Chamber chided for taking tax dollars

Chamber chided for taking tax dollars

July 18th, 2010 in Business Around the Region

Chambers of Commerce may represent business, but local governments helped foot the bill for many Tennessee Chambers, records show.

Last year, cities poured more than $3.3 million of taxpayer funds into Chambers across the state, according to a new study by the Tennessee Center for Policy Research, an anti-tax group based in Nashville.

The Chattanooga Chamber received nearly $1 million of public funds last year from the city of Chattanooga, Hamilton County, the Tennessee Valley Authority and EPB to help fund its economic development programs.

In a new report on what it calls "Tennessee Pork," the Tennessee Center for Policy Research suggests that Chambers of Commerce should wean themselves of government aid and be supported instead entirely from their business members.

"Chambers of Commerce serve a vital function for economic growth in local communities," said Justin Owen, acting executive director at the Tennessee Center for Policy Research. "However, rather than fund these entities with taxpayer money, governments should cut taxes and spending, allowing individuals, small businesses and entrepreneurs to thrive."

With lower taxes, Mr. Owen argues, businesses could afford to do more to support local Chambers without forcing other taxpayers to support a private organization with which they may not agree.

But economic recruiters in Tennessee insist that public-private partnerships have helped Tennessee to recruit more than $35 billion of new business investment since 2003, including three billion-dollar-plus projects landed during the recent recession.

"Tennessee operates in a competitive environment and what they seem to be advocating is that Tennessee unilaterally withdraw from competing in that environment," said Mark Drury, assistant commissioner for Tennessee's Department of Economic and Community Development.

The Chattanooga Chamber received the second highest level of government support of any of the 30 Tennessee Chambers getting government aid last year, behind only the city of Sevierville which pumped nearly $1.6 million into its Chamber to promote "the Gateway to the Smokies."

The city of Chattanooga and Hamilton County each contribute $450,000 a year to the Chamber's economic development program, billed as "Chattanooga Can-Do." The government-owned TVA and EPB also support the local Chamber.

J. Ed. Marston, vice president of marketing for the Chattanooga Chamber, said the public funds support a separate development program run by the Chattanooga Chamber Foundation, which is a legally separate identify from the membership-supported Chattanooga Chamber of Commerce. Both groups share the same board and staff, however.

The current 4-year economic development program which runs through next June gets 40 percent of its funding from local government and 60 percent from local businesses, Mr. Marston said. That program works to recruit businesses to Chattanooga and help retain or expand existing industry, including the operation of a business incubator in North Chattanooga.

The Can-Do program has helped 17 local companies expand and add 1,262 new jobs and has recruited 13 companies, including Volkswagen, which have added 2,910 jobs.

"We're outperforming other communities today and that wasn't the case prior to 2002 when we began this public-private partnership," Mr. Marston said. "It's not just a matter of what you pay, but the results you achieve."

The Chattanooga Chamber is supported by more than 1,600 business members, Mr. Marston said.

Chattanooga Mayor Ron Littlefield, who worked in the early 1980s as the Chamber's economic development director, said bringing the local government and Chamber recruitment efforts into a single organization helped to unify Chattanooga's message and expand the resources available for business trips, advertising and startup assistance programs.

"Our efforts have been extraordinarily successful in recent years and for every dollar the city and county put in, there is even more support from private businesses," he said. ""The Chamber has a great team and it helps to be able to put the public and private efforts together."

Online: Read the 2010 Tennessee Pork report from the Center for Policy Studies.


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