April 24, 2008

Money for Volkswagen In Bredesen's Tax Plan?

Tennessee lawmakers (and the capitol hill press corps) should scrutinize the forthcoming "technical corrections" legislation from the state Department of Revenue, given today's news that Tennessee is one of three states where Volkswagen is considering building an auto assembly plant

A few years ago, the Bredesen administration used that year's "technical corrections" legislation as the vehicle in which it slipped a secret provision that gave Nissan $64 million of your tax dollars, without telling lawmakers. (In fact, it deliberately mislead lawmakers as to the real purpose and cost of a vague "correction" contained in the bill.)

This year's draft technical corrections legislation includes yet more changes to the state's economic development-oriented tax incentives, according to a summary circulated from the Waller Lansden law firm, which is monitoring the legislation for its impact on the business community.

According to the Waller Lansden summary, "The Bill continues the efforts of the administration to (i) expand and target incentives and (ii) provide more flexibility for combined activity of the Commissioners of Economic Development and Revenue to extend periods for business to qualify for certain incentives and credits. "

Volkswagen's decision may well come down to which state puts the best deal - i.e., the most money - on the table, says one analyst quoted in The Tennessean:

George Peterson, president of the marketing research firm AutoPacific in Tustin, Calif., said Michigan is a long shot largely because of the United Auto Workers union influence there. He also said money and tax incentives could play a big factor in where VW lands.

"It really comes down to how much the states want it and how much they're willing to pay," Peterson said, referring to potential tax incentives.