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‘Extenuating Situations’ Call for Expanding Government Grants to Businesses: Haslam

Areas suffering high unemployment or infrastructural exigencies can legitimately require taxpayer-financed payments and incentives to entice companies to locate there, Tennessee’s governor said Thursday.

Gov. Bill Haslam Thursday afternoon explained his reasoning for a push to expand the use of taxpayer-funded cash grants given to businesses through the state’s FastTrack program.

Since 2006 the state has allotted an average of $38.5 million annually to the FastTrack. The governor’s 2013 fiscal year budget plan outlines development grants that would award up to $70 million through the program.

“Right now, with cash grants in Tennessee, you can spend them on two things, you can spend them on infrastructure or training,” he told TNReport after speaking to the Tennessee Hospital Association in Nashville Thursday.

“What we’ve said is in some extenuating situations – maybe we’re going into an area with high unemployment, one of our rural counties with high unemployment – we would like to use those grants for other things as well. For employee relocation costs and some things that currently can’t be covered by infrastructure or training grants.”

The governor’s administration also sought to clarify some apparent confusion about what the bill would change about the current program.

“The administration’s legislation on cash grants expands the current FastTrack program,” Haslam spokesman Dave Smith said in a statement emailed to TNReport. “So just like the current FastTrack program, these would not be direct payments to companies, but the reimbursements would go through local Industrial Development Boards as is the current process.”

Haslam said his preference for cash grants, as opposed to tax credits, is grounded in transparency.

“The reason for cash grants rather than tax credits is it’s much more transparent. Cash grants have to be approved by the funding board – tax credits don’t,” he said. “If I’m in the media business, I would prefer cash grants to tax credits because everyone knows here’s exactly what you’re spending and here’s where it’s going, which is not the situation you have when you go to tax credits.”

The Haslam administration is also pressing the Legislature for passage of SB2206, a measure that’s encountered bipartisan apprehension over the past several weeks. Skeptics are uncomfortable that it grants government the power to keep secret information it would begin collecting about individual ownership interests in companies seeking millions in taxpayer-financed grants and incentives.

Earlier in the day, during his weekly press conference, Lt. Gov. Ron Ramsey expressed a certain amount of discomfort about expanding FastTrack’s scope. He said he likes the way the program currently works. Asked if that contradicts Republicans’ stated preference for free-market approaches, Ramsey said he views the current program as “doing for businesses what they can’t do themselves.”

“If a new company is coming in, we ought to put in the infrastructure, we need to build the roads, we need to put in the sewer lines, we need to make sure the gas line is there and the utilities,” he said. “That is a perfect example of what government is supposed to be doing as opposed to just giving arbitrary tax breaks that sometimes are immeasurable [and] go on for decades.”

With regards to his feelings on Haslam’s planned expansion of the program, Ramsey had less to say.

“I still like the utilities and infrastructure,” he said. “We’re talking about that bill.”

When reporters pressed him about what seemed like opposition to the governor’s bill, Ramsey denied the charge. When a reporter asked him if he hadn’t come real close to opposition, he laughed.

“I didn’t say that,” he said. “I’m pretty good at coming real close.”

Andrea Zelinski contributed to this report.

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