Tuesday, April 26, 2011

The strange, corrupt world of State "Economic development"

Thank you Chas Sisk and the Tennessean, a great reporting job. So-called "Economic development", as practiced by State and Local governments by both Republicans and Democrats is nothing more than legal bribery. And like most bribery it can only be transacted in secret....and apparently in this case without even a paper trail. It is absolutely outrageous.

Republican lawmakers are particularly concerned about whether economic development officials made agreements without informing the incoming administration and legislature, and whether the state has the ability to take back incentives if those companies do not follow through on their commitments.

Republicans have been raising questions about the Electrolux deal since it came to light earlier this year that the Bredesen administration had committed $97 million toward the company's $190 million plan to build a kitchen appliances plant in Memphis. The commitment involved state government directly underwriting the project, a departure from the Bredesen administration’s general stance against direct cash incentives to companies.

More recently, Republicans have been questioning the promises made to Amazon to convince it to build a distribution center near Chattanooga. They are particularly concerned about an agreement not to collect sales taxes from Amazon.

Kisber said that decision was a legal interpretation made by state revenue officials that the company was not doing sufficient business in Tennessee to create a taxable situation, not an incentive offered by the administration. "It's a question of whether we want the jobs or not," he said. "They have their business model, and they have their legal arguments as to whether we need to collect sales tax or not."