“A performance audit from the Tennessee Comptroller’s Office has revealed the State of Tennessee has only recovered $5.3 million of its initial $200 million investment in the TNInvestco program,” according to a statement dated November 10, 2016, under the name of Justin P. Wilson, Comptroller, referring to a performance audit report.
The statement from the Comptroller focused primarily on the TNInvestco program from the 60-page October 2016 “Performance Audit Report” produced by the state’s Comptroller’s office on Governor Haslam’s Department of Economic Development and Tennessee Technology Development Corporation.
The Report was conducted by the Comptroller’s Department of Audit, Division of State Audit, with the report dated October 25, 2016, signed by Director, Deborah V. Loveless, CPA and addressed to The Honorable Ron Ramsey, Speaker of the Senate; The Honorable Beth Harwell, Speaker of the House of Representatives; The Honorable Mike Bell, Chair, Senate Committee on Government Operations; The Honorable Jeremy Faison, Chair, House Committee on Government Operations; and, Members of the General Assembly; and The Honorable Randy Boyd, Commissioner, Department of Economic and Community Development.
At the time of the audit, the program was in in its sixth year, having been approved by the Tennessee legislature in 2009. With five years remaining for the program having an expiration of 2021, the audit report concludes, “the department will likely not receive a return nearing the $200 million tax credits.” (Page 7, Sheet 14 of 60)
The $5.3 million return on Tennessee taxpayers’ $200 million investment represents an anemic 2.6 percent recovery. An “investment” is made “with the hope that it will generate income or will appreciate in the future.” At this point, nothing near the original $200 million has been recovered, making it unlikely that the TNInvestco program will ever perform as an “investment.”
“Neither the timing nor the amount of the funds returned to the state is governed by statute, rule or policy,” the audit report states regarding the lack of accountability to Tennessee taxpayers.
Through his IMPROVE Act – Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy – Governor Haslam intends to give the largest incentive in the way of tax cuts, estimated at $113 million, to a small segment of Tennessee businesses.
The current version of the IMPROVE Act calls for Tennesseans to incur gas and diesel tax increases of 6 cents and 10 cents, respectively, phased in over a three year period plus increases in annual motor vehicle registration fees.
In total, the increased taxes and fees from Tennesseans will provide the state an estimated $384 million in additional revenues per year when fully implemented, to fund a road project list of 962 items for $10 billion.
An estimated $110 million in tax reduction will benefit individual Tennessee taxpayers through a reduction in the grocery tax from 5 to 4 percent. The Hall Income Tax phase-out, approved by the state legislature in 2016, has been incorporated in the IMPROVE Act as an additional tax cut.
The final paragraph in the statement is a quote in which Comptroller Justin P. Wilson cautioned, “We’re dealing with taxpayer money, and it doesn’t appear that the TNInvestco program has been successful. In the future, the administration and the General Assembly should consider the effect on taxpayers before even considering similar programs.”