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Tennessee Offers $222,000 To Create One Job

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Tennessee Offers $222,000 To Create One Job

By Phil Williams. CREATED Apr 28, 2014

NASHVILLE, Tenn. -- How much should taxpayers pay a big corporation to create a single job?

An exclusive NewsChannel 5 investigation discovered that secret deals cut by politicians could cost more than you ever imagined.

Take, for example, Tennessee Gov. Bill Haslam's secret $300 million offer to Volkswagen.

Confidential documents leaked to NewsChannel 5 Investigates -- for what was called "Project Trinity" -- revealed the Haslam's administration's offer to help Volkswagen expand its Chattanooga plant.

In exchange for $300 million in state incentives, the automaker would be expected to create 1,350 new jobs.

We did the math: $300 million divided by 1,350 jobs.

"$222,000 to create a single job?" exclaimed Nashville Tea Party head Ben Cunningham.

"I think to most people when you tell them that the state of Tennessee, on their behalf, is giving away $222,000 -- it's wrong."

Haslam told NewsChannel 5 on Friday that auto manufacturers create even more jobs as suppliers spring up around the plants, which helps the state's budget even more. A United Auto Workers organizer, who supports the Volkswagen incentives, recently said that those 1,350 VW jobs could create another 9,000 jobs.

"The state brings in revenue when companies decide to invest and grow and employ people," Haslam said.

Yet, taxpayers are never told exactly how much such deals are costing.

Earlier this year, NewsChannel 5 Investigates obtained another confidential proposal -- for what was called Project Neptune -- where the Haslam administration offered almost $600 million in incentives in 2011 in an unsuccessful effort to convince Sears to move its corporate headquarters to Tennessee.

The cost there -- nearly $100,000 per job.

Three months ago, the governor announced that gun maker Beretta would set up a plant in Tennessee, but the Haslam administration says full details of that that deal are still confidential.

"They are sitting somewhere in a room negotiating these deals in secret and the people who are paying for it, the citizens, are shut out of the process," Cunningham said. "That's the part about this that's so wrong."

In fact, our investigation discovered that, while parts of those deals are eventually made public, the amount that these big corporations collect in tax breaks is always kept secret.

In the case of the Volkswagen proposal, more than $200 million would be for so-called FastTrack grants and other payouts to help the company build a new production line. Just under $100 million would come in the form of tax credits.

According to the state, those FastTrack grants cost taxpayers a total of $63 million in 2012-13.

That same year, those sorts of corporate tax breaks cost the state $94 million.

In fact, Republican and Democratic lawmakers openly questioned this legislative session whether those sorts of deals could factor into the shortfall in corporate tax collections that left them unable to give state employees and teachers a pay raise.

"Our franchise and excise are down and we really don't know why," said Rep. Craig Fitzhugh, D-Ripley. "So it could, in fact, be some of those incentives we've given out earlier. May not be. But we just don't know as legislators."

Deborah Fisher, who heads the Tennessee Coalition for Open Government, argued that "citizens have a right to know the whole package that a company is getting."

Fisher said these sorts of deals actually may be good for taxpayers. But, because of all the secrecy, those taxpayers have no way to know.

"I think that it's fair that we're able to look at how much that is costing the state and weigh that against the payoff that we get in terms of jobs," she added.

Haslam said that, if the state does work out a deal with Volkswagen, the final numbers could end up being very different than that $300 million.

Still, the public may never know.

NewsChannel 5 Investigates has repeatedly offered officials in Haslam's Department of Economic and Community Development the chance to sit down on camera and tell their side. They have repeatedly refused. 

Back to NC5 Investigates: Tennessee's Secret Deals
NewsChannel 5 Investigates

Phil Williams

Phil Williams

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Phil Williams is chief investigative reporter for NewsChannel 5's nationally award-winning investigative team. His investigations have earned him journalism's highest honors.