Live from Music Row Thursday morning on The Tennessee Star Report with Michael Patrick Leahy – broadcast on Nashville’s Talk Radio 98.3 and 1510 WLAC weekdays from 5:00 a.m. to 8:00 a.m. – host Leahy welcomed Deborah Fisher, the executive director of the Tennessee Coalition for Open Government to the studio to describe reports lacking transparency where clawbacks have not been redeemed after large corporations shut down.
Leahy: I am joined in studio by our friend Deb Fisher, who heads the Tennessee Coalition for Open Government. You were going to tell us about the results of all of these funds spent in secret agreements by the Economic Development Administration here to induce a large corporation to come to Tennessee.
Supposedly, if they don’t hit their employment objectives. There are “clawbacks” where they’re supposed to give us back the money. How’s that working out according to this report, Deb?
Fisher: This is the first report, and it was acquired by lawmakers to be presented to the fiscal committee. And I’ll give you just one example from it.
Service Master Global Holdings have received grants I found online on the ECD website of about $5.5 million, $385,000. repaid to each to ECD.
Leahy: Whoa, whoa, whoa. They got $5.5 million in grants with clawback provisions? Is that it?
Fisher: Yeah. The report is sketchy. So I don’t know how much of that was subject to the Clawback provisions, but they received a lot of money from the state.
And that’s the only one listed in this report where they actually did get the clawbacks. There are almost $11 million in clawback owed from previous years that have not been collected.
Leahy: So let’s talk about the not collected bit. And so we don’t have the details of these. These are all secretive deals. To me, you had up a transparency group, why should these deals be secret?
Fisher: Well, they shouldn’t be secret. The public needs to know the performance of ECD. If we’re going to give taxpayer dollars to companies to do things and they don’t do it, we need to know how it works out.
And we’re starting to get just a very small peek at what’s going on. And this has been because some lawmakers have passed laws forcing it, but we still don’t have a full picture. There was a good question yesterday about it.
Leahy: In the Tennessee General Assembly at a committee? House or Senate?
Fisher: House. Bobby Ross. He’s the economic development and asking, how is the performance gone before? And of course, he gives an example of something that’s gone really?
Leahy: One example.
Fisher: But we don’t know the full picture.
Leahy: Why don’t we know that? Why shouldn’t we have accountability, complete detail of comparing every deal where Tennessee taxpayers gave millions of dollars to corporations compared to what they said they would do, what they actually did, how much they owed back in these, and how much they actually paid?
Fisher: I don’t know why we don’t. They don’t provide it. They make it hard to find. They have a lot of discretion to make things confidential. And they have.
A lot of the discretion to make things confidential end up being up to one man, either at the discretion of the ECD Commissioner. In some cases with tax credits. It’s two with a revenue commissioner.
Leahy: Let’s go to that. The clawbacks first, you said $11 million owed in clawback. Who owes the clawback that hasn’t given the money back? Are these companies that went broke?
Fisher: That information is not in the report.
Leahy: You can’t find that out. I would like to find that out, wouldn’t you?
Fisher: Yeah. It’s not clear how many jobs. So the report is pretty sketchy, but it is our first clue. Our first window into the fact that the state is trying to get money owed and hasn’t been able to.
I think these clawback provisions are super important to be put in the contract, but we just have to be realistic about them, and we need to see how they turn out. I mean, it’s not just the magic bullet to the deal.
Leahy: You said something else here about the discretion that some of these folks have, and it’s not just in grants for capital improvements or building buildings or other stuff. It’s for tax credits.
What’s the law on it? And tell us who the Tennessee state officials who have this discretion are? Do they exercise it on tax credits?
Fisher: Right. In statute, there are certain requirements you have to meet to get, say, a job tax credit or a capital investment tax credit, and it’s open to everybody. But if a business doesn’t meet those qualifications, it still can be awarded the credit if the revenue commissioner and the ECD commissioner decide that it’s in the best interest of the state to give that credit to that business.
However, our problem with that is that we don’t have to know who they have decided to give it to. And we think that’s a problem when you basically have two people who can make a decision to give millions and millions of dollars in a tax credit to a company, and that’s not public.
Leahy: And there’s no way to find that out?
Fisher: No, it’s confidential. And it’s confidential by state law.
Leahy: Who voted for that state law?
Fisher: This goes back.
Leahy: How far back does it go?
Fisher: These have been in state law for a while. I don’t know. But they add to it. They subtract from it every year. This year, they added one more of those discretionary tax credits.
Leahy: In the statute.
Fisher: In the statute. Usually, it’s targeted to a company that they want to give incentives to, but they don’t quite meet the qualifications laid out in the state law.
They applied to everybody else, and they want to just bend the rules, basically, for a particular company.
Leahy: Bend the rule. And I’m sure lobbyists have nothing to do with this. That was a little satire there. (Laughs)
Fisher: The state of the credit thinks it’s in the best interest of the state, so they think it’s going to help economic development. So I don’t want to discount that. We just think it should be transparent.
Leahy: Yeah. I think a lot of things should be transparent, and a lot of things that aren’t particularly about this Ford deal. I think a lot more should be transparent. But I want to go back to the two people that can give tax credit at their discretion.
Now, you said it’s the director of economic development, Bob Rolfe. Whoever the revenue commissioner is, it’s a known thing. (Fisher chuckles) But they have a lot of power. A lot of discretion.
Is there any element Deb within the Tennessee General Assembly to limit those discretionary powers that give lots of money to these Fortune 500 companies and sometimes smaller companies?
Fisher: Yes. They wrote the law to allow it, and they could write the law to not allow it, or they could write the law to make it transparent.
Leahy: When you talk to legislators about transparency, what kind of feedback do you get if you say we need more transparency, do they say, oh, yeah. That’s great. Let somebody else do it. How do they respond?
Fisher: Some of them want it. Some of them want it. But they also feel pressured that they need to have jobs brought to their community. And ECD says we can’t deal with companies if we’re going to reveal who we give the money to.
They’re caught between a rock and a hard place because jobs are really important in communities. That’s why we have a whole state agency focused on it. The political angle there is you want the jobs? We got to keep these secrets.
Fisher: To some extent.
Leahy: I think that’s terrible. But that’s the way it is.
Fisher: Not everything is secret, but there are some pretty big holes in this.
Listen to the full second hour here:
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Tune in weekdays from 5:00 – 8:00 a.m. to the Tennessee Star Report with Michael Patrick Leahy on Talk Radio 98.3 FM WLAC 1510. Listen online at iHeart Radio.
Photo “Tennessee Capitol” by Peggy Anderson. CC BY-SA 4.0.
Live from Music Row Thursday morning on The Tennessee Star Report with Michael Patrick Leahy – broadcast on Nashville’s Talk Radio 98.3 and 1510 WLAC weekdays from 5:00 a.m. to 8:00 a.m. – host Leahy welcomed all-star panelist Clint Brewer in studio to weigh in on the growth spurt that continues in Tennessee due to a re-locating caravan of blue state refugees.
Leahy: We are joined in studio by our very good friend all-star panelist, Clint Brewer, recovering journalist, who gives me advice on pitfalls to avoid. And I follow that advice very very often. Thank you for that. But I wanted to talk about for a minute, Clint, what’s happening here in Nashville, despite all of the bad policies of Mayor John Cooper Nashville, for a number of reasons outside of Nashville and some inside of Nashville, it’s growing like crazy. California is going nuts. Illinois is going nuts. New York’s gone nuts. These bad blue states are basically creating refugees who want to run a business where they’re not going to be interfered with.
Brewer: And it’s been that way for a while. I spent five years in Governor Haslam’s administration doing economics.
Leahy: That’s right. You did. You’ve seen this.
Brewer: I’ve witnessed this up close and personal. I mean, New York, Illinois, California have fed more businesses to the state of Tennessee in last 10 years, probably than any other state ever has.
Leahy: We should send a thank you note to Governor Newsom in California.
Brewer: It’s the low tax rate. It’s the low corporate tax rates, the general affordability of land. It’s a willingness of governments to be partners with businesses rather than be in opposition to them. And it’s a lifestyle choice for a lot of people’s families and a lot of employers’ families. You can find really great schools here. And it’s just a more laid-back way to live.
Leahy: You can find houses here in Middle Tennessee that are less expensive than the houses being sold in California. But what a hot market this is?
Brewer: Yeah, it is a hot market. All the people moving here have certainly heated up the real estate market. I mean, it’s hot for this area. The appreciation rate is high, but it’s still cheaper to live in than the vast majority of other places in the country.
Leahy: And by the way, that no state income tax, you can’t beat it.
Brewer: I mean, it’s the best recruiting tool we’ve got.
Leahy: It absolutely is a great recruiting tool. Apparently, Oracle likes it. Now they have a few hurdles to overcome. But I guess on Tuesday night, the Metro Nashville Council unanimously approved the things they had to do to get Oracle in here for the first step.
Brewer: Oracle has been in the economic development pipeline for a while, and it’s a big win for the state. Kudos to Nashville for showing so well and winning the deal. It’s good to see the Cooper administration sort of getting back into the ring on economic development. That’s encouraging. And when a company can do business anywhere and they decide to do business in Tennessee, it says a lot about our business environment.
It says a lot about our workforce, and it says a lot about the potential for the state. We’re becoming a hub for tech, which are high-paying jobs, which is what you need now. There are some challenges policy-wise with it. And I think some of the residents of the East Bank are right to be worried that they’re going to be crowded out.
Leahy: I think it’s inevitable.
Brewer: Well, it may be, but, I mean, we can’t just drive people willy nilly out of the county. We’ve got to figure out a way to do both. To allow people to stay in the county and to recruit economically.
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Tune in weekdays from 5:00 – 8:00 a.m. to The Tennessee Star Report with Michael Patrick Leahy on Talk Radio 98.3 FM WLAC 1510. Listen online at iHeart Radio.
Live from Music Row Wednesday morning on The Tennessee Star Report with Michael Patrick Leahy – broadcast on Nashville’s Talk Radio 98.3 and 1510 WLAC weekdays from 5:00 a.m. to 8:00 a.m. – host Leahy welcomed the original all-star panelist Crom Carmichael to the studio to weigh in on economic foreign development cronyism and lobbyists while speculating who the Republican presidential candidate for 2022 will be.
Leahy: We are joined in studio by the original All-Star panelist, Crom Carmichael. Crom, former Secretary State Mike Pompeo was a featured speaker, a surprise speaker, actually at Liberty University’s Equity for Africa Conference. And The Star News Network had a reporter there who provided an exclusive report from Lynchburg, Virginia. He was introduced by former Congressman Dave Brat, a friend of ours.
And he was very very warmly welcomed. And here’s what he had to say about Africa. Pompeo said, greater business development improves security for all of us. It’s a collective set of security issues that are threatening not only Africa but the Northern part of Africa through the Middle East. We always knew that if we got the business development right and did so in an atmosphere that allows all the people of Africa to reap the benefits of that development through greater freedom that America would be a better place too. This is sort of his pushback against the Chinese incursions into Africa.
Carmichael: Well, the Chinese are clearly aggressive in many areas of the world. Especially Africa. And most of it is for mining its raw materials and natural resources and especially targeted to what are called rare earth minerals. And rare earth metals are needed for electric cars. They’re needed for chips, they’re needed for high technology.
And the Chinese want to corner that market. And so they’re going after that very very aggressively. The Trump administration tried to build bridges with other countries through economic deals that, as Pompeo says, our business relationships create wealth and are spread because of the value of the work that’s being done.
Democrats tend to give money away rather than focus on building business interests. They’re more interested in giving money away. You see where Kamala Harris is now apparently trying to give money to Guatemala so that Guatemala can then offer money to people to not come to the United States.
Leahy: Here’s how that works. When the United States “gives money” to foreign governments, it does not go to any economic development.
Carmichael: No it doesn’t.
Leahy: It goes to the dictators and the cronies. And so they become richer. It’s a transfer of wealth from American taxpayers to dictators in foreign countries.
Carmichael: Well, not just that. It emboldens and empowers the dictators that allow them to continue to be tyrants. And so it’s a sad thing to watch. And much of it is kickbacks to cronies within the United States.
Leahy: Cronies that are doing business with the dictators.
Carmichael: Make no mistake that these dictators have lobbyists. Those lobbyists get lots of money. And so if the lobbyists can get $50 million to be given to a dictator in some small country, that lobbyist charges perhaps three to $5 million for the work they do over a period of two or three years. So it’s not designed to create wealth for the society in question. It is designed to circulate money to the cronies. And that has been going on, especially with the Democrat Party for generations.
Leahy: Let me pose this question to you, Crom. I look at it and we’ve got a very dangerous year and a half ahead with Democrats in control of the executive branch.
Carmichael: We hope only a year and a half.
Leahy: Yeah, we hope only a year and a half. But the answer is going to have to be that the Republicans take back either the United States House of Representatives or the U.S. Senate and or both. Now my question to you is a lot of people and politicos look at the horse race, who’s going to be the Republican nominee.
That’s, like three and a half years from now. It’s too far even to imagine, right? Let me pose this. Of these three people, which one is going to likely be more effective at helping Republicans win back the House of Representatives in November ’22? Would it be Donald Trump, B, Governor Ron DeSantis of Florida, or C, former Secretary of State Mike Pompeo?
Carmichael: I think depending on the race. First of all, I can’t imagine any Republican running for a House seat or a Senate seat, even as an incumbent who wouldn’t want any of those three to come campaign for them. Because as time passes, a lot of the public is looking saying, maybe I screwed up when I voted for Biden over Trump.
Carmichael: I don’t think so. Let me say this. I don’t think there are any people. I’d say there are virtually no people who voted for Trump who said, boy, I made a mistake. Biden is doing a great job. And so when you get into the midterms, as more time passes, and we see more of this just having money in wheel barrels towards special interests out of Washington. And then we see the tax bill when it comes through. And we see all of the stuff that the Democrats are doing. I think that Trump will be able to speak very clearly and DeSantis and Pompeo will be very strong.
Leahy: Part of that team.
Listen to the full third hour here:
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Tune in weekdays from 5:00 – 8:00 a.m. to the Tennessee Star Report with Michael Patrick Leahy on Talk Radio 98.3 FM WLAC 1510. Listen online at iHeart Radio.
Photo “Xi Jinping” by Narendra Modi. CC BY 2.0.