Lieutenant governor opens door to reexamining Amazon deal

Lieutenant governor opens door to reexamining Amazon deal

April 26th, 2011 by Andy Sher in News

Ron Ramsey

Ron Ramsey

NASHVILLE - Lt. Gov. Ron Ramsey opened the door Monday to possibly revisiting the economic recruitment deals the Bredesen administration struck with Internet retailing giant Inc. and manufacturer Electrolux.

Ramsey's comments came after the state's former economic and community development commissioner, Matt Kisber, canceled what Ramsey aides characterized as a planned meeting with Ramsey, the Republican Senate speaker.

The purpose was to discuss what commitments former Gov. Phil Bredesen made in the waning days of his administration to lure Amazon to Southeast Tennessee and Electrolux to Memphis.

"I don't know until I actually look at the agreements and see what the ramifications are for those moving forward," Ramsey said when asked whether he might change his previous statement that he would "honor" the deals.

"Now obviously," Ramsey said, "I want to make sure that if there's something we made an obligation that we uphold that obligation. But if there's not, then I think it's worth looking at. That's all I can say."

Ramsey said he doesn't mean to be evasive, noting, "my problem is I don't know. That why I'm trying to set up this meeting so I would know."

Ramsey said his main issue is that unlike with previous major employers recruited to Tennessee by the Bredesen administration, the Amazon and Electrolux deals have been "cloaked in secrecy."

In an interview Monday night, Kisber said he and Ramsey had "played voice-mail tag" for several days and there had been several changes on the proposed meeting. Monday's had been tentative, he said.

"I think a lot more's being made out of it than it merits," Kisber said, adding that he now has private sector responsibilities he has to juggle. He said he remains willing to meet with Ramsey.

Later in the day, the House voted 92-2 in favor of a $106.4 million bond authorization bill that would provide $77 million to Electrolux and another $29.4 million to Wacker Chemical. The state will pay an estimated $64.2 million in interest over the 20-year life of the bonds.

Wacker is building a $1.45 billion plant in Bradley County to produce polysilicon for solar power arrays. It will employ an estimated 650 people.

Meanwhile, House Assistant Republican Leader Kevin Brooks, of Cleveland, indicated he is less than happy that Ramsey, the Republican Senate speaker, and others continue to raise questions about Amazon.

"This deal is done," Brooks said. "We're going to turn into South Carolina or Texas if we're not careful. There's hundreds of jobs, hundreds of millions of dollars in economic development - and the deal is done."

The reference to South Carolina and Texas involves sales-tax collection issues that continue to haunt Internet retailing giant Amazon.

Amazon plans to spend $139 million to build two distribution centers in Hamilton and Bradley counties. They would employ between 1,400 to 1,500 full-time workers and ultimately more than 5,000 part-time workers, an Amazon official told local legislators earlier this year.

Democrat Bredesen's successor, Republican Gov. Bill Haslam, has all but acknowledged the state is waiving requirements that would make Internet retailing giant Amazon collect sales taxes on purchases made by its Tennessee customers.

Tennessee requires retailers with a physical presence in the state to collect and remit sales taxes from state customers. Under U.S. Supreme Court rulings, states cannot compel retailers that do not have a physical presence in a state to collect sales taxes.

Brooks said the difference between "Amazon and other businesses we have given incentives, it's not apples and oranges, it's apples and watermelons."

He challenged someone to "explain to me what we could tax at the Amazon warehouse. It's not a Wal-Mart. It's not a Sam's. It's not a Costco."

"This is a distribution center where little boxes come in one end and big boxes go out the other end," Brooks said. "And there is no cash register. There is no point of sale."

His reference to Texas involved a situation where state officials sought to compel Amazon to collect sales taxes, arguing a distribution center constituted physical presence. Amazon left the state. A similar argument is taking place in South Carolina, where the state's former governor recruited Amazon to build a distribution center there.

Haslam told the Chattanooga Times Free Press last week that Bredesen explained the Amazon deal to him before he took office, saying Amazon could just as easily build the centers a few miles away from Chattanooga in Georgia and the state would not collect sales tax in that event either.

But Haslam said Bredesen did not tell him whether Amazon would now be exempted from collecting tax. Haslam said he assumed it did. But Haslam continues to argue that resolving the entire issue of Internet sales tax collections is something that will have to be done at the federal level and not the state level.

Contact Andy Sher at or 615-255-0550.