Electrolux's deal with Memphis drawing scrutiny from state legislators

NASHVILLE -- The state's $101 million commitment to Memphis' Electrolux plant in the waning days of former governor Phil Bredesen's term still sticks in Lt. Gov. Ron Ramsey's craw.

The East Tennessee Republican has previously expressed dismay at terms of the Electrolux deal negotiated in December by city, county, state and Chamber of Commerce officials. He is particularly unhappy about the direct commitment of $97 million cash to build and equip the manufacturing plant and the deal's lack of a "clawback" provision that would require the company to repay the state if its commitment to 1,250 jobs doesn't pan out.

Ramsey reiterated his support for the funding because, he said, the state must honor its commitment.

But he's calling in one of the architects of the deal -- former state Economic and Community Development Commissioner Matt Kisber -- today to talk about both the Electrolux deal and a separate deal to land two Amazon distribution centers in the Chattanooga area.

Ramsey's planned meeting with Kisber will occur just hours before the House of Representatives is scheduled to consider a $106.4 million state bond issue to finance $77 million of the Electrolux costs and $29.4 million toward another Bredesen-era project, Wacker Chemie's polycrystalline silicon manufacturing plant in Cleveland, Tenn. The 20-year general obligation bonds will cost Tennessee taxpayers $173.4 million to repay, including $67 million in interest.

Ramsey, who is speaker of the state Senate, and new House Speaker Beth Harwell, R-Nashville, learned of the Electrolux and other deals in January, just after the legislature convened facing large budget cuts and more than a month after the state had committed to them. Both said they were not told of the massive commitment of public funds previously.

"I'm going to have former commissioner Kisber in here," Ramsey said in his weekly news conference Thursday. "He's coming in here and we're going to meet. I want to know what did we agree to. What's in writing? What's not in writing?"

Ramsey, R-Blountville, said he wanted to ask Kisber in "because I've asked Governor Haslam and I've asked (new Economic Development) Commissioner (Bill) Hagerty: 'Have you all actually talked to them (Kisber and former ECD staffers) about this?' The answer is no, apparently."

Kisber has not returned calls seeking comment.

Ramsey said that as a result of the Electrolux and Amazon deals, he is considering new legislation requiring a broader range of state officials to sign off on deals that commit the state to funding.

"There needs to be legislation to have it be more than just one person, apparently, having this carte blanche authority. I think we at least should have the two speakers sign on to it, the governor sign on to it, maybe the two (House and Senate) finance (committee) chairmen. But I do think there's been way too much power over the years concentrated in basically one person."

The Amazon deal is controversial because the state apparently agreed to waive state tax laws that would have otherwise obligated the giant Web-based retailer to collect Tennessee state and local sales taxes on products shipped to Tennessee. The tax law requires tax collections by online retailers that have a physical presence in the state, which Amazon will have after spending $139 million building two new distribution centers in Hamilton and Bradley counties that will employ 1,400 to 1,500 full-time workers and sometimes, the company has said, more than 5,000 part time.

Ramsey said he's fine with the state's traditional spending on industrial recruits, like infrastructure, job training for workers and tax credits and incentives.

"Infrastructure, providing training through community colleges -- I usually agree with those. It's the one where you make an outright gift or do a sales tax exemption that no other business in the state has, those are the type of things that bother me," Ramsey said.

"This whole Amazon tax issue, that they're not paying sales tax, I just don't think that's something that should ever have been agreed to," he said.

A letter from Electrolux executives earlier this year, combined with a visit to Nashville, informed Ramsey, Harwell and other officials in blunt terms that Electrolux wanted its money, originally by Jan. 31, or it had authority under the agreement to pull out of the deal.

That was virtually impossible for the legislature to do and the company agreed to a smaller amount by June 1, which the bond bill up for a House vote Monday will fund.

© 2011 Knoxville News Sentinel. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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TrueTennessee writes:

Start acting in an "disunited" way Tennessee leaders, and business investors will run from this state quicker than scalded dogs.

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