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Business and Economy Tax and Budget Transparency and Elections

Amazon Announces Tennessee ‘Fulfillment Center’ 3.0

Upping the stakes and adding drama to the Amazon.com tax-collection dilemma in Tennessee, the company announced plans Thursday for a 500,000-square-foot distribution center in Lebanon.

The company said the facility will create hundreds of full-time jobs and that it plans to open the site this fall.

There was no immediate announcement on whether Amazon would have the same arrangement with the state on sales tax collections with the addition of the Lebanon site as the company currently enjoys with sites in Hamilton and Bradley counties.

Amazon does not have to collect taxes on sales in the state, which has been an ongoing issue in the Legislature. Some prominent GOP lawmakers favor requiring the company to collect the tax. Several states face a similar quandary in dealing with the online sales giant.

The trade-off, begun with the administration of former Gov. Phil Bredesen, has been the number of jobs Amazon brings to the state at a time Tennessee is desperate for employment.

Gov. Bill Haslam has publicly backed the arrangements of the previous administration with Amazon, and he has said he believes Congress ultimately will have to settle the tax issue for states. Haslam told reporters Thursday his administration is interested in “jobs, period” and that Amazon had been working on the Lebanon site “for some time.” Amazon released a formal announcement about the site Thursday afternoon.

When asked Thursday afternoon for comment about Amazon, Yvette Martinez, a spokeswoman for the governor, replied by e-mail, “Hundreds of jobs for Middle Tennessee is great news.”

Rep. Linda Elam, R-Mt. Juliet, said the deal was a “wonderful” coup for Lebanon, but she said she did not know specifics about the sales tax arrangement.

“I would imagine it’s all under the same framework they agreed to previously,” Elam said. “I wasn’t involved in those talks.

“There are two ways to look at that. Are they all covered under the same deal, or do they have to be treated as they would have absent that agreement with the prior governor? On the other hand, you look at it and say because of that agreement with the prior governor they’re bringing thousands of jobs to three locations in Tennessee.”

Rep. Charles Sargent, R-Franklin, chairman of the House Finance Ways and Means Committee, the House sponsor of the legislation calling for Amazon to collect from customers, said Thursday he had been unaware that the announcement about Lebanon was coming.

“I’m glad to see companies want to locate here in Tennessee,” Sargent said. “I think it’s a great opportunity for people in Tennessee, anywhere in the state.”

When asked if he still planned to pursue efforts to force the company to collect the sales tax, Sargent reiterated his previous position.

“I’m going to get with the governor, Speaker (Beth) Harwell, Leader (Gerald) McCormick and see how they want to proceed on the bill, if they want to proceed, and where we’re going to head on that,” Sargent said.

“I don’t know what the incentive was to bring them to Wilson County, nor do I know what contract was signed on getting them there.”

Sargent said he knew Amazon was looking at one or two more locations in Tennessee, which has been broadly discussed for several weeks, but that he had not spoken with the governor or with legislators representing the Lebanon area on the issue.

State Attorney General Robert Cooper has issued an opinion that distribution centers like those in Amazon’s plans create nexus, meaning they represent enough physical presence in the state to warrant legislation forcing a company to collect the tax. Cooper’s opinion said the legislation by Sargent and Sen. Randy McNally, R-Oak Ridge, would be constitutionally defensible.

McNally, reached Thursday night, said it’s hard to comment on the specifics of the deal on the Lebanon site when Tennesseans still don’t know exactly what the original agreement was.

“Unfortunately, I nor the people of Tennessee know what the ‘deal’ is,” McNally said. “I guess it would depend on how it was written.

“It could be written that it just applies to the facilities in Bradley and Hamilton county, or it could be written generally that they would not consider the distribution center nexus, and that brings up some issues.”

McNally voiced concern about the erosion of the sales tax base and the issue of secrecy on the original deal.

“I think everybody’s glad to see the jobs come to Tennessee, but I think we need to certainly answer the questions about what the deal is and the fairness of the deal,” McNally said. “And are we treating one business one way and treating businesses that are in a similar situation differently?”

Paul Misener, vice president for Amazon Global Public Policy, who appeared before Tennessee legislators this year, referred to Haslam and legislators in an official press release from Amazon on Thursday.

“We’re grateful to Governor Haslam, Senator Beavers, Representative Elam, Mayor Craighhead, Mayor Hutto and other officials who have demonstrated their commitment to Amazon jobs and investment,” Misener said.

Those other officials are Sen. Mae Beavers, R-Mt. Juliet, Lebanon Mayor Philip Craighead and Wilson County Mayor Randall Hutto.

An attempt to reach Beavers on the announcement Thursday was unsuccessful, but during the legislative session this year, Beavers expressed concern about the tax policy on Amazon.

“I think we’ve got to be very cautious on giving all of these tax breaks to companies because ultimately the taxpayers in Tennessee end up paying for it,” Beavers said in May. “I’m not sure how many jobs we’re talking about, and that would have an impact on some things I think. We just keep giving company after company tax breaks. How long can we afford to do that?”

Craighead, the Lebanon mayor, expressed his gratitude to state officials for their role in landing the Amazon site and gave special credit to the Joint Economic Community Development Board of Wilson County and its executive director, G.C. Hixson, for work on the plan.

“They don’t get a lot of the credit, but they do 95 percent of the work,” Craighead said of the board.

Craighead said he was unaware of any of the terms discussed on sales tax collections.

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Press Releases

TN AG to Craigslist: Shut Down ‘Adult Services’

Press Release from the Office of Tennessee Attorney General Robert E. Cooper, Aug. 24, 2010:

Tennessee Attorney General Joins in Call on Cragslist to Eliminate Adult Services Section

Attorney General Bob Cooper today joined 16 other state attorneys general asking craigslist to immediately take down the Adult Services portion of the site due to continued allegations of rampant prostitution advertisements and growing public frustration.

The multi-state letter, to craigslist CEO Jim Buckmaster and founder Craig Newmark, contends that if craigslist does not adequately screen these ads it must stop accepting them altogether and shut down the Adult Services section.

“The increasingly sharp public criticism of craigslist’s Adult Services section reflects growing allegations that ads for prostitution—including ads trafficking children—are rampant on it,” Attorney General Cooper said. “The company should take immediate action to help end exploitation of the women and children victimized as a result of these ads.”

“Your much-touted ‘manual review’ of Adult Services ads has failed to yield any discernable reduction in obvious solicitations,” the letter says.

“We recognize that craigslist may lose considerable revenue generated by the Adult Services ads,” the attorneys general said. “No amount of money can justify the scourge of illegal prostitution, and the suffering of the woman and children who will continue to be victimized, in the market and trafficking provided by craigslist.”

Even following its 2008 public pledge that it would better police its own site, the attorneys general allege that craigslist remains a hot spot for blatant prostitution ads.

In July 2010, two girls who said that they were trafficked for sex through craigslist wrote an “open letter” to craigslist officials, pleading for the elimination of the Adult Services section. The girls’ poignant account told a horrific story of brutalization and assault suffered not just by them, but also by untold numbers of other children, the attorneys general said.

The attorneys general termed recent blog posts and public statements from Buckmaster and Newmark, including a CNN interview, “deeply troubling” because they seem to imply that victims, law enforcement officials and children’s advocates are at least partially to blame for these incidents due to their failure to provide craigslist with police reports, ad copy or links documenting these heinous crimes.

The attorneys general said this position fails to acknowledge that craigslist is the only party positioned to stop these ads before they are published. While the perpetrators may eventually be apprehended and brought to justice, the victims — assuming they survive — could carry the scars for life, the attorneys general said.

Anyone who has information regarding possible illegal abuses of the website should contact local law enforcement.

Anyone who has complaints with any business regarding unfair or deceptive conduct may contact the Tennessee Department of Commerce and Insurance (TDCI) Division of Consumer Affairs at 1-800-342-8385 or online at www.tn.gov/consumer/.

Anyone who has information regarding possible illegal abuses of the website should contact local
law enforcement.
Anyone who has complaints with any business regarding unfair or deceptive conduct may contact
the Tennessee Department of Commerce and Insurance (TDCI) Division of Consumer Affairs at 1-
800-342-8385 or online at www.tn.gov/consumer/.

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Press Releases

Ramsey to AG Cooper: Defend TN’s Rights

Press Release from Lt. Gov. Ron Ramsey, March 23, 2010:

(Nashville) – President Obama today signed a law triggering a massive government takeover of the nation’s health care system and Lt. Governor Ron Ramsey (R-Blountville) is again calling on Attorney General Bob Cooper to join his colleagues in at least 13 other states in legal action to stop implementation of the new law.

“The United States Constitution does not give the federal government the authority for this massive power grab that will reduce individual liberty and strangle state government finances,” Ramsey said. “Politicians in Washington may have temporarily lost their minds but we still have our sanity out here in the states and we need to take action to roll this law back.”

Late last year, Lt. Governor Ramsey asked Cooper to make preparations for protective legal action in the wake of the massive and unconstitutional health care bill passed by the United States Senate. The Attorney General deferred, opting to wait for passage by the United States House of Representatives.

“The job of the Attorney General is to defend Tennessee’s rights and so today I am calling on General Cooper to join 13 other attorneys general in the legal action that was filed today in Pensacola, Florida,” Ramsey said. The action was instigated in Pensacola under the direction of Florida’s attorney general and is also joined by a bipartisan group of AGs from South Carolina, Idaho, Texas, Nebraska, Michigan, Utah, Pennsylvania, Alabama, South Dakota, Washington, Colorado, and Louisiana.

In addition to the legal action, Ramsey is also urging his colleagues in the State House to pass the Health Care Freedom act scheduled to be heard tomorrow in the Industrial Impact subcommittee. Lt. Governor Ramsey will headline a press conference outside the Senate chamber before the vote to urge passage.

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Press Releases

Ramsey Asks AG Cooper to Research Options for Blocking Federal Health Care Legislation

Letter from Senate Speaker Ron Ramsey, R-Blountville, to Tennessee Attorney General Robert Cooper, 5 Jan. 2010:

Dear General Cooper:

As you are aware, on December 24th the United States Senate passed the Patient Protection and Affordable Care Act (H.R. 3590). As publicly acknowledged by Senate Majority Leader Harry Reid, the critical sixtieth vote in favor of passage was cast by Nebraska Senator Ben Nelson in exchange for inclusion of a provision within H.R. 3590 that requires the federal government to hold the State of Nebraska harmless from increased costs arising from the proposed Medicaid expansion. H.R. 3590 does not require the federal government to pick-up the full cost of the proposed expansion of Medicaid in any other state. The so-called “Nebraska Deal” clearly grants special benefits to a single state purely for the purpose of political expediency. Taxpayers in all other states will be required to annually pay millions of dollars to offset increased Medicaid costs. In defending the “Nebraska Deal,” no one has suggested any rational basis for favoring Nebraska taxpayers over taxpayers in Tennessee or any other state.

Please share your expertise and insights with regard to the following question:

Does any provision within the United States Constitution or other federal law provide a legal basis by which the State of Tennessee and other states could seek judicial intervention to block implementation of H.R. 3590 or, alternatively, to ensure that the “Nebraska Deal” is extended to the other states?

I have read your public comments wishing to defer the issue until legislation is finalized but the General Assembly must be proactive in dealing with what Governor Bredesen has called “the mother of all unfunded mandates.” I join Governor Bredesen in his outrage at the $1.2 billion price tag of this legislation in a year when we are preparing to cut up to $1.5 billion from the state budget.

While it is admirable that the Governor has contacted our federal officials on this issue, it is the duty of the state Attorney General to defend Tennessee against unconstitutional dictates from the federal government. All I ask is that you share your expertise and insights regarding the above question. We must begin to prepare for the harsh impact of either the House or Senate bill on Tennesseans. As Governor Bredesen has not ruled out asking that Tennessee join other states in challenging the proposed legislation, there is no reason to wait.

A bipartisan group of state elected officials have publicly stated that the “Nebraska Deal” is bad policy, excessive and are concerned about its implementation. It is time for the Attorney General’s office to offer preliminary legal options to the legislature as to how we may best protect Tennessee citizens from this unfair and quite possibly unconstitutional federal action.

If there are questions or if additional information is required, then please do not hesitate to contact me or my staff.

I look forward to discussing these matters with you in the near future.

Sincerely,

Lt. Governor Ron Ramsey