72% question state's transparency
Tuesday, June 7, 2016 1:24 pm
By DEBORAH FISHER
Just how transparent is the state of Tennessee with its economic development programs?
In the eyes of Tennesseans, not very.
A new poll by icitizen and The Beacon Center of Tennessee measured opinions about the state's economic development activities. The Beacon Center favors stemming "corporate handouts" to specific companies in favor of lowering business taxes for everyone.
While the poll results show mixed opinions about favoring select companies with incentives, what's indisputable is that Tennesseans largely think the state is not transparent about them.
A whopping 72 percent agreed with the statement: "State government is not transparent with the incentives it provides to corporations."
That's not a number to ignore. When people think government is done in secret, they tend to get suspicious of what government is doing. Considering the importance of a good economy to Tennessee's well-being, could steps be taken to improve understanding of the state's programs, and their effectiveness?
Occasionally, we see lawmakers question the amount of secrecy involved in giving taxpayer money to companies. In a Senate Finance Committee meeting in March, for example, lawmakers were asked to approve a $30 million earmark for a company without knowing who it was, where it was or what the company would be doing.
State Finance Commissioner Larry Martin would only describe the project as "exciting." State Sen. Bill Ketron, R-Murfreesboro, pushed back, noting past projects that fell flat. He said he was uncomfortable voting on the basis of state officials saying, "Trust me, it's going to be good."
Still, lawmakers approved the money.
The law allows state government to keep secret economic development packages until after the deal is signed. News reporters cannot use the Tennessee Public Records Act to find out a proposed financial package to a company -- no matter how significant or large -- and lawmakers are equally impotent.
However, that's only one part of the transparency puzzle.
The other more important part is the ability of citizens and lawmakers to measure and understand the effectiveness of programs.
To its credit, the Tennessee Department of Economic and Community Development has a website called, Open ECD. On this website, you can look at lists of companies who have received grants and the amounts. You can also look at PDFs of reports submitted by companies on how many jobs have been created.
But the website, however well-intended, is woefully horrible in providing any information that allows people to understand how well the programs work.
For example, the PDFs of company reports on jobs do not have information about the grant amount, nor how many jobs were supposed to be created.
The state has touted that it writes "clawback" provisions into contracts. But there is no information on the clawback provisions for each company's grant, and no information about when or if the state has ever even used a clawback.
While some information about grants is publicly available, information about tax credits is not.
Because of rules protecting taxpayer information, the state Revenue Department which handles the credits cannot or will not reveal the value of the various credits used each year by businesses in Tennessee.
The executive director of the Fiscal Review Committee reported a key problem with this secrecy in a report in December: Lawmakers who propose legislation for new tax credits rely on committee staff to calculate estimates on how much the credits will cost in tax revenue. But the Fiscal Review Committee has no way to check whether its estimates are on target because the state revenue department will not give them any information about the use of the credits. Lawmakers have to make decisions about tax policy without any data.
This was also an issue when the Haslam administration refused to release a tax collection study that was used to support the rewrite of the tax code for business last year. A tax accountant sued on behalf of one of his clients to get the study, arguing essentially that the state's interpretation of the public records exemption did not make sense, but he lost at the trial level and on appeal.
Meanwhile, Tennessee has not been eager to require companies to provide information related to job creation in exchange for giving them money.
The last legislation, passed in 2014, required recipients of FastTrack grants or loans to report annually to the Department of Economic and Community Development the number of net new jobs produced. But requirements that companies disclose whether the jobs are full-time, part-time or temporary, and by wage group, was stripped from the final bill.
It's notable that the icitizen/Beacon poll gave us conflicting results on how Tennesseans feel about the state's economic development initiatives.
Nearly 70 percent did not think government should give corporate handouts to select businesses. But 59 percent favored the statement "It makes more sense for Tennessee to give more money to certain companies that show greater potential for job creation and growth."
If it's a little murky about what Tennesseans think is the right way for government to stimulate an economy, you might excuse them for the scarcity of information about the state's programs to begin with.
On that, I think everyone has agreed.
Deborah Fisher is executive director of Tennessee Coalition for Open Government, a nonprofit that promotes government transparency. You can follow her blog at www.tcog.info.