Chattanooga: VW bond, appropriation bills pass Senate

Chattanooga: VW bond, appropriation bills pass Senate

February 27th, 2009 by Andy Sher in Local Regional News

NASHVILLE - The Senate unanimously authorized $262 million in bonds on Thursday to help state officials meet commitments made for the Volkswagen plant in Chattanooga and a factory in Clarksville, Tenn.

Senators also approved a separate appropriations bill allowing the state actually to pay for the remaining work on items such as roads, water and sewer lines and electrical grids at VW's Enterprise South site, as well as many of the similar jobs at the Hemlock Semiconductor Corp. plant site in Clarksville.

The House is expected to vote Monday on the $262 million bond authorization measure and the accompanying appropriation bill. House Finance Committee Chairman Craig Fitzhugh, R-Ripley, said he expected them to pass.

State Economic and Community Development Commissioner Matt Kisber said he was pleased by the Senate's action, noting "we market the bipartisan spirit in economic development that Tennessee enjoys, and I think this is an example."

About $170 million of the bonds, if they actually are issued, is for the VW project. The remaining $92 million would go for the Hemlock plant, which will make polysilicon used in solar-power panels. Construction at Volkswagen is expected to generate enough money to fund the $28 million debt initially, and taxes from the project will fund the bonds down the road.

The bills were delayed by a week in the Republican-controlled Senate as GOP lawmakers, including Sen. Bo Watson, R-Hixson, sought to explore if the state could use federal stimulus funds to at least partially offset the need to issue bonds.

Sen. Watson, in whose district the VW plant is going, stressed throughout the week that the Senate would honor all commitments to VW. Senate Republicans hoped to save money by dealing in cash. Some also were wary of departing from previous state policy against issuing bonds for economic development.

"This is the most thorough vetting that I know of since I've been here. That bond bill was really analyzed and looked at," Sen. Watson said.

It was appropriate to delay before making a "decision of this significance" in order to "make the best decision for the state," he said. "Certainly, a large part of this affects a project in my Senate district, but even with that, we were wise to step back and just review this one more time to make sure."

Democratic Gov. Phil Bredesen cited the state's $900 million shortfall as the driving need for using bonds. The governor told senators in a closed-door meeting earlier this week that it remains unclear if stimulus funds could be used, senators said.

Mr. Kisber told House Finance Committee members this week that Tennessee committed to VW to have funding approved by the end of February. He said the last thing the state needed was get embroiled in a "political battle over your (VW's) decision to come to Tennessee."

Senate Majority Leader Mark Norris, R-Collierville, said Republicans initially were not aware of the February timetable. He said they "don't want to send the wrong signal to somebody that somebody can't deliver."