Business and Economy NewsTracker

Norris Tweets Dig at Dems on Solyndra Setback

Everything under the sun seems to be open to squabbles over jobs between Republicans and Democrats in the Tennessee Legislature. Now it’s solar panels.

Senate Majority Leader Mark Norris tweeted Tuesday night, “Solyndra’s shadow as Dems plan to tour Bredesen’s solar farm.” Norris linked to a recent Nashville Business Journal article noting that solar businesses either seem to be starting up or fading away.

Solyndra, based in Fremont, Calif., specializes in rooftop solar power systems. The company received a loan of $535 million in 2009 as part of the federal stimulus package and has been lauded by the Obama administration as an example of the nation’s energy future.

But the company has shut down, laid off hundreds of workers and filed for Chapter 11 bankruptcy protection. The company also faces a federal investigation. The House Energy and Commerce oversight committee is scheduled to begin hearings on Solyndra on Wednesday, but Solyndra executives have postponed their appearance, citing the bankruptcy proceedings. A column posted Tuesday night on Politico called the Solyndra venture “corporate favoritism” and “Chicago-style deal-making.”

Norris picked up on the Solyndra news as a further dig at Democrats, who plan to make the West Tennessee Solar Farm with Haywood County Mayor Franklin Smith part of their jobs tour Sept. 19-24.

The Solar Farm is on the first day of the Democrats’ tour, right after a tour of the vacant West Tennessee megasite. The solar farm, near Interstate 40, is part of the Volunteer State Solar Initiative of former Gov. Phil Bredesen.

Norris responded to the Democrats’ jobs tour announcement early this month by calling it the “Obama Apology Tour.”

But in February, Republican Gov. Bill Haslam expressed his pleasure that the U.S. Department of Energy had cleared the path for the solar farm, citing Tennessee’s commitment to a clean energy future.

“It’s a tangible demonstration that jobs and investment in this fast-growing sector of our economy are welcome in Tennessee,” Haslam said in a formal statement at the time.

In the same announcement, Economic and Community Development Commissioner Bill Hagerty said, “We’ve seen billions of dollars in capital investment in the solar industry alone in Tennessee. Coupled with the investments we’re seeing in energy efficiency, sustainable transportation and other forms of clean energy, the clean energy sector has the potential to truly become a bright spot for Tennessee in terms of job growth.”

Haslam and U.S. Sen. Lamar Alexander recently visited another Bredesen-linked project, the ethanol-from-switchgrass process in Vonore, Tenn., after which both the governor and the senator expressed support for the business but limited interest in subsidies for it.

Press Releases

TNDP: Republicans Need to Get Real on Unemployment Issues

Press Release from the Democratic Party of Tennessee, Sept. 9, 2011:

1-in-10 hunting for jobs—Republican lawmaker says Tennessee ‘too easy’ on job seekers

NASHVILLE — Tennessee Democratic Party Chairman Chip Forrester called out Republican lawmakers Thursday for being “out of touch with reality” on growing the state economy and assisting Tennessee’s 300,000 job seekers.

“We don’t have a shortage of work ethic in Tennessee, we have a shortage of work. We have roads and bridges to fix, safe energy to harness, and schools to rebuild,” Forrester said. “Instead of playing politics and mocking people who have lost their jobs by no fault of their own, Republicans should want to work with Democrats in finding ways to make Tennessee work again for Tennesseans.”

In August, Wacker Chemie, a Germany-based company that former Gov. Phil Bredesen recruited to set up in Bradley County, reportedly accepted 10,000 applications for 130 positions.

Forrester’s statement comes after a comment made Thursday by Republican state Rep. Jimmy Matlock. Matlock said Tennessee’s 306,000 job seekers weren’t actually looking for work because they have no incentive to find a job.

“We’re making it too easy,” Matlock said in reference to the extension of jobless benefits for the long-term unemployed.

In Tennessee, the maximum unemployment insurance benefit is $1,100 a month or less. That’s at the poverty line.

“The truth is Tennesseans want to work, and Democrats won’t rest until every Tennessean who wants to work has a job,” Forrester said. “Irresponsible comments like the one from Mr. Matlock just reaffirm how out of touch with reality Republicans have become.”

On Wednesday Democratic members of the state House and Senate announced a six-day jobs tour across the state Sept. 19-24 to talk to business owners, local officials and the public about how to best grow jobs in Tennessee.

Senate Republican Leader Mark Norris accused his Democratic colleagues of using the tour for politics.

“That’s a rich accusation coming from Sen. Norris considering his party killed a dozen Democratic jobs bills this year and did absolutely nothing on their own to grow the economy,” Forrester said. “Sen. Norris and Gov. Bill Haslam are obviously waiting for Santa to leave jobs under the tree this Christmas.

“Republicans continue to sit on their hands and call it leadership,” Forrester said. “It’s past time Republicans stopped complaining about the government, and started focusing on running it well.”

FACTS: Plenty of work ethic, not enough work

  • In Bradley County, Wacker Chemie has received 10,000 applications and made 130 hires. [Chattanooga Times Free Press, 8/17/11]
  • In Knox County, 700 students attend a jobs fair at UT Knoxville [Daily Beacon, 8/26/11]
  • In Robertson County, 400 people turned out for a job fair [, 8/17/11]
  • In Hamilton County, received 4,300 applications in two days. [Memphis Business Journal, 5/18/11]
  • In Rutherford County, 800 people apply for teaching positions. [Daily News Journal, 5/15/11]
  • In Knox County, Jobs News’ drew more than 1,400 job seekers. [WVLT, 5/4/11]
  • In Tullahoma, 60 people applied for 10 jobs — at McDonalds. [Tullahoma News & Guardian, 4/28/11]
  • In Montgomery County, “thousands of people” attend a two-day job fair in Clarksville. [The Leaf-Chronicle, 4/28/11]
  • In Shelby County, more than 20,000 job-seekers applied over 14 days to work at a brewery that plans to hire 500 workers over the next five years. [The Memphis Commercial Appeal, 4/13/11]

Tennessee’s unemployment rate is 9.8%

That’s higher than the national average. 306,200 Tennesseans are still looking for jobs. [, 9/8/11]

RHETORIC: Tennessee Republicans eager to abandon and mock people who’ve lost their jobs.

Rep. Jimmy Matlock: “We’re making it too easy.” [Memphis Commercial Appeal, 9/8/11]

Rep. Glen Casada: “I would contend the answer to that is it’s up to individuals to help their family and their friends and neighbors who don’t have a job.” [Chattanooga Times Free Press, 5/20/11]

Rep. Tim Wirgau: “We got people who can’t find jobs, but we got more people who don’t look for jobs because we keep handing them money.” [Chattanooga Times Free Press, 5/20/11]

Press Releases

Dreyzehner Named New State Health Commissioner

Press Release from the Office of Governor Bill Haslam, Sept. 2, 2011:

Appointee brings broad experience as physician and public health practitioner to state government

NASHVILLE – Tennessee Gov. Bill Haslam today announced Dr. John Dreyzehner will join the administration to lead the Tennessee Department of Health. He will replace Susan Cooper, who after fulfilling her commitment to assist with the transition and the first legislative session has decided to pursue other opportunities.

“I am thankful Susan served the people of Tennessee as part of this administration,” Haslam said. “She is a passionate advocate for a healthier Tennessee, and we will continue to focus on initiatives that encourage our citizens to make positive choices to exercise and eat well. I have enjoyed working with her and wish her the best.”

“When I came to the state in 2005 from Vanderbilt University School of Nursing to develop the safety net, I had no idea that I would have the honor and privilege to serve as Commissioner of Health under two exceptional, health-focused governors, Bill Haslam and Phil Bredesen,” said Cooper, who has been commissioner since 2007. “I want to thank both governors for the opportunity to serve and their support of policies and programs that improve the health of Tennesseans.

“It is especially fulfilling to see that the hard work of the department, our partners and Tennesseans has resulted in remarkable and measurable gains in the health and quality of life of our residents,” Cooper continued. “It is infrequent that states see this level of improvement in such a short period of time. I am proud of and want to thank the employees of the department, our partners and all Tennesseans for making a commitment to better health. I wish Dr. Dreyzehner the best and will work with him to ensure a smooth transition.”

Dreyzehner, 48, currently serves as director of the Cumberland Plateau Health District in Southwest Virginia. During his nine years in that role, he also spent two years serving as acting director of the Lenowisco Health District. Dreyzehner began his medical career as a United States Air Force flight surgeon, and prior to returning to public service with the Virginia Department of Health, he practiced occupational medicine as director of the Blue Ridge Occupational Health Clinic in Lebanon, Va.

“I am pleased that John has agreed to join our team,” Haslam said. “He brings a wealth of experience to the position from his service in the Air Force to his work as a public health official in Southwest Virginia and Northeast Tennessee. I look forward to working with him and appreciate his willingness to serve the citizens of Tennessee.”

“I am honored and excited to be a part of Governor Haslam’s administration,” Dreyzehner said. “It has been my privilege to work with dedicated Tennessee Department of Health professionals for years in Northeast Tennessee. I know we have a lot of work to do in tackling the significant health challenges Tennesseans face, and I look forward to rolling up my sleeves and getting to work.”

Dreyzehner served the Air Force as Chief of Aeromedical Assessment in the Office of the Command Surgeon at Langley Air Force Base, Chief of Flight Medicine in the 1st Medical Group of the 1st Fighter Wing, and as flight surgeon for the 94th Fighter Squadron. In addition to his occupational medicine and public health practice, he has also practiced in the field of addiction medicine.

He currently serves on the Appalachian Regional Commission’s Health Policy Advisory Committee, as vice chair of the Southwest Virginia Health Authority, chairman of the board of One Care, Inc., chairman of the Mountain Empire Public Health Emergency Coordination Council, chair of the Virginia Tech Carilion School of Medicine Master of Public Health Advisory Committee and co-chair of the Appalachian Substance Abuse Coalition.

Dreyzehner graduated magna cum laude from the University of Illinois, Champaign-Urbana. He received his medical degree from the University of Illinois at Chicago and his master of public health degree at the University of Utah in Salt Lake City, where he completed his occupational medicine residency.

Dreyzehner is adjunct faculty at East Tennessee State University College of Public Health, founding faculty of the Healthy Appalachia Institute and visiting assistant professor at the University of Virginia. He is also a fellow of the American College of Occupational and Environmental Medicine.

He and his wife, Jana, a child psychiatrist, have two sons and live in Abingdon, Va.

Education NewsTracker

Who Wants to be an ‘Education Governor’?

Gov. Bill Haslam gives bipartisan high marks to Phil Bredesen and Lamar Alexander for their records as governors on education.

Haslam, a history buff, has been telling audiences recently that he has been reading about Tennessee’s past governors. He has made the point of how, going back to Austin Peay, who served from 1923-27, every governor has said he wanted to be the education governor.

But that puzzles Haslam because after all those education governors, the state still ranks in the 40s nationally in education.

Haslam hasn’t let on exactly what he has been reading, nor has he told audiences which governors he thought did a better job on education than others.

So Haslam was asked what he’s been reading and who stands out.

He didn’t say what he has read, but he offered up the names of Bredesen, a Democrat, and Alexander, a Republican, as achievers. Bredesen immediately preceded Haslam as governor, serving from 2003-2011. Alexander served as governor from 1979-87.

Haslam said this week he is impressed with governors who push standards the most, and that gives points to Bredesen.

“I think that’s one of the great things about Race to the Top. It was about raising standards,” Haslam said.

Bredesen used the special session on education in 2010 to nail down the state’s bid for federal Race to the Top funding for education reform. The state won $501 million, which is being put to work now in the state’s ongoing education reform plans.

Then there is Alexander.

“I think Lamar did a really good job of trying to tie teachers’ performance to student achievement,” Haslam said.

Alexander initiated a five-step career-ladder program for teachers that included merit pay.

Putting the choices in perspective, the reasoning lines up with Haslam’s own ideas in education reform.

“Those are kind of the two basics of what we’re doing now, raising the level of expectation and tying students’ performance to how we evaluate teachers,” Haslam said. “And those are ideas that have been out there awhile. Hopefully, they’re now fully incorporated in the mainstream.”

Haslam said he will continue to focus on education.

“I’ve looked and tried to figure out what has worked and what hasn’t. If you go back, you’ll see the governors who focus on how their legislation or initiatives impacted the classroom made the biggest difference,” Haslam said.

“The question is how do we get the very best people standing in front of the class, and how do we make it so more students raise their attainment level and their expectation level?”

Although elected on a platform that emphasized job growth, when Haslam spoke to a dinner breakfast last week, he said his time as governor would probably be evaluated most by whether he “moved the needle” on education in the state.

Business and Economy Tax and Budget Transparency and Elections

Haslam Promises Openness On Amazon

Gov. Bill Haslam insisted Friday he has not changed his position on negotiations with on the collection of sales taxes and said whatever agreement might be struck with the retail giant the people of Tennessee would be informed about it.

Meanwhile, former Commissioner of Revenue Charles Trost, on whose watch the original Amazon deal was made in Tennessee, declined to comment Friday on details of the state’s current arrangement with the company. Current commissioner Richard Roberts, whom Haslam said is leading the talks for his administration, declined to comment on any talks as well.

Haslam says he wants Amazon to collect sales taxes on its transactions in Tennessee in the future, and his administration is involved in talks with Amazon on how to settle the issue of whether the company should have to collect the tax.

But Haslam’s predecessor, Phil Bredesen, struck a deal last year before leaving office where Amazon would not have to collect sales taxes as the company established large distribution centers in Hamilton and Bradley counties, bringing more than 1,000 jobs to the state. Amazon has since announced the addition of a distribution center in Lebanon

Haslam has said he planned to honor the Bredesen agreement, which was handled with little transparency and has stirred interest among some legislators concerned about the erosion of the state’s sales tax base. Legislators from the Chattanooga area, home of the first two distribution centers, have generally supported the Bredesen deal because of the jobs it creates.

Negotiations between the Haslam administration and Amazon have raised questions on exactly what the arrangement might become and whether it represents a shift in the state’s policy.

“Nothing has changed from the state’s commitment at all,” Haslam said Friday. “We are in ongoing discussions with Amazon. Everybody knows that. We’d love to see them grow more. Number two, there is quite a bit of discussion in the Legislature about exactly how that should work out.

“I wouldn’t be being honest if I didn’t say I’d love for them (Amazon) to collect sales tax.”

The governor has said all along he would like to get the definition of the state’s long-term relationship with Amazon nailed down. He has also said there needs to be a national solution to the issue of online retailers collecting sales taxes, and Amazon officials have said they believe a national approach is best.

But given the continuation of talks with Amazon, the future of the state’s arrangement continues to be scrutinized.

Trost, a Nashville attorney who replaced Reagan Farr as commissioner of Revenue last Sept. 10, would not comment on details of the Bredesen deal.

“I really am not in a position where I can,” Trost said. “The taxpayer confidentiality rules have put me in a position where I just don’t even want to start down the road talking about it.”

Trost said he is not even in a position to confirm that the deal was struck while he was commissioner.

“What’s in the public record out there, if you looked at the timing on it, when I was in office, you can draw your own conclusions,” Trost said.

“It’s just not a topic I feel comfortable talking about to the press or anybody else. It’s just … I’ve thought about this … I’m no longer the commissioner. There is a new administration. There is a new commissioner. The issue is still in the public domain for discussion. I think my best policy is not to add myself to the discussion.”

The Amazon arrangement was made late in Bredesen’s time in office. Bredesen informed the incoming governor, Haslam, of the deal with the explanation that if Amazon were not given the break on tax collections, the company might have put its facility in Georgia.

“I have the utmost regard for Governor Haslam, Governor Bredesen, my successor as commissioner and my predecessor as commissioner,” Trost said. “There’s a new group dealing with these issues, and I’m just not going to get into it. That’s the only position I can take.”

Roberts had a similar response.

“I can tell you that the state statutes prohibit me from discussing any taxpayer, whether it be you or Billy Bob’s Bait Shop or an unnamed major Internet retailer,” Roberts said. “Just as a matter of policy we simply can’t comment on individual taxpayers.”

Roberts said he cannot confirm that the administration is talking to Amazon.

“Our policy here requires that we maintain confidentiality. The reason is we have to give any taxpayer the confidence that what they file with us and their dealings with us will not wind up in the public domain. Until the legislature changes that — and I also believe it’s the right policy — I just simply can’t confirm or deny,” Roberts said.

Sen. Andy Berke, D-Chattanooga, speaking to reporters Friday, picked up on the issue of discussing the talks.

“I can’t quite tell what the governor’s position on this is, but we are making a mistake by talking about our discussions with Amazon without having some kind of firm agreement with them,” Berke said.

“One of the rules of economic development over the last several years is that we don’t talk about ongoing discussion. Now, if there’s going to be an agreement, we should have an agreement with them before we start talking about it.”

Two lawmakers have filed legislation that would require Amazon to collect the sales tax. When one of the sponsors, Sen. Randy McNally, R-Oak Ridge, suggested a two-year grace period on collecting the tax might be an answer, Haslam said that would leave the arrangement uncertain.

Haslam said Friday he has not personally had any direct conversation with Amazon, with Roberts taking the lead.

“We’re going to honor our commitment to them, but we would love to figure out a way long-term for them to pay (collect) sales tax and to build an employee base here,” Haslam said.

The issue has become ticklish for the state since it is highly interested in increasing the number of jobs in Tennessee, but there is a concern that it creates a double standard that hurts other retailers who collect the sales tax.

An opinion from state Attorney General Robert Cooper said distribution centers, like the ones Amazon is constructing, would present enough physical presence to require the tax collection and that the legislation sponsored by McNally and Rep. Charles Sargent, R-Franklin, would be constitutionally defensible.

Lt. Gov. Ron Ramsey has expressed frustration that he cannot learn the specifics of the Amazon deal, and at one time Ramsey attempted to meet with Matt Kisber, commissioner of Economic and Community Development under Bredesen, about the arrangement. But Ramsey has said he never got his answers from Kisber.

Haslam was asked Friday if, when an arrangement with Amazon is reached, the public would be informed what it is.

“Sure,” Haslam said. “You bet. You bet.”

Haslam was also asked about the time frame for a deal.

“It’s too early to say that,” he said. “We’re in discussions with them. I’d love to have some sort of agreement with them where we all do that by the time the Legislature comes back (in January). Remember, in the context of all this, there’s quite a bit of controversy in the Legislature about how this should go forward. So it’s not solely an administration decision what happens here.

“We’d love to come to an agreement that works where the Legislature says, ‘OK, that’s the right approach for the state of Tennessee long-term,’ and Amazon says, ‘Great, we can live with that, and we will grow and expand in Tennessee.'”

A call Friday to the media office at Amazon’s corporate headquarters was not returned.

Haslam said he does not believe the attorney general’s opinion has changed the administration’s approach to the issue.

“Obviously, the Legislature is a major factor in what gets worked out with anything in the state of Tennessee. It’s not different with Amazon than any other item, and so I think Amazon is aware of that,” Haslam said.

“We’re continuing to have conversations. I’m not going back at all in what the state has told Amazon. I’d like to work out something where we took this issue off the table, and Amazon says, ‘Great, we can live with that,’ the state of Tennessee says, ‘Great, we can live with that, too,’ and we have a great relationship.”

Haslam said he did not believe the recent announcement of the distribution center in Lebanon changed the dynamics of the negotiations with Amazon, and he noted that the company has talked of even more distribution centers in the state. Haslam also pointed out that individuals who buy an item online are supposed to pay the tax regardless of the business’s status. is an independent, nonprofit news organization supported by generous donors like you!

Education Health Care NewsTracker

Dems’ Jackson Day Dinner to Commemorate Gov. McWherter

Maybe they will begin calling them “McWherter Day” dinners.

The Tennessee Democratic Party has announced that its state Jackson Day dinner in Nashville will be Oct. 1 and will celebrate the life of Gov. Ned Ray McWherter, who died this year on April 4.

Respect for McWherter and his place in the state party’s history since his death seem only to have grown among the Democrats, who are beginning to portray him as one of their most revered historical figures.

In a message to Democrats on the party’s official website, state party chairman Chip Forrester says, “As we work together to rebuild Tennessee and restore the American Dream for our children, our families and communities, we would do well by the next generation in fighting for the same values Gov. McWherter fought for: fairness, dignity and responsibility — for all.”

McWherter’s memorial service in Nashville drew former President Bill Clinton and Vice President Al Gore, as well as prominent Republicans, including three former Republican governors of the state and GOP icon former Sen. Howard Baker.

The Democratic Party’s website home page, in addition to a prominent announcement of the tribute, features photos of McWherter with figures as varied as Clinton, Gore, former Gov. Phil Bredesen and University of Tennessee women’s basketball coach Pat Summitt.

Republican Gov. Bill Haslam, who defeated McWherter’s son, Mike, in the gubernatorial race in 2010, took the highly unusual step in a campaign ad of referring to Ned McWherter and Bredesen, both Democrats, as among the state’s outstanding leaders.

Ned McWherter, from Dresden in Weakley County, was governor from 1987-95 after serving 14 years as speaker of the House. He was noted for his efforts at education reform, including a revamped funding mechanism for schools and annual school report cards in the state. McWherter also ushered in TennCare, a new system for Medicaid, which has since become a troubled, controversial experiment.

McWherter was honored with the unveiling of a statue on the town square in Dresden in October 2010.

The Democrats’ annual Jackson Day dinner is named for former President Andrew Jackson, considered one of the founders of the Democratic Party.

Business and Economy Tax and Budget Transparency and Elections

McNally Seeks Compromise on Amazon Deal

Sen. Randy McNally, R-Oak Ridge, chairman of the Senate Finance Committee, is suggesting allowing a two-year “grace period” on collecting Tennessee sales taxes as a possible compromise on the issue of the state’s arrangement with the Internet sales giant.

McNally still prefers his original proposal — forcing Amazon to collect sales taxes like other retailers in the state. A recent opinion by the state attorney general gives McNally what would appear a green light for his legislation, which is carried by Rep. Charles Sargent, R-Franklin, in the Tennessee House.

But McNally, recognizing the political obstacles of getting the legislation through, sees putting off the sales tax collections as a possible way to help solve the matter.

Lawmakers interested in making Amazon collect the taxes put their legislation on hold this year, pending Attorney General Bob Cooper’s opinion, which came down last week in their favor.

Amazon has become a complex issue for state government. Its two distribution centers being established in Hamilton and Bradley counties are seen as tremendous job creators at a time the state desperately needs them. Yet the arrangement that allows Amazon off the hook for collecting sales taxes has become an item that won’t go away, since it means forfeiting the revenue that could be derived from its sales and creates an uneven playing field with Amazon’s competitors.

McNally said he feels a strong responsibility to protect the state’s revenue stream. But the deal struck by the administration of former Gov. Phil Bredesen with Amazon has complicated the issue.

The Bredesen team decided it was more important to bring the jobs accompanying the two distribution centers to the state than to see the company go elsewhere, where the state would end up with nothing. Many members of the current Legislature, especially the contingent from the Chattanooga area, support the no-tax deal.

McNally told TNReport he knows the Haslam administration is negotiating some with Amazon, which has indicated it might bring even more distribution centers to the state, and that he believes the current administration will be forthcoming on whatever terms are negotiated.

“I’d like to see what the administration is able to negotiate,” McNally said Tuesday. “Given what’s happened, if they allowed them to be exempt from collecting the sales tax for a couple of years, I think some type of arrangement like that would be in the best interest of the state.”

McNally also said he believes a strong possibility could be a lawsuit brought by other retailers who do not get the same luxury as Amazon. The Haslam administration has said it wants to honor prior commitments made to the company.

The attorney general’s opinion bolstered the concept — at least from a legal standpoint — of forcing Amazon to collect the taxes. Cooper said the presence of distribution centers, which some have simply called warehouses, creates “nexus” under state law, meaning there is a substantive retail presence of Amazon in the state, even if it is not a conventional retail center. Amazon calls the facilities “fulfillment centers.”

Cooper also said legislation that would require the tax collections would be constitutionally defensible.

Under other circumstances, Cooper’s opinion might prompt lawmakers to proceed, and McNally and Sargent could still do so, if they choose. But McNally called that strategy an “uphill battle.”

“Amazon has lobbied pretty well on this issue,” he said.

Several lawmakers have expressed frustration in being unable to learn exactly what Amazon got from the Bredesen administration. Lt. Gov. Ron Ramsey had attempted to talk to Matt Kisber, the commissioner of Economic and Community Development under Bredesen, about what deals were made in the last weeks of the Bredesen administration. But when asked last month if he ever was able to have that conversation with Kisber, Ramsey said no.

McNally continues to express frustration.

“My concerns are, No. 1, (the deal) is a secret incentive nobody else knows about or gets,” McNally said. “I think the public at some point should have a right to know: What are the terms of some of these incentives that state and local government give companies to come in and build the facility?

“Second, it treats one out-of-state retailer with nexus different from other out-of-state retailers with nexus. Eventually, we could see a court case come down on that issue.

“Third, it erodes the tax base. We can invest a little into industries that come into the state, and Amazon has received a pretty good deal as far as local and county property taxes. It also received a jobs tax credit. This was sort of the Cadillac of deals.”

He sees long-term ramifications from such arrangements.

“I think, eventually, if we keep doing things like this, we would be in trouble as far as sales tax revenues in the state,” McNally said.

Tennessee is not alone in dealing with the Amazon dilemma. Several states have grappled with the issue, and South Carolina actually reversed course after sensing that Amazon would leave, granting the company the ability to operate without collecting sales taxes.

“Forever and ever not to have to collect sales taxes in the state, particularly when other retailers similarly situated have to, is just wrong,” McNally said.

Amazon does collect the tax in five other states — Kansas, Kentucky, New York, North Dakota and Washington — where it has offices or other physical presence. is a nonprofit news service supported by generous donors like you.

Business and Economy Featured Health Care News Tax and Budget Transparency and Elections

Bredesen Busy Traveling, Lecturing, Promoting Health Policy Book

Former Gov. Phil Bredesen remains zip-lippped about what’s in the state’s deal with, although he has plenty to say about what he’s been doing since leaving office, which is traveling the country making speeches, mostly about health care.

“I’m not retired. I’m not vegetating,” Bredesen said. “I’m very active and trying to figure out how I can best use the next few years.”

Bredesen was at a campaign event Saturday in support of Nashville Mayor Karl Dean, who is running for re-election.

Nashville is still home base for Bredesen, but since leaving office in January he has traveled to various locations, from Chicago to Florida to the West Coast, to speak. He has primarily talked about health care, including one joint appearance with former Florida Gov. Jeb Bush, but he has also spoken on the state’s experience recruiting international businesses like Volkswagen and Wacker Chemie.

One domestic business recruitment with Bredesen’s brand on it, however, remains a point of controversy in the state. Amazon is building two large distribution centers in and near Chattanooga. The Internet sales giant is making a $139 billion investment, offering 1,400 jobs and comes in with the agreement that it will operate without collecting sales taxes as a retail outlet would.

A couple of key lawmakers have cried foul, presenting legislation to force Amazon to collect the tax, but that effort has met resistance and even a threat from Amazon that it might pull out if forced to collect. Lawmakers have even asked the state’s attorney general to weigh in on their effort. The bill has been deferred to 2012.

Among lawmakers’ questions have been to what degree the agreement with Amazon has even been in writing.

“I’m just not commenting on stuff that’s going on like that right now,” Bredesen said. “We had an understanding with Amazon, and it was really Matt Kisber (former commissioner of Economic and Community Development) who did all the detail work on the thing.

“I think it was the right decision. I think the current governor thinks it was the right decision to get them here. I think they will be an important piece of the economy.”

The Bredesen administration made the deal after Bill Haslam was elected governor in November but before Bredesen left office. The most widely reported explanation for the arrangement has been that Bredesen told Haslam the state could either grant Amazon the ability to avoid collecting the tax or see the company go a few miles down the road and build its facility in Georgia. The same issue has played out in other states. Bredesen wanted the jobs in Tennessee, and Haslam has publicly said the state will honor the commitment.

Bredesen said there were compelling reasons for striking such a deal.

“Part of what appealed to me about Amazon was I worked real hard to get some of the knowledge-based jobs that require a college education, where you’ve got good salaries and so on,” Bredesen said. “A lot of the Amazon jobs are a little different from that. They’re working in a warehouse. We need those jobs, too.

“There are a lot of people in this state who just need a job with a good company with good benefits, and they’re not going to go back to college to do it.”

When asked last week where the attorney general is on the Amazon issue, Sharon Curtis-Flair, spokeswoman for Attorney General Robert Cooper, said, “We’re working on it,” but she offered no elaboration on a potential opinion or when it might come.

Bredesen said getting a well-respected company like Amazon to build in Tennessee at a time when jobs are hard to come by seemed like the right deal to make. He was asked about the precedent, however, of setting up that arrangement, since Amazon is already making overtures of building even more distribution centers in Nashville or Knoxville.

“I think the governor has got to figure that out,” Bredesen said. “But in the scheme of things, if an Amazon were to be located here, ultimately these tax issues are going to be solved by the Congress.”

Haslam has also said no single state should have to work out the issue of collecting sales taxes on online sales. The issue is complex. Amazon is based in Seattle. Company officials point to the commerce clause of the U.S. Constitution and say the existence of a “fulfillment center,” as Amazon is building, does not create substantial presence, known as nexus, to qualify as a point of sale.

“The two facilities happened on my watch, I think we made the right decision, I think the governor has backed that up, and how he treats the next two or three is up to Gov. Haslam,” Bredesen said.

As for the former governor’s travels, they’re the kind of speaking engagements one would normally expect after the publication last year of Bredesen’s book, Fresh Medicine — How to Fix Reform and Build a Sustainable Health Care System.

“I had a lot of requests to do that after the book came out in the fall, and you really can’t do it as a sitting governor,” Bredesen said. “You can’t take off and go to California for a few days and give speeches.”

He said the topic in such settings is beginning to move more toward the future of the health care system, rather than just reaction to the health care reform law. Bredesen’s book is due for a paperback version this fall.

“I’m up to my eyebrows in health care,” Bredesen said.

The event with Jeb Bush was a health care discussion held by the venture capital group Health Evolution Partners, where they had a “D” and “R” program, with Bredesen the “D” as a Democrat and Bush the “R” as a Republican.

Bredesen said he has put the notion of trying to serve at the federal level on health care policy on the shelf, adding that when it came up it was probably given more attention than it deserved. He also said Saturday he has no intention of running for the Senate. Bredesen was at one time considered a candidate to be President Barack Obama’s secretary of Health and Human Services, which ultimately went to Kathleen Sebelius, a former governor of Kansas.

So for now, Bredesen is doing the speech-making tour and deciding what’s next. Bredesen was mayor of Nashville for two terms from 1991-99 and governor for two terms from 2003-2011.

“When I left the mayor’s office, after I left on Saturday, on Monday morning I was setting up my desk in a new office,” he said. “I’ve said this time, don’t do that, when you’ve got one more good career in you. Get a little space. Get some of these speeches done you wanted to do. Do a little writing, and let things gel a little bit.”

Bredesen said former first lady Andrea Conte now “enjoys being out of the line of fire,” and she’s doing a lot of the same things as her husband is.

“She’s been out and active and around doing different things, giving talks to different groups. She is spending serious time in the garden, and we’re having a great time right now,” said former governor Bredesen.

Mike Morrow is a correspondent for, a not-for-profit news organization supported by donors like you.

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No Sales Tax for Amazon in SC

South Carolina lawmakers have blinked in a stare-down with Internet sales giant over sales taxes, a development that could reverberate in Tennessee.

The House and Senate in South Carolina have voted to give Amazon a five-year exemption from collecting sales taxes, a move that comes after the company stopped a project in South Carolina because of the tax dispute.

Amazon has said South Carolina mistakenly thought the company was bluffing about stopping its activity in the state.

Amazon has reportedly made a similar threat to shut down new sites in Tennessee, where it is building distribution centers in Chattanooga and in Charleston in nearby Bradley County. The chairmen of the House and Senate finance committees in the Tennessee General Assembly — Sen. Randy McNally, R-Oak Ridge, and Rep. Charles Sargent, R-Franklin — proposed legislation this year aimed at requiring sales tax collections on the Internet sales, but both deferred the legislation until 2012.

Amazon, based in Seattle, has begun its Tennessee hiring process for its distribution centers, including a series of hiring events across the state this week.

Advocates for allowing Amazon to forgo sales tax collections are looking at the company’s presence for its value in creating jobs, which have been scarce in the troubled economy. Reports have put an estimate of 1,400 jobs on the two facilities in East Tennessee, after an investment by Amazon of $139 million.

The Tennessee State Funding Board on April 12 approved $4 million for infrastructure and $599,500 for job training for the Amazon site in Chattanooga. The same day the board approved $2.2 million in infrastructure and $102,500 in job training for Amazon in Charleston.

The original Amazon deals in Tennessee were struck during the administration of then-Gov. Phil Bredesen, although lawmakers have had difficulty finding out details of those agreements. Gov. Bill Haslam has said the state should honor its commitment to Amazon.

At issue is whether Amazon should have to collect the state sales tax of 7 percent along with the additional 2.5 percent local option sales tax, which combined make Tennessee’s sales tax among the highest in the nation.

Amazon says it is protected under the U.S. Constitution’s commerce clause from having to collect the Tennessee sales tax because its distribution centers do not constitute substantial presence, or “nexus” in the state. The company’s position is that it does not have a retail presence in Tennessee, that its “fulfillment centers” simply distribute the goods and do not conduct sales.

Some Tennessee lawmakers believe the centers do create sufficient nexus to require collection of the taxes, as do a vast number of brick-and-mortar retailers in the state. Lawmakers have requested an opinion on the issue from Tennessee Attorney General Robert Cooper.

A compromise was struck in the South Carolina legislature that provides a five-year exemption but says Amazon must include language in confirmation emails to customers on sales that the customer may owe a state tax on the transaction. At the same time, an Internet link must be provided the customer by Amazon to the South Carolina Department of Revenue. In addition, Amazon would have to inform customers of the yearly total of tax they owe on their Amazon purchases.

Amazon officials have reportedly said they will renew their construction on their South Carolina site when the legislative action becomes law.

In its most recent annual report to stockholders (pdf), Amazon said its fulfillment centers and customer service centers could result in greater tax obligations. The report notes that Supreme Court rulings have protected Amazon from sales tax collections.

“However, a number of states, as well as the U.S. Congress, have been considering or adopted initiatives that could limit or supersede the Supreme Court’s position regarding sales and use taxes on Internet sales,” the company report said.

“If these initiatives are successful, we could be required to collect sales and use taxes in additional states or change our business practices.”

Amazon has voiced its support for federal efforts to create a streamlined sales tax system that would address Internet sales tax issues, an approach Haslam has said is a better answer than having a single state tackle the matter. But questions have been raised about the willingness in Congress to enact such a measure, because it would clearly be viewed politically as a large tax increase on consumers.

Amazon has had a similar spat with Texas, where the company has yanked an expansion operation in a disagreement over collecting taxes. Texas has said it is owed $269 million. According to Site Selection magazine, which covers economic development issues, Amazon collects taxes in several states, including Kansas, Kentucky, New York, North Dakota and Washington. It does not collect sales taxes in Arizona, Indiana, Nevada, Pennsylvania and Virginia. The company has cut off arrangements in Rhode Island, North Carolina, Hawaii and Colorado, the magazine reported.

Amazon has more than 50 fulfillment centers.

Amazon has said it hopes to bring several fulfillment centers to Tennessee, which it says could mean an additional 1,500 jobs in Nashville and Knoxville. Should the state agree to allow Amazon to avoid collection of sales taxes at its two East Tennessee sites, the precedent could factor in on future arrangements under the Haslam administration.

Business and Economy News

Volkswagen Opens Chattanooga Plant

Volkswagen formally unveiled its automotive manufacturing plant Tuesday in Chattanooga. Company officials say the facility, built on one of the state’s taxpayer-financed economic development megasites, will boost its efforts to make a major impact on the national automotive market.

“The Chattanooga plant really does represent a very significant commitment toward our overall U.S. product strategy,” Jonathan Browning, president and CEO of Volkswagen Group of America Inc., told a huge room of people at an elaborate press conference at the plant. “This is a strategy we’ve talked about for some time. It’s a strategy that represents an investment of $4 billion into the U.S. market. It’s a key driver of our long-term success in the United States.”

Volkswagen is building the Passat, a midsize sedan, at the Chattanooga plant. Company officials said the car will get 43 miles per gallon on the highway and can provide nearly 800 miles on a single tank of gas. While Tuesday marked the grand opening, the plant has already assembled test cars and customer cars, and the first customer car rolled off the assembly line April 18.

Dignitaries at Tuesday’s event included Gov. Bill Haslam as well as the German ambassador to the United States, Klaus Scharioth. The plant currently has 1,700 workers and will have more than 2,000 employees when fully staffed, Frank Fischer, head of the Chattanooga plant, said.

The plant has been presented as a prime example of how the state can attract businesses with a huge capacity for hiring. Bill Hagerty, commissioner of the state Department of Economic and Community Development, said Tuesday he will travel next month to Germany to talk to Volkswagen officials and will visit other car manufacturers there for further recruitment.

Hagerty said recent reports that the State of Tennessee, under Haslam, will emphasize expansion of existing businesses rather than seeking to attract big businesses like Volkswagen, were somewhat misleading.

“It’s not a ‘rather than.’ It’s ‘in addition to,'” Hagerty said. “We actually are beefing up the department that does these large sort of home-run activities. We’ve still got four overseas offices.

“We are adding more resources at the local level on focusing on existing businesses, so it’s a resource addition on the recruitment side of our department altogether.”

When Fischer said Volkswagen hopes to expand its number of suppliers to the plant, Hagerty noticeably applauded.

Haslam was quick to give credit to former Gov. Phil Bredesen and Bredesen’s team of business recruiters for their work landing the Volkswagen plant that held its grand opening in Chattanooga on Tuesday.

“I must confess to you, I feel a little bit like someone who got to jump in and run the last mile of the marathon after other people had run the first 25,” Haslam said.

“I can’t help but acknowledge the contribution of my predecessor, Governor Bredesen, and his team who worked hard to make certain this happened.”

Haslam also gave credit to leaders in Chattanooga and Hamilton County for their work in attracting the German automaker to Tennessee. Deputy Gov. Claude Ramsey attended Tuesday’s opening and kept a low profile, but he was Hamilton County mayor before joining Haslam’s administration.

“Good things like this don’t just happen,” Haslam said. “You have to have people willing to stick out their necks and make the investment as local government both in buying the site and preparing it, and then the state to come in with additional infrastructure with the interchange back to the interstate.

“I get to be the lucky person who gets the baton at the last minute and runs across the finish line, but I do that in full knowledge that other people worked really, really hard to get us to this day.”

The Volkswagen plant represents a $1 billion investment by the company, and the plant sits on one of the state’s three megasites geared toward economic development.

Only a day before, Haslam presided over the first meeting of the West Tennessee megasite board, which hopes to attract a large business to a site in Haywood County. The state’s other megasite is in Montgomery County, where Hemlock Semiconductor operates a solar plant, another $1 billion investment that has already led to further expansion.

State and local taxpayers have contributed hundreds of millions of dollars in incentives toward luring Volkswagen to Tennessee, with one estimate in 2008 putting the figure above $500 million. The land at the Enterprise South site in Chattanooga was purchased for a reported $81 million, and a reported $43 million went for connections to highways and roads.

Volkswagen has a presence at 30 locations across the United States.

Browning said the Passat will play a major role for the company.

“The Passat produced here in Chattanooga will be a key enabler of our growth and will allow us to compete very much in the core of the midsize sedan segment here in the U.S., the largest single car segment in the U.S.,” Browning said.

“You could say the future for Volkswagen begins here in Chattanooga.”

The Passat is expected to be one of two high-volume vehicles the company makes in this country, the other being the Jetta.

The plant’s opening comes after Volkswagen announced in July 2008 that it was choosing Chattanooga from nearly 400 potential sites, with the aim of making 150,000 midsize sedans each year.

Construction of the plant began in February 2009. The first robots for making cars were in place by February 2010. The company is emphasizing attention to having an environmentally friendly plant. Among the techniques toward that end is collecting rainwater from the roof for use inside the plant cooling welding guns. Fischer said the plant will use 35 percent less energy than a standard automotive plant.

Much was made Tuesday of promises being kept, both by Volkswagen and by state and local governments. Much was also made of the potential for attracting suppliers for the plant, which can greatly enhance the economic impact of the facility.

“If you talk to their management team, to a person, they say Tennessee has delivered on what they said they would. Of course, we feel the same way,” Haslam said. “They said they would have a $1 billion plant and have it open in three years, and they did it.”

Haslam said his two daughters, Leigh and Annie, as well as daughter-in-law Hannah, have Volkswagens. When asked why there are so many Volkswagens in the family, Haslam said simply, “It’s what my daughters wanted.”

Browning said one of the things that stood out to Volkswagen officials has been the enthusiasm and attitude of the local people, whether they were public officials or residents. He explained that last September when Volkswagen was launching a new Jetta and had 650-700 Jettas in Atlanta for a dealers’ meeting, the company wanted the dealers to see the Chattanooga plant. Dealers drove the Jettas from Atlanta to Chattanooga. A local radio station picked up on it, and it led to a reaction.

“Spontaneously, local residents came out, standing on bridges on overpasses over the highway with ‘Welcome Volkswagen’ signs, showing a true sense of enthusiasm about Volkswagen coming to the local area,” Browning said. “That’s a perfect example, not just from the official level but also the individual level. The community is very enthusiastic about Volkswagen coming to the area.”

Ramsey said the plant is a success story.

“It just tells me the right things are happening,” Ramsey said. “It can happen again. It just takes time and patience.

“It means the future is very bright here.”