NASHVILLE, Tenn. — Tennessee Gov. Bill Haslam made economic development one of his key priorities, increasing state spending by 80 percent from 2011 to 2017.
Combined with local incentives, the state’s business subsidies top $2.5 billion a year, according to the W.E. Upjohn Institute for Employment Research. But do the promised jobs ever materialize?
The largest four media organizations in Tennessee — The Tennessean, The Commercial Appeal, the Knoxville News Sentinel and (Chattanooga) Times Free Press — sought to answer that question.
Their investigation found that many officials and agencies do not track or disclose the number of jobs created by subsidy deals. And for the ones that do, the results are mixed. The lack of accountability means taxpayers and leaders can’t effectively decide whether individual subsidy deals are a good investment or if the money would be better spent on education, infrastructure or another jobs program.
“It is our job and responsibility to make sure these businesses succeed,” said Ted Townsend, chief operating officer of the Department of Economic and Community Development.
A group of companies getting subsidies from Tennessee’s main grant program, FastTrack, fulfilled about 80 percent of all jobs committed, according to an analysis of internal state data. Some exceeded their hiring expectations, but nearly 40 percent said in 2016 they had fewer than half of the jobs promised. The state does not publicly disclose individual companies’ job figures.
For other subsidy programs, it is impossible to gauge whether subsidies were a good value. Some local agencies awarded businesses multimillion-dollar property tax breaks without calculating the actual loss of tax income to government coffers.
Google, whose parent company Alphabet is the nation’s second most valuable business, will not pay taxes for 20 years on the land at its new Clarksville data center, or on its equipment and buildings for four years.
The Google deal did not include a cost analysis, according to records obtained only after news organizations threatened to sue. The Clarksville-Montgomery County Industrial Development Board did not have a calculation of the projected forgone property taxes, according to the records. Google did not respond to a request for comment.
While Montgomery County’s announcement of the deal said Google would create 70 jobs, the contract states that is only a “target.” Google committed to hiring 34 direct employees, plus an additional 15 contract or temporary hires. It plans to invest $600 million at the site, which formerly housed Hemlock Semiconductor, a solar materials manufacturer.
How the county will evaluate the job gains is unclear, as the lead agency doesn’t keep records for any of its property tax subsidies.
“It’s a verbal check,” said Mike Evans, executive director of the Clarksville-Montgomery County Industrial Development Board. “Do we have a piece of paper or a form filled out? We don’t. But it’s a system.”
A lack of analysis can be found at agencies across the state, particularly in smaller governments. In a review of tax abatement deals by nearly 20 local economic development boards, about half did not require companies to regularly report job creation.
“How do you expect the cheerleaders to be the cops?” said Greg LeRoy, executive director of Good Jobs First, a Washington-based liberal watchdog group that advocates for more economic development accountability.
Some agencies stood out for transparency. The Economic Development Growth Engine for Memphis and Shelby County (EDGE), for instance, makes progress reports for hiring the projected amount of forgone property tax amounts available to the public online.
Tennessee’s economy has added 390,000 new jobs since January 2011. Employment grew by nearly 15 percent, fourth among states in the Southeast and 12th nationwide, according to state figures.
Information from: The Tennessean, http://www.tennessean.com