by Jon Styf
Tennessee has spent more than $81 million on its Site Development Grant program to help pay to get rural industrial sites prepared for businesses since the program began in 2016.
While the Tennessee Department of Economic and Community Development recently lauded the spending in promotional materials on the impact of that spending, experts don’t agree that the funding was well-spent.
The grants are separated from TNECD’s select certified site program, where the state buys property and prepares it for business. The state did that with the West Tennessee Megasite outside of Memphis where Ford will build its $5.6 billion Blue Oval City following nearly $1 billion in additional state incentives.
“This is an extremely expensive way of doing rural economic development,” said John Mozena, President of The Center for Economic Accountability. “They claim 6,342 jobs created by the program. Tennessee has 3.3 million people in its workforce, which means the state spent $81 million to influence jobs for two tenths of a percentage point of its population. If TNECD spent that much money for every job in the state, it would cost $42 billion and take up the entire state budget.”
Having the state spend money on site development is often an additional incentive that is not included when the state approves deals for businesses, like the $884 million approved for Ford.
Since the site grants began, Tennessee has handed out 136 grants for a total $54 million in 66 counties. The state then says it committed $27.7 million in “leverage” as 20 projects have moved to sites that received grants.
“The big barrier to getting industrial firms to locate in rural areas isn’t a lack of prepared sites,” Mozena said. “Rather, it’s a lack of prepared workforce. Employers regularly say that the single most important factor in their site selection decision is the availability and cost of skilled workers. That’s a challenge in rural areas, because a low population and small workforce is what makes a community ‘rural’ in the first place. If there was a big workforce, it wouldn’t be a rural community.”
Tennessee spent $7.7 million on the program in 2016, $10.3 million in 2017, $14.4 million in 2018 and $17.3 million in 2019.
The spending decreased significantly in 2020 as the COVID-19 pandemic hit at $4.1 million and then ramped up to $15.9 million in 2021 and $11.6 million in 2022.
Large incentives for businesses have continued to increase in size and frequency across the country and economists have shown that they lead to political gain while the economic benefits of the spending don’t match the cost.
“Rather than shoveling tens of millions of dollars out the door to try to attract that one big project, state policymakers should instead be finding ways to make it easier for Tennesseans in rural areas to do things like small-scale entrepreneurship, informal working relationships, part-time and seasonal work, mixed-use properties, artisanal food production and other long-time hallmarks of rural economies,” Mozena said. “People talk a lot about the ‘gig economy’ but rural folks figured out a long time ago how to build economic resiliency through a web of formal and informal jobs, businesses, seasonal gigs, part-time work, helping out friends, off-the-books businesses and other things that increasingly don’t play well with the modern regulatory and administrative state.”
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Jon Styf is an award-winning editor and reporter of The Center Square who has worked in Illinois, Texas, Wisconsin, Florida and Michigan in local newsrooms over the past 20 years, working for Shaw Media, Hearst and several other companies.
Photo “Construction Workers” by 652234.
3 Thoughts to “Tennessee Spent $81 Million on Site Development Grants Since 2016”
These businesses should be paying us for the opportunity to work in TN. These grants are very suspicious and it appears as if they may be a financial windfall for others at the tax payer expense.
Randy – well said.
I supposed that the only way to end this nonsense is to vote in some true GOP conservatives thereby throwing out the RINOs that claim to be conservatives. That includes my rep and senator.
Big incentives for deep pockets, the only ones left empty are the taxpayers.