Business and Economy NewsTracker

TN Will Likely Keep Pledge to Grant VW $300M Incentives Package

Despite some Tennessee lawmakers displeasure with the growing influence of the United Auto Worker’s union at the Volkswagen plant in Chattanooga, the Legislature appears likely to approve a $300 million incentives package for the automaker.

A few members of the General Assembly’s Hamilton County legislative delegation grumbled to the Chattanooga Times Free Press editorial board last week that VW’s continued acceptance of the labor union was causing them some consternation about whether or not to approve the proposed incentives in this year’s legislative session.

Sen. Todd Gardenhire, a Chattanooga Republican, told TNReport Wednesday he was upset with the automaker and labor union for “not honoring” the outcome of the unionization vote last year. “They voted in a fair election not to be represented by UAW, and then they turn around and ignore that,” he said. But Gardenhire added that if a promise was made by the state’s governors, the Legislature would “honor that” because they didn’t want to “embarrass the state.”

Likewise, Senate Speaker Pro Tem Bo Watson said while the incentives could probably come up  during the greater budget discussion, the Volunteer State has “a long history of honoring its commitments, and none of us collectively are going to allow that not to happen.”

Additionally, House Majority Leader Gerald McCormick, R-Chattanooga, told reporters Wednesday that while he didn’t want the UAW to “slip in the back door because of a secret deal with Volkswagen,” he expected the Legislature to approve the incentives because “Tennessee will keep its promises.”

And despite the skepticism of Hamilton County legislators, the head of Volkswagen Group for the Americas said he is “very confident” the incentive package will be approved.

Gov. Bill Haslam said last week he understood the lawmakers unease, and he had “expressed” similar concerns as well, but he hoped the local lawmakers would support the incentives package because their votes — as the hometown gang — would be “very important” to its passage. The package was offered to the German company last summer to encourage expanded production at the Southeast Tennessee location. The automaker announced in July Chattanooga would be home to production lines for the new CrossBlue and Cross Coupe GTE.

“We’ll have those discussions about where we think Volkswagen is and why we think this is the right proposal for the state,” Haslam said.

Haslam added future efforts by Tennessee to recruit businesses could be harmed if the legislation fails. “We always put that as a caveat to the deal, that the Legislature has to approve, but historically, that has always happened in Tennessee,” he said.

Last February, the UAW failed an attempt to unionize the plant — 712 to 626 — leading them to file a complaint against several Tennessee politicians who suggested the unionization could interfere with the incentives. The UAW later dropped the case, citing the time it would have taken to settle.

Haslam said this Spring he hadn’t intended withholding incentives from the company as a threat — he was just making “a statement of reality.”

The UAW has since established a chapter at the plant, and currently claims to represent about 45 percent of VW employees, giving the labor group the right to meet with top managers every two weeks, as well as regular plant access. Because of the closeness of the labor vote Volkswagen adopted a new policy to allow multiple unions to represent workers, with representation rights depending on the number of employees the union speaks for.

A rival labor group — the American Council of Employees — has complained that VW is showing favor to the UAW. ACE has also been working to sign up members in what they call an effort to offer the plant’s employees a choice in representation.

The UAW announced in December that Chattanooga’s Local 42 had been invited to participate in an executive committee meeting of the Volkswagen Group Global Works Council in Germany this month. The ACE interim president has disputed the UAW’s numbers, and said a number of the signatures the autoworkers union claims are invalid.

The free-market Nashville-based Beacon Center of Tennessee awarded its 2014 Yuletide season “Lump of Coal” jointly to UAW and VW. The Beacon Center bestowed the “dubious distinction” on UAW and VW for having “seemingly worked together to bilk the taxpayers of the state out of hundreds of millions of dollars,” a Beacon Center blog post declared. The center also alleged that despite being “firmly rejected” by employees at the plant, “UAW has continued trying to bully its way into the plant, and VW has seemingly been more than happy to comply.”

Education NewsTracker

Contentious Charter School Issues Still Unresolved as Session Draws to Close

Many among the Tennessee Legislature’s Republican supermajority believe the more charter schools, the better — particularly in areas served by poorly performing traditional public schools. But things are not going smoothly in the waning days of the legislative session for a GOP-backed effort to circumvent local school boards resistant to that vision.

Legislation has been proposed to create a state-appointed board with the power to overrule local education agencies that deny new charter schools. The lower-chamber version of the charter “authorizer” legislation, House Bill 702 carried by Memphis Republican Mark White, has had relatively smooth sailing through the committee process. But its upper-chamber counterpart has run into snags of late.

Senate Bill 830 is sponsored by high-ranking Republican Dolores Gresham of Somerville. But the retired Marine Corps officer who chairs the Senate Education Committee has deferred action on the bill several times in recent days after members of the chamber’s Finance, Ways & Means Committee, including several of her GOP caucus cohorts, have voiced concerns about the bill.

Senate Speaker Pro Tem Bo Watson, who sits on the Finance Committee, told TNReport Tuesday that he is uncomfortable with the limited purview of the charter authorizer, which would only extend to urban counties that have struggling, so-called “priority” schools.

“We had testimony that establishing a panel was a best practice, but also making it state-wide was a best practice so I think if we’re going to be consistent…we ought to have one review process for it,” the Hixon Republican said.

Gresham is set to bring the measure up again Wednesday after a day’s worth of last minute tinkering. But it is unclear if she’ll be able to swing enough votes in her favor.

Meanwhile, another of Sen. Gresham’s charter-school bills passed the House without one of the amendments she fought to include in her version. The added language to Senate Bill 205 would allow charter schools to contract with for-profit companies to manage the schools, an option currently only open to non-profit organizations.

On the House floor Tuesday, Knoxville Republican Harry Brooks introduced his version of the legislation as originally drafted which would only serve to clean up or clarify existing charter-related rules. House Minority Leader Craig Fitzhugh of Ripley asked Brooks explicitly if the legislation dealt with for-profit operators and Brooks told him it did not.

The Senate is set to vote on Greshams bill, as amended, in coming days and, if passed, the two chambers would still have to hash out any differences, including those related to for-profit management.


State Monitoring of Dead Parolees Draws Lawmakers’ Ire

Legislators hammered corrections and parole officials Wednesday for running a system that allowed officers to waste time and tax dollars “monitoring” 82 dead criminal offenders. The revelation raises many questions, among them is how closely tabs are being kept on former inmates who’re actually still among the living, they said.

“Its troubling enough to find out that we have employees who are supervising dead people. But those dead people aren’t exactly a menace to society today,” said outgoing Sen. Kerry Roberts, R-Springfield, during the Government Operations joint subcommittee on Capitol Hill.

“So my greater concern is what about the employees who are claiming to supervise people who are a threat to society, who are a menace to society. How do we know how much of this is taking place, that we have people who are claiming to check on folks and they’re not actually doing that?” he said.

The issue, one of eight highlighted in a damning state report released this week, prompted lawmakers to set a one-year deadline for the state Department of Correction and the Board of Probation and Parole to fix the problems. Pending approval from the Legislature, both agencies will be under the microscope of auditors in a year with a report due back to the Legislature in 2014.

But state officials say the timeframe is not realistic.

“It would take Superman to do that, and we don’t have Superman. He’s a great commissioner, but he’s not Superman,” Charles Traughber, chairman of the Board of Probation and Parole, said of DOC Commissioner Derrick Schofield, whose department is taking over monitoring parolees. Previously, the probation board did that.

The findings were “egregious” and “of such a magnitude that they require an immediate and urgent response,” Speaker Pro Tempore Bo Watson, R-Hixson, said.

The state report found that Probation and Parole Board workers were still checking in on parolees who had died, some 19 years ago. The report by the Comptroller’s office also found that 80 percent of GPS-monitored offender alarms “appear unmonitored.”

Assistant Correction Commissioner Gary Tullock said the agency fired two parole officers responsible for much of the faulty reporting on dead offenders, but Schofield said other employees likely contributed to the high number of erroneous reports.

According to the Department of Correction, the state monitors 13,000 offenders on parole and 56,000 people on probation. The state also supervises 7,500 people in community correction, a program that keeps less violent offenders out of prisons.

Overall, that’s 3,175 more offenders under state observation this year than last year, though the number of parole officers has not increased, Tullock said.

However, Schofield said it’s too early to say whether he’ll ask the governor to add to his department’s yearly budget.

“The first thing we say is we’re short-staffed. If you look at and examine how we supervise and how we do things, there’s always opportunities to find resources. If we need those resources, we will present that to the governor,” he told reporters.

Featured News Tax and Budget Transparency and Elections

Retiring, Defeated Lawmakers on Taxpayer-Funded Getaway

Updated Aug. 7, 2012: Sen. Roy Herron called and said he had planned to attend the conference but decided against it due to a family emergency.

Six Tennessee legislators leaving the General Assembly this year are expected in Chicago this week on what could amount to a taxpayer-funded junket.

Four retiring legislators and two state reps who lost their bids for re-election in last week’s primary have given the state notice they plan to get reimbursed for attending the National Conference of State Legislatures annual summit in the Windy City that began Monday, a trip that could cost as much as than $2,500 in registration, airfare, hotel stay, per diem and cab rides.

They are Rep. Richard Montgomery, R-Sevierville, and Rep. Jeanne Richardson, D-Memphis, who lost their primaries, and retiring lawmakers Sen. Mike Faulk, R-Church Hill; Rep. Bill Harmon, D-Dunlap; Sen. Roy Herron, D-Dresden; and Rep. Jimmy Naifeh, D-Covington.

One of the General Assembly’s highest-ranking Republicans says he trusts that the departing lawmakers have good reasons behind their decisions to make the trip.

“I know it will be beneficial to the others who attend to get the benefit of their wisdom and their years of service,” said Senate Majority Leader Mark Norris, R-Collierville. “I think discretion is the better part of valor with these things, and obviously they’ve exercised their discretion and think it’s fine to go. I’m not passing judgment on it.”

Legislators are permitted to let taxpayers foot the bill for out-of-state legislative trips, complete with a per diem, travel and lodging expenses. Even outgoing lawmakers are entitled, said Connie Ridley, director of Tennessee’s office of Legislative Affairs.

“Members of the General Assembly serve as a legislator until the general election in November,” Ridley said in an email. “They are no longer eligible for compensation of any form the evening before the November general election.”

Richardson says she may have lost her primary election, but she still has legislative responsibilities to handle at the conference.

“I signed up because I am one of the representatives, there’s just a couple of us, who represent Tennessee on the Health Committee,” she said. “These are working committees where we share what we’ve done, and find out what other states have done and make policy recommendations for states. So, because I represent Tennessee on the health committee, I still need to come to the meeting.”

Attempts to reach Montgomery for comment were unsuccessful.

A handful of retiring lawmakers are also on the trip, including Naifeh and Faulk, according to their offices. Herron and Harmon’s offices did not respond to requests for comment.

Legislators can collect a $173 per diem each of the four days of the conference, for $692 total. Registration to the NCSL event ranges from $549 to $690, depending on when lawmakers registered for the conference online. Guests were encouraged to reserve rooms in downtown Chicago with rates ranging from $199 to $227 a night if locked in prior to Aug. 1. Lawmakers can also be reimbursed for airfare, which runs about $300 roundtrip, and cab rides, which average between $25 to $42 from the airport to the convention site.

If lawmakers decide against splitting hotels and cab fare, the cost to taxpayers could approach almost $2,500 for the four-day, three-night trip.

But no money has left the taxpayers’ pocket yet, Ridley said. Lawmakers will have to submit receipts to have their travel expenses paid for once they return, although the conference’s registration will be billed directly to the state.

While the practice is legal and learning how other state legislatures are tackling difficult policy issues is valuable, sending outgoing lawmakers on an out-of-town trip is still “questionable,” said Dick Williams, chairman of Tennessee Common Cause, a government accountability advocacy group.

“I have mixed feelings about the appropriateness of those going who will not be coming back, whether by the election or their own choice,” he said. “If they’re going to continue to do something in public life, they could make good public use of that.”

Here are the other 22 lawmakers slated to attend, according to the office of Legislative Administration:

House of Representatives

Rep. Vince Dean, R-East Ridge

Rep. John DeBerry, D-Memphis

Rep. Lois DeBerry, D-Memphis

Rep. Jeremy Faison, R-Cosby

House Minority Leader Craig Fitzhugh, D-Ripley

Rep. Sherry Jones, D-Nashville

Rep. Mark Pody, R-Lebanon

Rep. John Ragan, R-Oak Ridge

Rep. Bob Ramsey, R-Maryville

House Finance Committee Chairman Charles Sargent, R-Franklin

Rep. Johnny Shaw, D-Bolivar

Rep. Mike Sparks, R-Smyrna

Rep. Curry Todd, R-Collierville

Rep. Joe Towns, D-Memphis

Rep. Mike Turner, D-Old Hickory


Sen. Stacey Campfield, R-Knoxville

Sen. Ophelia Ford, D-Memphis

Sen. Thelma Harper, D-Nashville

Senate Minority Leader Jim Kyle, D-Memphis

Sen. Steve Sutherland, R-Morristown

Sen. Reginald Tate, D-Memphis

Sen. Bo Watson, R-Hixson

Business and Economy Featured News NewsTracker Transparency and Elections

Senate Shelves ECD Transparency Bill for Year

Gov. Bill Haslam’s administration is giving up on a plan to solicit more detailed information from companies receiving taxpayer-funded grants after hitting a snag in the Senate over which details should be made public.

Sen. Bo Watson, a high-ranking Republican who is carrying the measure, opted to shove the bill in a defunct subcommittee that is not expected to meet again this year. The move essentially kills the bill.

“The administration made the decision not to move forward,” said Watson of Hixson. “I don’t anticipate anything happening.”

The administration originally set out to collect and keep confidential information like budgets, financial plans and a list of owners from companies wanting FastTrack grants in exchange for building or expanding their businesses in Tennessee.

The move, SB2207, was intended to give the Department of Economic and Community Development more information to use when deciding whether to hand over taxpayer dollars to those companies.

But the measure was trip upped when lawmakers, including Senate Speaker Ron Ramsey, said information about who owns companies actually winning the grants should be made public. ECD has been working since February on some sort of compromise with no success, saying the department “felt there were concerns and questions about this bill that merited further discussion.”

“ECD will spend time over the next year working with stakeholders on the best approach to conducting due diligence of prospective projects in the most transparent way possible while maintaining Tennessee’s competitive advantage,” said Clint Brewer, the agency’s assistant commissioner of communications said in an email.

Business and Economy Featured News NewsTracker Transparency and Elections

House OKs Expansion of Business Grants

The Tennessee House of Representatives unanimously endorsed Gov. Bill Haslam’s plan to dramatically expand economic development grants Wednesday. But lawmakers are still uncertain if and how they’ll publicly identify the owners behind companies taking home those taxpayer dollars.

Department of Economic Development officials and legislative leaders are shy on details about out how they’ll require private businesses seeking state grants to reveal who owns their companies without scaring away organizations looking to open up shop in Tennessee.

“This is necessary information for the ECD to make good decisions, so we need to figure out a way to get this information. That’s why we keep pounding at it,” said the Senate sponsor of the bill, Bo Watson, a Republican from Hixon.

Lawmakers voted 96-0 to expand the state’s taxpayer-funded FastTrack development grant program to the tune of $80 million Wednesday, $10 million more than original estimates.

HB2344 would offer businesses grants or loans for expenses like “retrofitting, relocating equipment, purchasing equipment, building repairs and improvements, temporary office space or other temporary equipment related to relocation or expansion.”

All money would be funneled through local governments or their economic development branches to issue to companies. The FastTrack program already offers grants in the form of reimbursements for job training and infrastructure improvement, at a state tax-funded cost of about $38.5 million annually in recent years.

With the expansion, the Haslam administration wants to more thoroughly examine businesses seeking grants by requiring businesses to hand over internal records like cash flow reports and budgets, along with the names of the companies’ owners.

Lawmakers from both parties are OK with shielding most of that information from public view, saying it’s proprietary. Many are arguing, however, that the names of people who own companies accepting state money should be out in the open.

“Taxpayers have a right to know where that money’s being spent. I just think that’s a no-brainer,” said House Democratic Caucus Leader Mike Turner. “It makes you wonder who they’re trying to attract to come in here.”

The measure to add those reporting requirements but keep them private, HB2345, has idled on Capitol Hill since legislative leaders last month said business ownership shouldn’t be kept secret. Lawmakers have since remained silent on the progress of negotiations.

“Commissioner (Bill) Hagerty and the department’s legislative team continue to have productive conversations with leadership about the bill,” ECD spokesman Clint Brewer said in an emailed statement.

The Senate versions of both the expansion to the program and its reporting requirements are in committee.

Business and Economy Featured NewsTracker Tax and Budget Transparency and Elections

Senate Delays Economic Development Disclosure Bill

A legislative effort to prevent the public from seeing certain information state government wants to collect from businesses seeking millions in Tennessee taxpayer-financed handouts got bogged down Monday night amid concerns over the bill’s scope.

Lawmakers on the floor of the Tennessee Senate debated for about half an hour whether the Department of Economic and Community Development should require businesses to submit more information — like company ownership, financial statements and cash flow reports.

The sticking point arose over the bill’s assurances that the extra disclosure requirements wouldn’t be disclosed to the public.

“Quite frankly, it seems to me irresponsible,” said Sen. Roy Herron, D-Dresden, adding that the measure creates a “secret cloak” to shroud information that ought not be hidden.

“It’s hard for me to believe that we don’t know, that ECD doesn’t know — and that others who ask questions can’t know right now — who owns these companies when we’re proposing to give tax dollars to them,” Herron said.

The measure’s sponsor agreed Monday to delay the bill while the Haslam administration, which is pushing the legislation, attempts to address Herron’s chief complaint that the measure would keep secret the names of people who own businesses winning grants. “The idea that we’re hiding something that is currently public is misleading,” said Sen. Bo Watson, a Hixson Republican.

The company details, which are not currently collected, would be used for “due diligence” investigations by ECD as part of a process to award up to $70 million in FastTrack development grants outlined in the governor’s 2013 fiscal year budget plan, in addition to other tax incentives and government-funded inducements to private business.

The amount constitutes a dramatic expansion in the taxpayer-funded program for businesses. Since 2006, the state has allotted $38.5 million annually, on average, for the FastTrack program.

The measure has so far earned all yes votes in both House and Senate committees. It is up for a vote in the House Commerce Committee Tuesday and on the Senate floor again Thursday.

Business and Economy Environment and Natural Resources News Transparency and Elections

ECD ‘Due Diligence Bill’ Advances in Senate

Gov. Bill Haslam, who wants to expand taxpayer-funded grants to business, is also suggesting that extra information collected to pick the winners be kept hidden from public view.

“Due diligence” documents such as corporate financial statements, budgets, cash flow reports and ownership information would be reviewed by politicians and agency staff but would not be open under a measure, Senate Bill 2207, that advanced out of a Senate committee Tuesday on an 8-0 vote with little debate.

Haslam, a Republican, wants to pump $70 million into the Fast Track grant program which is used to entice companies like Amazon to locate in Tennessee in addition to tax incentives and tax credits. Under SB2207, the state would collect more information from applying businesses but share none of it with taxpayers.

“You have to recognize that as a private company, that they have a need to keep information private,” Sen. Bo Watson, a Hixson Republican and the bill’s co-prime sponsor, told TNReport.

Both Haslam and his predecessor, Democratic Gov. Phil Bredesen, have faced criticism for keeping lucrative state deals with corporations shrouded in secrecy. In some cases, it’s hard for the public to even know the final tally of incentives provided because of the privacy of tax information, though in the case of Volkswagen, the bill reached hundreds of millions of dollars for expenses like buying land and training employees to work for the car manufacturer.

The measure comes from a long list of bills Haslam wants to see passed this year, including one that would give the Department of Economic and Community Development more flexibility to offer Fast Track grants for high-impact relocations and expansions.

“Using hard dollars from the FastTrack program is more transparent than the tax incentive process, which is completely confidential under law,” Clint Brewer, an ECD spokesman, said via email. “The due diligence bill does not hide anything ECD is doing, it only protects private company finances.”

The “due diligence” business details, which lawmakers want to add as an exemption from open records laws, are additional bits of information Watson says will help the agency do its “homework.”

Under that legislation, the State Funding Board would be able to review insider details for Fast Track grants but the group — made up of the top five officers in the executive branch — will also be required to keep that information confidential.

ECD now decides which companies to invest in without that “due diligence” level of insider information. It now reviews and keeps proprietary information and any trade secrets close to the vest.

One government transparency advocate contends the documents Haslam is looking to keep out of the public eye are already protected under state law. But push comes to shove, the most important information that needs to be public are the final details of the arrangement: Who is getting how much money?

“Our concern was that language dealing with ownership could be construed to say that they didn’t have to say who they were giving grants to,” said Frank Gibson, director of the Tennessee Coalition for Open Government, who is not fighting the bill because the company name would still be public information on the final ECD contract, even if the owner’s name isn’t.

“Eventually people are able to find out who they are. Volkswagen LLC is still Volkswagen.”

Press Releases

Ramsey: State Senate Redistricting Map ‘Fair and Legal’

Press Release from the Office of Lt. Gov. Ron Ramsey:

(January 4, 2011, NASHVILLE) — Lt. Governor Ron Ramsey today announced the release of the Senate’s first-ever Republican-drawn redistricting map. The plan was put together by the Senate’s Working Group on Redistricting with the assistance of the Office of Legal Services and is now available at the General Assembly’s website.

“We were committed to drawing a fair and legal state senate map and that is exactly what we have done.” said Lt. Governor Ron Ramsey. “The map emphasizes regional integrity and adheres to state and federal laws as well as court precedent. I look forward to concluding the redistricting process swiftly and efficiently as soon as we go into session next week.”

This year’s redistricting has been the most open, interactive and transparent redistricting process in Tennessee history. By placing an unprecedented amount of information and data online for use by the general public, Lt. Governor Ramsey opened up the process to any Tennessean with access to a computer.

In addition to Lt. Governor Ramsey the Senate Working Group on redistricting included three regional coordinators: Majority Leader Mark Norris, Republican Caucus Chairman Bill Ketron and Speaker Pro Tempore Bo Watson.

This unprecedented release includes both a statewide map as well as regional and urban center breakout maps for public perusal. A comprehensive memorandum explaining the new map in detail can also be found at the website:

Education Featured News

Huffman: Teacher Feedback On Evaluations Sought

Tennessee’s education commissioner says it’s unjustified for critics of the new teacher evaluation system to suggest the department is favoring principals’ feedback over teachers’.

“I actually don’t think that’s fair. We’ve actually talked to thousands of teachers across the state,” Commissioner Kevin Huffman said Wednesday after speaking before a legislative committee about the evaluations.

“Just in the last two months, people on my staff have talked to nearly 2,000 teachers in different forums where they’ve had feedback from lots and lots of teachers,” he told TNReport.

The department began using a new evaluation system this school year that requires school officials to observe and grade teachers four times a year. The system also factors in student scores on standardized tests, which accounts for 35 percent of the teacher’s rating. This has frustrated some teachers in subjects like history and music, which are not tested, because they will be evaluated on scores they have no control over.

Teachers are rated on a scale from 1 to 5, and persistently low scores can mean no tenure or be cause for dismissal.

Some teachers say they’ve been told it’s nearly impossible to score a 4 or 5 on their evaluation.

Huffman told lawmakers on Capitol Hill the department is likely to continue to tweak the system, but has so far decided that administrators should be able to lump two of those observations together in one sitting to save time.

The evaluations are based on a formula lawmakers approved in 2010 to qualify for $500 million in education funds from the federal Race to the Top grant.

“Often times, very good ideas in theory don’t work out in their execution and implementation,” Sen. Bo Watson, R-Hixson, chairman of the Government Operations Committee, said.

“It appears to me that we’ve addressed some of the concerns the principals had, and you said you’re going to tweak this, but if we can make it a better system, and not so burdensome on teachers and let teachers teach, I think we’ll be better off in the long run,” Democratic Caucus Chairman Mike Turner, D-Old Hickory, told the committee.

Senate Education Chairwoman Dolores Gresham, R-Somerville, said in a news release Wednesday work on other fronts, such as asking the state to let Tennessee opt out of the federal No Child Left Behind standards, prove the DOE is “actively listening to advice and working to find solutions to ensure fairness in how our education system is evaluated under the federal law.”

“There never will be a perfect evaluation system,” Huffman countered to lawmakers. “If we try to aspire to have a perfect evaluation system, we will never get there.”