Chattanooga: State eyes stimulus to aid at plant site

Mr. Kisber said a stimulus package could be helpful in updating water and wastewater pipes as well as electrical stations at Enterprise South, where Volkswagen plans to start rolling out vehicles in 2011.

Tennessee also is angling to attract two other major companies, although officials won’t specify the firms.

President-elect Barack Obama has announced plans for a two-year stimulus package intended to create 2.5 million jobs, some on infrastructure projects. But he has yet to unveil full details of the plan, including what tax and spending elements it will contain, saying those will be outlined in the “coming weeks.”

In Congress, Democratic leaders have been pushing a $61 billion follow-up stimulus package, after earlier this year passing a $150 billion stimulus that mostly gave cash rebates to families.

The second package is aimed largely at helping states that face major problems as the economy continues to tank and unemployment rises.

Among other things, the package sought to provide more funding for roads, bridges and similar public projects as well as to boost federal Medicaid payments to states.

The plan passed the House but was blocked in the Senate by Republicans, who objected to a variety of its spending provisions, including $466 million on a new U.S. Department of Homeland Security headquarters.

President George W. Bush vowed to veto the measure, saying it would not be effective and was too costly.

Michael Bird, senior federal affairs counsel for the National Conference of State Legislatures, said he expects the package to be reintroduced at the outset of the new 111th Congress next year.

He said he is “highly confident” a stimulus bill benefiting states will pass next year, given that Democrats have increased their majorities in the House and Senate and President-elect Obama’s commitment to a further stimulus.

As for whether federal officials might be persuaded to grant Tennessee flexibility to use some stimulus money for public infrastructure tied to economic development, Mr. Bird said he thinks it is a possibility but that the answer to the question “will be provided by the new president.”

In the previous bill, Senate Democrats included a provision in the bill extending a moratorium on the development of oil shale, raising objections from Republicans. Among those voting against bringing the bill up for a vote on Sept. 26 were U.S. Sens. Bob Corker and Lamar Alexander, both R-Tenn., according to the roll-call tally listed on the U.S. Senate Web site.

“Calling something an economic stimulus package is fashionable these days, but what Sen. Corker voted against in September was a $61 billion everything-but-the-kitchen-sink federal spending bill that had nothing to do with constructively addressing our country’s economic issues,” Corker spokeswoman Laura Lefler said in a statement. “We haven’t seen language for a future stimulus bill, so it’s difficult to prejudge it or what our position will be.”

Sen. Corker, Chattanooga’s former mayor, was involved in helping push the Enterprise South site to Volkswagen.

Lee Pitts, a spokesman for Sen. Alexander, said the senator is “very concerned about the economic downturn and will continue working across party lines both in Washington and at home in Tennessee to move legislation forward that jump-starts growth.”

But he said the senator voted against the bill in September “because it was a grab-bag of spending that would have deepened the national debt, banned the offshore oil drilling needed to get us closer to energy independence, and was loaded up with proposals unrelated to creating jobs.”

Mr. Pitts said Sen. Alexander’s vote on any future stimulus plan “would depend on the final language, which doesn’t exist yet, but the goal must be creating jobs for the American people.”

U.S. Rep. Zach Wamp, R-Tenn., who is from Chattanooga, said he would prefer any economic stimulus include provisions that provide incentives for good investments, such as a proposal he has crafted that would provide tax rebates for people who trade in gas-guzzling cars for fuel-efficient smaller vehicles.

He also has proposed an elimination of the capital gains tax for up to 36 months for investments in U.S. companies during the next 120 days.

“This would encourage needed investment instead of simply transferring wealth from one sector to the other,” he said. “Clearly, the states need help, but finding consensus on how this might be done will be difficult.”

Rep. Lincoln Davis, D-Tenn., said through a spokesman that any discussion of a not-yet-proposed stimulus bill is “highly speculative.”

Lawmakers last week approved the extension of unemployment benefits, part of the sweeping stimulus bill. But the rest of the stimulus measure appears dead for the year unless the Democratic-controlled Congress seeks to bring it up in December.

Washington D.C. correspondent Herman Wang contributed to this story.