Guard taxpayers' cash

Guard taxpayers' cash

March 12th, 2012 in Opinion Times

Though we often disagree with positions taken by state Senate Speaker Ron Ramsey on legislative issues, we thoroughly agree with his opposition to the secretive sections of Gov. Bill Haslam's dubious FastTrack proposal. That proposal would allow the governor's administration to keep secret the identify of the owners of firms and businesses that would receive cash awards of taxpayer funds as incentives to expand or build selective business enterprises in Tennessee. There should be full disclosure and complete transparency for any program in which the state would give taxpayers' cash - or any taxpayer-backed credit or incentive - to any person or business.

Haslam supports a state-sponsored, cash-incentive program to attract new or expanded businesses in Tennessee, instead of the traditional tax abatement policies. Though such programs exist in some other states - Texas is a ready example - they are not a good idea, mainly because they easily can be manipulated to benefit political supporters, cronies and rich friends of the state's reigning politicians.

Texas Gov. Rick Perry, for example, is widely criticized for granting cash awards to rich crony businessmen, most of whom don't need cash taken directly from state taxpayers as incentives to expand their businesses. Haslam's proposal for cash awards seems to be more restricted, but the program still needs more scrutiny, full disclosure, public transparency and tighter restrictions on the range of uses for which cash grants would be awarded as an incentive for new business development.

Co-sponsors of Haslam's proposal argue that it would require businesses to provide a comprehensive range of proprietary financial information to ensure that cash awards are needed, and that they would generate ample public benefits and economic impact that otherwise would not occur. They also note that such cash grants of taxpayer money would be funneled through local development boards.

None of that justifies cash grants to private business owners, or keeping recipients' identities secret. Nor does it ensure that political cronies - friends and political insiders at any level of state or local government - would not be given preferential treatment, or given grants of taxpayer money simply because of their connections.

Full public disclosure of intended recipients and of each and every cash award, and its purpose, should be publicly disclosed. Grants also should only be awarded through public votes after public scrutiny if, in fact, they can be justified. And even then, cash grants of taxpayer money should only be awarded for the cost of publicly-owned infrastructure, such as roads, sewers and utility connections. No taxpayer cash should be given to a business for the purchase of property or development which will be privately owned.

This isn't rocket science. Indeed, it's not clear that any cash awards in any form funded by taxpayers should be given to private businesses. If public infrastructure development, land use and tax abatement programs are not enough, it's doubtful that any cash awards at all are ever justified. Indeed, there's a good argument to be made that state or local governments already offer too much public money in economic incentives to attract new businesses; and that businesses that base their location on the highest bidder's incentives are simply exploiting the competition that fuels such public giveaways.

Ramsey is right to insist on full transparency for taxpayer cash, if ever such awards can be justified. And more debate on the latter point is clearly needed.