published Sunday, June 9th, 2013

VW: You pulled for us, we'll pull for you

A worker cleans a Volkswagen logo in the production line at the Volkswagen plant in this file photo.
A worker cleans a Volkswagen logo in the production line at the Volkswagen plant in this file photo.
Photo by Associated Press /Chattanooga Times Free Press.

By the numbers

2,415 jobs at the plant

12,400 jobs at the plant and in businesses grown here for VW support.

$642.1 million a year in annual income to workers

$31.2 million a year in state tax revenue

$22.3 million a year in annual local tax revenue

As the region waits to learn whether Chattanooga's VW plant will expand to include a cool new SUV on assembly lines here, few need the recent University of Tennessee report to understand what a boon Volkswagen has meant to this local economy.

Anyone doubting that should try to picture what Chattanooga's job climate might have looked like through the recession that snapped a vise on the rest of the country in 2008 -- the same year VW threw us a lifeline.

While many of our neighbors and most of Tennessee fought through more than a year of double-digit percent joblessness, Chattanooga mostly tracked snug in single digits.

But UT's new report does add tasty icing to this region's anticipation of more good news.

In the years since VW's 2008 announcement of its $1 billion project here, the automaker has spurred more than 12,400 direct and indirect jobs through 2012, the UT study states. That's nearly 1,000 more jobs than the 11,477 initially predicted.

And while some questioned the $577.4 million in state and local incentives -- taxpayer dollars -- that the company received five years ago, the UT report estimates the auto assembly plant generates that much and more each year -- about $643.1 million in wages and benefits for local residents.

The plant also boosts state and local tax revenues by $53.5 million a year. That's not a bad return by anybody's measure.

Still, VW -- both the employer and the plant -- is more than just dollars and cents.

It brings an added diversity and culture to the region, and it extends the city's exploration of becoming sustainable -- economically, environmentally and culturally.

VW built Tennessee's largest solar farm to provide 12 percent of the auto-assembly plant's power.

It was the first and only automotive plant worldwide to be awarded the LEED Platinum certification of the U.S. Green Buildings Council. Its new paint shop saves the use of 20,000 gallons of water a day with an innovate dry scrubber technology, and the plant's "water harvesting system" yearly provides about 6 million gallons of roof-top, runoff stormwater for restrooms and cooling circuits in the body shop.

What's more, the plant sits on what once was vacant land -- part of a former brownfield. So what once was a wasteland is now a workplace generating jobs, tax revenues, energy -- and, oh yeah, 150,000 cars a year.

It's true VW recently laid off 500 temporary workers because of slower than expected growth in Passat sales. About 117,000 were sold in 2012.

That was a blow, as our city still hasn't regained its historic stable of manufacturing jobs from the 1980s recession. Those manufacturing paychecks were, and are, the really good, solid, blue-collar center in any economy.

Yet against the backdrop of our auto plant's successes, and the anticipation of more successes to come, VW has been more than just a lifesaver thrown to Chattanooga at the very moment the national recession set in.

VW put us on the road to recovery. We hope Volkswagen -- and we -- can see it through.

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soakya said...

577 million in state and local incentives, 150 million federal tax credit. 727 million in tax incentives/ 53.5 million yearly payback= 13.58 years to payback. Anybody want to invest their own money for a 13.5 year payback period. Of course this doesn't consider the time value of money or any future tax incentives at any level. It also makes the assumption the 53.5 million tax collection remains constant.

June 9, 2013 at 3:49 p.m.
aae1049 said...

Hogwash Editorial

The Sales and Property Tax Revenues for the City of Chattanooga are flat, both pre and post VW and Corporate Welfare Boom! The most tell-tell economic measure is property tax revenue that has only increased due to a 19 percent increase in the rate, and mass annexation.

Sales tax revenue increased with the City ending a long standing shared sales tax agreement with Hamilton County Gov.

http://littlechicagowatch.com/2012/11/sales-tax-revenue-city-and-county/

The only big boom has been in the Chamber of Commerce pr imagination station. You know the big lie that is conveyed to the taxpayers and poor, that if we give our tax money to these rich corporations, it will trickle down to those in need with jobs.

The fact is the poverty rate pre VW and the Corporate Welfare Clubsters was about 19 percent, it is 31 percent. Corporate Welfare is increasing poverty in Chattanooga, by these Corporations increasing service demands, yet not contributing to property taxes. Why? VW and the Corporate Welfare club is exempt from paying property taxes for 30 years and stormwater fees in some cases. Meet the Corporate thieves in your porperty tax dollars.

http://littlechicagowatch.com/2012/11/chattanoogas-passion-for-corporate-welfare/

Small local business have to pay their own taxes,and then pay the share of taxes for the 51 corporations share of services. Why? because the Pilot Club of Corporation is exempt from paying property taxes except an arbitrary number of the public school share, that mostly funds their German programs.

The government subsidized VW infrastructure, site work, roads, generated temporary construction jobs in the region. Sistah, that was our tax dollars influxing the construction. We could have used the loan on public infrastructure and generated a better outcome. VW's success is not the government's function or job. Why not help local business, instead local business is required to fund this rich corporation.

VW loves our Chattanooga Tax dollars and actually hired the family members of the city employees charged with making funding recommendations to Industrial Development Board. Yes, while 40 million in bond issues or taxpayer guaranteed loans spent by public works, VW hired the children of the city employees, Nice for VW to hire the person's children, vested with stamping approved on taxpayer spending for their plant. These pilot deals are so corrupt. Check how many times VW has shuttled Chamber of Commerce Pilot decision makers to Europe. It's all fun.

The public in general does not believe that it is our responsibility to ensure the corporate growth and success of VW for more corporate welfare. Bob and the Boys are fixing to do it again, with Chattanooga's Bond debt at half a billion. There are are local that would generate more job growth than VW. In fact, small business is the greatest private employer in the state of Tennessee.

Why is VW the chosen one for corporate welfare?

June 9, 2013 at 5:02 p.m.
soakya said...

I have attached a link for anyone wanting to see the study

http://ftpcontent2.worldnow.com/wrcb/060413VWImpact.pdf

June 9, 2013 at 8:24 p.m.
aae1049 said...

Thank you for sharing the study which was commissioned by the Chamber of Commerce and....The original UT study assumed that all the suppliers would locate to the region, and that did not happen. That is why Chattanooga will never recover the largest incentive in State History. I am glad you are versed in this subject.

http://www.timesfreepress.com/news/2008/jul/24/chattanooga-vw-incentives-largest-state/

June 9, 2013 at 8:39 p.m.
soakya said...

Hamilton county property and sales tax

Property Taxes 2012 - $ 128,640,070 2011- $ 128,028,643

Sales Tax 2012 -2,691,376 2011- 12,827,069 reduction of $10,135,693 is due to the expiration of the 1966 sales tax agreement with the City of Chattanooga.

Property Taxes 2010 -$ 124,907,475 2009- $ 122,782,141

Sales Tax 2010- 12,931,526 2009 -12,940,031

We only see 6 million dollar difference in property taxes from 2009 compared to 2012 and a slight decrease in sales tax in 2012 when compared to 2009.

Anybody see a 22 million tax benefit from the financial audits of Hamilton county. There's not even a 22 million benefit when you add all 4 years. This is nothing more than a shuffling of jobs and tax dollars from one industry to another.

Hamilton county you are no better off because of VW regardless of what the chamber tells you or this study. The above info was pulled from the audits of Hamilton county performed by independent CPA firm. Tell them if they want to make cars here they need to pay their taxes and do their own work force training or they can pack their bags.

June 9, 2013 at 10:21 p.m.
aae1049 said...

Soakya, thank you. That is the whole point. The UT school of business that produced this new report for the Chamber of Commerce, never analyzed the actual property and sales tax revenue. The property and sales tax is flat, and the school of business used Dept of Commerce multiplier, rather than actual data. Funny, the sales and property tax data was available to them.

So, What happens, the media does not even question the data, and perpetuates this huge lie to the public. VW has not increased sales or property taxes, sales taxes are FLAT, and property taxes for Hamilton County are flat.

This is a huge corrupt system with the Chamber of Commerce brokering these absurd PILOT incentives that are damaging Chattanooga and increasing poverty through corporate welfare, and hiring the families of city employees that make direct recommendations to Industrial Development Board. The media is helping perpetuate the lies by not checking revenue data compared to theoretical data in the new report of lies about VW saving the city.

June 10, 2013 at 12:06 a.m.
Leaf said...

Name names. Which family members were hired?

I think there is a bit of a mistake with your numbers though. While I don't disagree with your stance on corporate welfare, you're comparing actual revenue numbers without considering the economy at large. The recession would have brought those numbers lower in the absence of VW.

The 22 million tax "benefit" in this case might include revenue that wasn't lost during the recession. It's like subtracting a negative number and getting a positive one. So in that case the DOL multiplier might be closer to the real number if you are talking about the benefit to Chattanooga.

June 10, 2013 at 6:08 p.m.
aae1049 said...

Leaf, I have given the information to media. Clearly, you should look back at who were the city employees making recommendation for VW bond issues spending, and look at the VW trips with the Chamber. The people charged with protecting the public, are having a love affair with VW with public money. Do some homework, we will publish it on the watch group site.

The fact is the same economic outcome would have occurred with regard to the recession. VW did not change that outcome, the influx of taxpayer subsidized construction funds through the State and local bond issues. It kept the temporary construction work going thought he peak. However, the funds should have been spend on public infrastructure in a WPA concept, rather than the trickle down economic principle used on VW. The Chamber and leaders notions are that if we give our taxpayer resources to rich corporations, the poor will benefit for job creation. It works just the opposition, the PILOT and TIF incentives take drain services, because they don't pay property taxes, and adverse impact a government's ability to deliver job training and social services to these groups. Trickle down is a Catch 22 that grows poverty. We have the census numbers that show Chattanoooga has 31 people out of 100 living in poverty. The Chamber and these corporations need to pay their share of taxes like all other businesses. Why should business A pay taxes and pay the share of taxes for municipal services to these corporations?

June 10, 2013 at 7:02 p.m.
soakya said...

Leaf, Let me give some stats from Bradley county pulled from the 2011 City audit. Whirlpool, Duracel, M&M mars, and Peytons have all been in PILOT agreements and more than one. In 2002 Whirlpool had 2200 employees in 2011 they had 1386. Duracell had 700 in 2002 in 2011 they had 300. M & M Mars had 650 in 2002 in 2011 they had 495. Peytons had 1200 in 2002 in 2011 they had 950. Cormatech has also been in a PILOT agreement and they to have less jobs today. Merck is the only company that has added jobs that has been in a PILOT agreement, 37 of them. Bradley even entered into a PILOT agreement and kept the business private. The 2011 numbers are still listed on the Cleveland Chamber commerce website today. In the same 10 year period per capita income and personal income has declined in Bradley county. At least for Bradley county these PILOT agreements don't bring the jobs promised and I bet you would find the same everywhere.

June 10, 2013 at 9:07 p.m.
aae1049 said...

Tennessee is a poverty state due to corporate welfare. Chattanooga has really been hit hard by corporate welfare PILOTS that greatly increase service demands, with no additional revenue. In the case of VW, City and County gov gave $212 million in local funds, including a $40 million dollar bond for their needs. What if they thought education was more important, than playing capital venturist with our tax dollars?

These PILOT, TIF and other incentives are simply a means to pass the tax dollors of working poor, and small business to the Chamber of Commerce Corporate Clubsters.

The Chattanooga Chamber keeps endorsing this concept that if we give our hard earned tax resources to these rich corporations there will be a trickle down in jobs. It fails miserably, because those teetering on poverty are now paying a higher tax burden to subsidize these corporations share of services, which also reduces a local government's revenue for infrastructure, schools, and social services. Hello, we think it is ok to give VW $40 million, but not build homeless shelters. How screwed up is that?

Tennessee cities are being pauperized by Chamber of Commerce mentality of PILOT for the rich, and have increased our poverty rate from 19 percent, pre PILOT Boom, to 31 percent.

Meet the Corporate Thieves of Tennessee that pay reduced or no property taxes. This is the 2011 list

http://www.comptroller.tn.gov/SBOE/pdf/2011IDBSummary.pdf

The greatest employer is the state of Tennessee is small business, say no to PILOTS.

June 10, 2013 at 10:11 p.m.
fairmon said...

Why does any business, small or large, pay taxes which are simply passed on to the consumer?...that is the trickle down that should be eliminated.

June 11, 2013 at 3:42 a.m.
aae1049 said...

On food for sure.

June 11, 2013 at 12:19 p.m.
soakya said...

I get the feeling this piece and study is nothing more than a pretext for additional tax incentives. Does anyone know who wrote this piece? Sounds like it came straight from the chamber. Does anyone know of talks of tax incentives if VW decides to build their SUV here?

June 11, 2013 at 1:42 p.m.
aae1049 said...

I do know there have been talks between the City of County attempting to quantify how much taxpayer gift or subsidizes we the little people must give of our hard earned dollars. See VW doesn't pay property taxes or stormwater fees, but get's a firehall of their very own...amoung many other taxpayer gifts.

June 11, 2013 at 9:22 p.m.
fairmon said...

I am glad the action to get VW here was taken. I am confident the economics are good although some self anointed experts here can't see it. I rather contribute to the welfare of VW than to keep supporting people because they can't or won't get a job...I wish there were enough jobs that anyone needing an income could be working and paying taxes and if they chose not to work let them go hungry.

June 12, 2013 at 8:23 p.m.
soakya said...

I can't see it because the audited financial statements don't support what the study reports. The report used projections based on some multipliers, the FS looks at historical data. You can choose which is the most accurate. I'll go with the historical data. I'm pleased to hear you would support corporate welfare for VW. Would you support corporate welfare that went directly to your competition but not your place of employment? Oh by the way, doesn't take an expert to read the FS.

June 12, 2013 at 9:15 p.m.
aae1049 said...

Lets do the math on what the VW job cost the taxpayers just for the $577 million we know about. Was VW the best investment for those local tax dollars, or would the same taxpayer investment in small to mid sized business generated a better economic return? It is a fact that VW was simply the first to show up, rather than consider the best economic booster with public funds. Let's see no return on property or sales tax, which is flat in the long term. Short term we paid VW $290,000 per job. Frankly, small business jump starts would have generated more jobs than VW.

No one is a self anointed expert, but there are a pack of Chamber of Commerce people and a study that just does not hold water. Don't you think the data should be backed up by solid and available municipal revenue that is reflective of the true impact of VW on Hamilton County and Chattanooga. People asking questions about the oblivious should not bother anyone. A study commissioned by the gov. that omits relavate and readily obtainable data is more concerning to me.

June 12, 2013 at 10:11 p.m.
soakya said...

Here's an excellent study if you want to take the time to read. I'm not the only one thinking the tax base is flat.

Daisy Madison, the city's chief financial officer, said the time has come for city tax breaks to be re-evaluated.

"Our tax base is not growing enough to continuously support them,"

http://faculty.citadel.edu/sobel/UC/Unleashing%20Capitalism%20TN%20Ch1-3%20only.pdf

June 12, 2013 at 11:23 p.m.
aae1049 said...

The city knows the first come first serve method of Pilots, and now TIF and making our city's poverty rate increase, and revenues flat. Yet, the City is discussing issuing more. ugh

June 13, 2013 at 9:17 a.m.
soakya said...

From 2008 to 2012 Hamilton county population has grown by almost 13,000 while the civilian labor force has declined by 1100. This means the labor participation rate has declined by 2% points, and it only cost taxpayers(federal, state, local) 727 million to have less people participating in the labor force, and that money only includes the VW deal.

June 14, 2013 at 1:33 p.m.
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