Tennessee Governor says VW obligations to be covered

Tennessee Gov. Phil Bredesen said Thursday the state’s financial obligations to Volkswagen for its Chattanooga auto plant will be covered and the money won’t need to come out of reserve funds.

“I’m confident those are covered,” he said, even though state revenues are off sharply. “We’re going to meet those commitments we’ve made in the past.”

The governor, speaking to Chattanooga Times Free Press editors and reporters, also said there are a couple of other large economic development projects on which the state is working.

“One of the things you’ve got to do when times are tough is to go the extra mile to bring in those companies,” he said.

It is estimated the state will need to provide more than $200 million for VW over the next few years for infrastructure and training at the 1,350-acre site.

“We will honor that,” the governor said.

Construction of the $1 billion assembly plant is expected to begin next month, with the facility producing cars by early 2011 at Enterprise South industrial park.

Stefan Jacoby, Volkswagen Group of America’s chief executive, said this week the project that is expected to create 2,000 jobs is on target.

“The plan is on time,” he said, adding that supplier selection for the facility is taking place now.

Gov. Bredesen, who is leading a delegation of about 50 people from Southeast Tennessee to Germany on a business recruitment mission next week, said he would like to see 6,000 to 8,000 supplier jobs created.

Tennessee, along with Chattanooga and Hamilton County governments, will provide $577.4 million in tax breaks and direct assistance for VW.

However, a study found that benefits from the plant and suppliers it is expected to draw to the region will exceed the incentives by spurring more than $11.8 billion in personal income growth.