Tag Archives: subsidies

Bredesen-era electric car rebates revived with leftover $682K

NASHVILLE, Tenn. (AP) — The Tennessee Department of Environment and Conservation is restarting a rebate program for electric car buyers.

WPLN-FM (http://bit.ly/1cRP2Hn) reports the state had $682,000 left two years ago after shutting down the subsidies, which were approved five years ago under former Gov. Phil Bredesen. The funds have remained unspent.

The station reports that instead of finding another use for the money, the state agency decided to begin giving out rebates again.

Beginning in June, those who purchase electric cars would be eligible for a $2,500 rebate while hybrid car-buyers would be eligible for $1,500.

Program manager Molly Cripps said there were various reasons to offer the subsidies even with the market growth for electric cars.

“I mean, air quality is one piece, certainly,” she said. “It is also to support not just Nissan, but any manufacturers of whether it be an electric vehicle or more sustainable transportation.”

The state originally set aside $2.5 million for rebates and issued 727 over a time period of about two years.

The same terms that applied then apply now. Car buyers must live in Tennessee and purchase the vehicle at a dealership in the state.

Note: News release is HERE.

The Silence of the Subsidies

Gov. Bill Haslam and Nashville Mayor Karl Dean are silent on how much state and local taxpayer money will go toward developing a $50 million “water and snow park” in Nashville, reports the Tennessean. The silence contrasts with the fanfare accompanying the announcement of the plans with Dolly Parton last week at a news conference last week.
It’s outrageous that they don’t feel any more obligation to let us know how much it’s going to cost us,” said (Ben) Cunningham, who recently started the Nashville Tea Party and previously led a successful campaign to limit Metro government’s ability to raise property
“They’re basically saying, ‘Don’t bother us, we’ve got this photo op with Dolly, and we’ve got to look good for the photo op. We don’t have time for questions about being caretakers of taxpayers’ money.’ Apparently something’s been negotiated.”
…Dean and Haslam said Metro and the state would provide incentives to help with the project, which they touted as a major boon to the tourism industry, with projections of 500,000 visitors in the first year and 450 full- and part-time jobs.
Both elected officials said they couldn’t provide any numbers yet, however. Dave Smith, a spokesman for Haslam, said that wasn’t out of the ordinary.
“In economic development projects, it often happens that it is announced before specific incentives have been finalized,” Smith wrote in an email Friday. “The governor participated because he’s excited about the project and its expected impact on Nashville and Tennessee. The state is prepared to offer infrastructure support to the project, likely through TDOT and/or ECD.”

TN Gets C- in Subsidy Monitoring

Tennessee is slightly below average in how well it monitors, verifies and enforces the terms of its job-creation subsidies, an economic-incentive watchdog group said in a study released Wednesday.
From the Tennessean’s report :
The Volunteer State received a C-minus grade and a 29th-place ranking from Good Jobs First, whose Money-Back Guarantees for Taxpayers report found fault with all five of the state’s major incentive programs.
Tennessee doesn’t require those receiving job tax credits to report their outcomes, the study said. Nor does the state independently verify claims made by those receiving FastTrack job-training assistance, the headquarters tax credit or even sales-tax credits for a qualifying facility in an emerging industry.
The law that created the Tennessee Job Skills program, which awards job-training grants, does not contain any penalties for those who don’t meet requirements, the study said. The group said the program’s administrator was “unwilling” to answer its questions about the program
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Electrolux Subsidies Total $152,000 Per Job Created

An analysis of the huge, largely state-funded incentives package for a new Electrolux appliance manufacturing plant in Memphis by the Commercial Appeal has a lot of previously-undisclosed details.
In January, local government officials were told in public meetings that the incentive package offered to Electrolux totaled $153.6 million, with most of the funds coming from the state.
That figure did not include the value of local property tax breaks approved by the Memphis and Shelby County Industrial Development Board, which raised the total amount of support to $188.3 million, or about $152,000 per job.
That figure also excluded other pledges made to the company, based on a review by The Commercial Appeal of internal e-mails, contracts and other public documents.
Among the newspaper’s findings:
-During negotiations with the company last fall, the Tennessee Department of Economic and Community Development sent Electrolux a proposal that offered reductions in franchise, excise and sales taxes worth, the state said, an estimated $41.3 million. A revenue department spokesman declined to discuss those tax breaks with The Commercial Appeal, saying state law bars him from talking about individual taxpayers.
-The Tennessee Valley Authority, also in the Nov. 17 proposal, offered an additional $5 million in grants, loans and other incentives on top of a $1.5 million grant that’s been made public. A TVA spokesman also declined comment on the subsidies, calling them “client confidential.”
-Governments are borrowing money to pay for the project, and interest alone will add an estimated $76.5 million over a period of decades, according to public documents. Memphis and Shelby County residents will pay off the debt until 2036 through non-property tax sources, such as local sales taxes and business taxes.
-Although public money is paying for most of the $190 million factory — even reimbursing the company for its purchases of conveyor belts and other equipment — a construction agreement signed with the company in July provides that Electrolux takes over ownership of the property at the “start of production” — the moment when the first product exits the assembly line.
-The city, county and state governments have no written policies to determine which companies will get large cash subsidies in the future, and which will not. The state government is working on some standards, but they’re still not complete.
-Electrolux was exempted from diversity requirements that have been a condition for other companies receiving local property tax breaks.
-Local governments also agreed to keep competing appliance businesses from settling near the factory, and even agreed to pay the company $25,000 per day if they were found to be the cause of construction delays.
-Of all the concessions made in the December contract, the one that may prove the most beneficial to the firm is an agreement by the governments not to try to recover taxpayer money if the company fails to create the required number of jobs or leaves Memphis quickly. At most, Electrolux could lose local tax breaks that have a present value of about $33.9 million, and represent about 18 percent of the $188.3 million in confirmed subsidies.

The CA’s Sunday story package on Electrolux has sidebars, too.
One begins like this:
The only due diligence report Tennessee completed for the Electrolux project was a six-page document that celebrated the benefits and didn’t consider the costs of subsidies. Reports paid for by the Greater Memphis Chamber didn’t consider all the costs, either. None of the reports addressed the possibility that the company would leave early or fail to meet job creation goals.
“The research on the performance of PILOTs (payments in lieu of taxes) in Memphis has always been very weak,” said David H. Ciscel, retired professor of economics at the University of Memphis. “That is, not everybody actually wants to know if there’s a payoff. Because I fear in many cases, there isn’t.”

The other is on Chamber of Commerce power and begins thusly:
In 2004, the Greater Memphis Chamber waged a very public battle against a proposed city of Memphis payroll tax. In 2005, Memphis officials, some still smarting from the opposition, responded by cutting the chamber’s funding. It would be almost two years before the city contributed funds to the chamber.
How times have changed. Today, no other outside organization is linked as closely to city and county governments — particularly the mayors — as the chamber, which has received millions of public dollars the last few years and is the de facto economic development engine for the area.

Haslam Eyes ‘Measurable Metric’ to Justify Subsidies to Job-Generating Companies

Gov. Bill Haslam says a big issue facing state policymakers is finding a balance between recruiting new jobs and the burgeoning cost to taxpayers of the incentives that subsidize them. From a story on a gubernatorial interview with Richard Locker:
“It’s a buyer’s market when it comes to site location now. I was surprised at how many interested parties we had in the pipeline. But I was also surprised at their expectation levels” from the state, he said.
As a result, Haslam said his administration is drafting “a measurable metric that says, ‘They’re going to bring “X” jobs at “X” salary and is that something we can justify?’ Our challenge is to keep going out there competing and bringing jobs here and yet doing it at a price that makes sense for our taxpayers. That’s tough.”
Before it adjourned last month, the legislature approved nearly $300 million in direct taxpayer subsidies of industrial plants and equipment for three large manufacturers locating in Tennessee, including about $100 million for Electrolux in Memphis. Two of the three were commitments made by former governor Phil Bredesen and represented a shift beyond the state’s traditional recruiting tools: funding for job training, infrastructure for factories and tax breaks.
State officials also agreed to a secret deal with Amazon.com to forego sales taxes on Amazon sales inside the state in return for two new distribution centers near Chattanooga.
Haslam said he’s heavily scheduled for job recruiting trips in and out of state (and the story says that will occupy much of his time for the remainder of the year, along “fine-tuning the big education changes lawmakers approved and digging deeper into the operations of state government agency by agency.”