Tennessee General Assembly, some Republicans had planned to alter the tax arrangement in part because they were suspicious after those who put it in place started a solar company. Since then, Silicon Ranch has made eight applications for green energy certification, a stamp necessary to receive the tax break, according to Tennessee Department of Environment and Conservation records.
…Kisber and Farr said the company had not planned previously to apply for the tax credit — or any other incentive they had advocated — unless a new legislature and administration affirmed the legitimacy of a Bredesen-era policy. Farr, who served as Bredesen’s revenue commissioner, said the Republicans’ ultimate decision not to alter the policy “reaffirmed” it and led the company to consider applying.
The state comptroller’s office says a current tax arrangement on solar energy is unconstitutional, upping the pressure on legislators to cast the policy aside as a fight over its purpose escalates, reports the Nashville Business Journal. A bill in the Tennessee General Assembly would change the tax treatment of solar companies, and various segments of the industry have spoken up, decrying it as a massive tax increase in place of an incentive they’d been anticipating.
Jason Mumpower, executive assistant to state Comptroller of the Treasury Justin Wilson, today cited a 1986 attorney general opinion, saying that a justification used for the treatment of solar installations is not constitutional.
He argued the current statute — passed in 2010 under the administration of Gov. Phil Bredesen, a Democrat — is open to challenge, and that therefore the comptroller is making tax law sound and preserving some incentive for solar companies.
“What we’re looking to do is correct a technical matter in the tax code,” Mumpower said. “What we’re doing is trying to help them.”
….Both McNally and Mumpower stopped short of accusing the Bredesen administration of passing a law to benefit a future business venture. But they said there could be the appearance of a conflict, with Farr pushing the law and then being part of the future company.
Farr called it “politics by a very political comptroller” for Republicans to be pushing the law change and making such suggestions. He said Silicon Ranch does not plan to apply for the tax benefit or other Bredesen initiatives. The company may consider future programs passed or reapproved by the legislature, based on circumstances at that time, he said.
Mumpower said the comptroller’s office is not seeking political gain against Farr or Democrats supportive of solar. Asked why the comptroller’s office doesn’t denounce suggestions about Farr, Mumpower said the comptroller’s motivation is only to fix the law, not engage in politics.
Former Gov. Phil Bredesen said Tuesday he believes the people who disagreed with former Revenue Commissioner Reagan Farr “got their final shot in” against Farr with a recent comptroller’s report that criticized the department on tax variances. (Prior post HERE.)
That’s one part of Mike Morrow’s TNReport on Bredesen, hereby excerpted: Bredesen said he has not read the report from Comptroller Justin Wilson but has talked briefly about it with Farr and that he has never had any questions about Farr’s integrity.
…Bredesen said his contact with Farr about the comptroller’s report lasted only about 30 seconds.
“He told me about it. I said, ‘That’s fine. You know the crew over there that was trying to do you in got their final shot in. There’s now a report. Fine,'” Bredesen said.
Bredesen said he never had any particular problems with what Farr did.
“He had a department which was very politically divided internally about the way it should operate,” Bredesen said. “This department has always had a group of people who thought, ‘Our job is tax collection, period. What we need to do is audit returns and collect taxes, and that’s the end of it.’
“But you’ve also got people that say, ‘No, no, no, tax policy and the way you do things is part of the process of the department. It’s part of economic development.’ Reagan was in that mode. I think the people that disagreed with him kind of got the final shot in there. I’ve never had any questions about his integrity or decision-making process.”
Former Revenue Commissioner Reagan Farr approved 20 multimillion-dollar tax reductions for Tennessee businesses without proper documentation or justification, according to a report released this week by the state comptroller that The Tennessean characterizes as “blistering.” Farr approved some of those reductions, known formally as tax variances, despite objections from his own staffers. Still others were given the green light without the knowledge of senior staff, according to the report. (Link to letter HERE)
Tax variances are granted after corporations contest their tax bills with the state. Under state law, the revenue commissioner may issue such variances without oversight by other state agencies.
Because the variances pertain to a business’s private affairs, details, such as the names of the companies and the amounts of the tax reductions, were not released in the report.
Farr, who was appointed by former Democratic Gov. Phil Bredesen, disputed the report’s findings and said politics, not tax policy, led to Republican Comptroller Justin Wilson’s critical report.
During Farr’s tenure from 2007 to 2010, there were 20 tax variances granted. Under his predecessor, Bredesen appointee Loren Chumley, 13 variances were approved over four years. From 2000 to 2003, only six variances were approved.
Wilson said the practice ballooned during Farr’s time in office and that there was a lack of documentation to back up the variances.
“The commissioner of revenue made decisions involving millions of dollars for which we could find no documentation, no rationale, no formal analysis and no evidence of investigation of the effect of such a variance on a similarly situated taxpayer,” Wilson said.
Farr defended his record and said each variance came with the approval of the department’s legal counsel, or the special counsel to the commissioner. Farr, who is now the chief operating officer of a solar energy startup company called Silicon Ranch, said he did not believe his tax policies were to blame for the critical report.
“I do think this is more about politics than policy,” Farr said.
Wilson said the report was focused solely on the tax practices of the Revenue Department.
See also the Chattanooga Times-Free Press story.
News release from DA Torry Johnson’s office:
Davidson County District Attorney General Torry Johnson and 15th Judicial District Attorney General Tommy Thompson have announced that a TBI investigation into former State Revenue Commissioner Reagan Farr has concluded. The investigation yielded no evidence of criminal wrong-doing on the part of the former cabinet member.
The review of that office was launched in August 2010, amid questions about how the investigations of sales tax revenues of some businesses were handled. One of the duties of the Revenue Commissioner is to oversee tax collections and investigations for the state. Johnson says the TBI’s investigation was closed when there was no evidence found to justify criminal charges against Farr.
“Allegations of possible public corruption are always taken seriously; however, in this situation, it appears the claims were the result of policy differences within the department and not any criminal conduct on the part of the former commissioner,” stated Johnson.
Farr left the position of Revenue Commissioner on September 1 last year to return to the private sector.
For more, see the Tennessean and/or Chattanooga TFP.