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Ramsey Seeks Details Of Taxpayer-Funded Economic Incentives

Officials in the administration of Gov. Bill Haslam have tried not to point fingers or publicly second-guess actions by former Gov. Phil Bredesen’s team involving major business relocations.

But Lt. Gov. Ron Ramsey appears willing to ask tough questions about the deals sealed by Bredesen’s job recruitment officials, saying lawmakers have been left clueless about details on state deals that came late in Bredesen’s time in office.

Ramsey is wondering not only what is in those deals but asking exactly who made them and suggesting that more people — like himself — need to be part of the approval process since the Legislature has to OK the state money involved.

Ramsey has seized upon statistics provided by the current Department of Economic and Community Development that show only a small fraction of new jobs in the state in recent years has come through relocations.

Such relocation deals were hallmarks of Bredesen’s administration, where high-profile agreements like the arrivals of Volkswagen, Hemlock Semiconductor and Wacker Chemie were hailed with headlines that Tennessee was the place to be for major businesses looking for new homes.

But Ramsey is raising questions about deals that came later, involving Electrolux in Memphis and in Hamilton and Bradley counties.

Haslam has said the state is still pursuing relocations by big companies but that the focus is shifting to expanding businesses already here because that’s where real job growth is.

But if Haslam is reluctant to publicly question the deals made by his predecessor, Ramsey appears to be a willing volunteer. Ramsey, R-Blountville, has said he is “elated” that the Haslam administration is taking a different course on job growth.

Ramsey contacted Matt Kisber, Bredesen’s commissioner of Economic and Community Development, and scheduled a meeting to discuss deals involving the kitchen appliance maker Electrolux and distribution centers by Internet sales giant Amazon.

Kisber canceled, and Ramsey speculated that Kisber shied away from potentially becoming part of a “media event,” since Ramsey had told reporters about the scheduled meeting. Ramsey still held hope this week that he and Kisber could talk.

The issue raises matters of transparency in government. Business relocation negotiations notoriously involve tight lips. The issue has even crept into the local level. One bill considered by the Legislature this year would give a local government authority to designate negotiations as proprietary information.

When the Haslam administration presented its jobs plan last week, the presentation included two pie charts, taken from statistics in the last three quarters of 2009 and the first quarter of 2010, showing that the vast majority of new jobs in Tennessee were created by existing businesses, not relocations.

One chart, accounting for all jobs in the state — those achieved with or without state help — shows only 1.2 percent came from relocations to Tennessee. Another chart showed jobs announced by ECD — jobs where the state had a hand in creating them — and 27 percent of those came through re-locations.

The Department of Economic and Community Development said 85.6 percent of all jobs in the state came from expansion of existing businesses, 13.2 percent from newly created businesses, leaving only the 1.2 percent in re-locations.

Haslam said his interest is in results.

“You look and see: Where are the new jobs coming from? And 98 percent are coming from existing businesses in Tennessee,” Haslam said last week.

“We’re not going to quit recruiting outside our borders, but we are going to make certain we put the right focus on energy and dollars where the results are. So it’s not a question of saying we’re going to quit welcoming people in. Just the opposite. But we are going to focus on where the results are.”

Ramsey climbed aboard his war horse last week, telling reporters, “I think we’re going to look very closely at things that happened in the last month of the Bredesen administration, as they handed out $92 million, more like $100 million, to Electrolux. Apparently that’s in writing. We’ll have to honor it. But that’s pretty easy for a governor who knows he is leaving office in a month to do.

“The whole Amazon tax issue, that they’re not paying sales tax, I just don’t think that’s something that should ever have been agreed to. Apparently, it’s agreed to. We’ll honor it. I think all those types of programs in the future are going to be looked at very closely before we do it again.”

Ramsey said he wanted to make sure businesses are held accountable for their side of the deals.

“I am absolutely elated that our Department of Economic and Community Development now will be concentrating on trying to help existing employers here in the state of Tennessee, most of them homegrown businesses,” Ramsey said.

“They grow businesses at three, five, 10 employees at a time. That is where you grow jobs. They’re going to be concentrating on that. I’m excited about that.”

Haslam has been relatively quiet on the Electrolux and Amazon deals. The governor has said the state should honor a previous commitment to Electrolux, and he has said on Amazon, where the issue has been that Amazon is not collecting sales taxes, that the matter needs to be resolved nationally and can’t be handled by only one state.

But Ramsey has expressed concern that the Electrolux and Amazon agreements appear to be “cloaked in secrecy.”

“I just want to try to figure out exactly what we have promised some of these companies because, keep in mind, the Legislature is the ones that have to vote on these appropriations,” Ramsey said.

“I think it is legitimate for us to find out what was promised, and when, and we’re still having a very, very, very tough time getting to the bottom of this.”

The House on Monday approved $106 million in bonds on a 91-2 vote, with most of the financing devoted to Electrolux.

Ramsey said Sen. Randy McNally, chairman of the Senate Finance Ways and Means Committee, and members of the House have also been asking questions about the Electrolux and Amazon agreements. Ramsey said he did not know which state officials approved the deals.

“Not me. That’s all I know,” he said.

Efforts this week by TNReport to reach Kisber were unsuccessful.

“I do think there needs to be a larger group of people that agree to this type of policy,” Ramsey said. “It needs to be a combination of the executive branch and the legislative branch.”

Ramsey said he didn’t remember that anything was kept secret about the Volkswagen deal, where the car maker made a $1 billion investment in a plant in Hamilton County, or the Hemlock Semiconductor deal, which involved a $1 billion investment in Montgomery County, or the Wacker Chemie deal in Bradley County, which also carried a $1 billion investment.

“Yet it seems to be that the deals that were made in the waning moments of the last administration are cloaked in secrecy,” Ramsey said.

He hasn’t even learned much from the Haslam team. Ramsey said he asked Haslam and new ECD Commissioner Bill Hagerty if they had actually talked to the Bredesen people about the matter.

“The answer is no, apparently,” Ramsey said.

Kisber and former Department of Revenue commissioner Reagan Farr together launched Silicon Ranch Corp., a green energy company, when they left state government. Bredesen is listed as chairman of Silicon Ranch and is featured atop Kisber and Farr on the leadership page of the business’s Web site.

Ramsey said there should at least be agreements in writing on Electrolux and Amazon.

“I have not seen anything in writing on either one of those deals,” Ramsey said. “That’s all I’m asking for, some kind of full disclosure, and if it’s something that needs to be kept confidential for business recruitment reasons then I’m more than happy to keep it confidential. Yet at the same time I want to make sure we as a Legislature — at least some members of the Legislature — know the details of some of these meetings.

“The one thing that I’d have to say is it makes you wonder if anything was in writing, if nothing has been presented in writing.”

Legislation sponsored by Memphis lawmakers and considered this week would authorize a local government, with the agreement of the local government’s attorney, to designate records as proprietary information, further preventing details of deals from becoming public.

The legislation, HB1774, would allow a local legislative body to determine that information should not be released because of its “sensitive nature” and that it should be considered confidential for five years. Only after that period would it become public record and open for inspection.

The City of Memphis has posted on its website the Electrolux deal, including a section on confidentiality. That agreement, in Section 12.5, which appears on Page 25 of the document, says:

“Each Public Authority understands the importance to itself and the Company of keeping details concerning the transactions contemplated hereby strictly confidential.

“Accordingly, each Public Authority acknowledges that, subject to all applicable laws which require disclosure of public records, all confidential, proprietary and trade secret information of the Company which has been delivered or otherwise made available to the Public Authorities, including the terms of this Agreement, is subject to the Confidentiality Agreements and may not othewise be disclosed to any third-party except in accordance with such respective agreement or as mandated by applicable law.

“Subject to applicable law, each Public Authority hereby agrees to redact any information in this Agreement which the Company deems, in its sole and absolute discretion, proprietary. The State hereby agrees that it will not publish any of the Letter Rulings issued in connection with this Agreement.”

The document further says that no press releases or other public disclosure about the transaction can be issued by any public authority without approval of the company.