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EPB and Volkswagen logos


• $1.5 million in state incentives for General Motors' Spring Hill plant;

• $25 million to continue developing the West Tennessee Megasite in rural west Tennessee;

• $500,000 for "Birthplace of County Music" museum in East Tennessee;

• $5.8 million property tax break to Gaylord Entertainment and Dollywood Co. for a water and snow park east of Nashville.

Source: Beacon Center

NASHVILLE -- Volkswagen and EPB defended themselves after a statewide advocacy group said Tuesday they were among the biggest wasters of taxpayer money in Tennessee last year.

Both companies said they have enhanced the image of Chattanooga around the U.S. and the world and also improved the quality of life for residents.

A state grant for a massive $266,000 "Volkswagen Chattanooga" sign on top of the plant and EPB's venture into cable and high-speed broadband Internet are among targets skewered in a "Tennessee Pork Report."

Issued Tuesday by the Beacon Center, a state-based government watchdog group that advocates free-market approaches to public policy, the report cites the two projects among dozens of examples of what they say is $468 million in wasteful spending across the state during the past year.

The group gave a "Pork of the Year" award on a flap in which the head of the Upper Cumberland Development District near Nashville spent $1.5 million on a "mansion and lavish furnishings."

But VW's sign -- expected to be about 650 feet wide and 208 feet deep -- was called "a pathetic waste of taxpayer money," by Beacon CEO Justin Owen.

"The VW Chattanooga plant got $266,000 to put a sign on its roof to market to passengers flying in and out of the Chattanooga airport," Owen said at a news conference. "The only problem? There are about 600 people who fly in and out of that airport every day. This is a pathetic waste of taxpayer money."

The sign on the German auto manufacturer's Chattanooga plant came out of $2 million in state funds Tennessee committed to Volkswagen for marketing and public relations and was part of the state and local incentive package totaling more than $500 million officials used to lure VW to Southeast Tennessee.

"If 600 people in airplanes are not sufficient, there are 600 million more who will be able to watch on Google Earth and recognize that Chattanooga was attractive to one of the biggest car manufacturers worldwide to create more than 3,000 jobs there," said Guenther Scherelis, general manager of communication for Volkswagen in Chattanooga.

"This is a good marketing initiative for the city, the state and the company," he said.

The company expects to have 3,500 employees and contractors at its $1 billion plant by year's end.

Owen also took aim at the city's municipal electric service, EPB, for spending "ratepayer money and taxpayer money on ultra-high speed Internet." The utility spent about $111 million in taxpayer money on the system through the federal stimulus program, along with a matching amount of its own money for a total of about $222 million.

EPB offers Internet speeds of up to one gigabit per second, which Owen said was more than a city the size of Chattanooga needs.

"I think that Hong Kong is one of the only other places in the world that has that level of Internet," Owen said.

EPB CEO Harold DePriest said "the fiber-optic network already has proven to be an important economic development tool."

"Access to high-speed Internet is clearly a factor when attracting new businesses to Chattanooga, resulting in many new jobs for our community," he said. "There are dozens of entrepreneurs from around the globe in Chattanooga today because we have the capability they need to develop high-bandwidth applications of the future.

"But the benefits of this type of network expand beyond the budget sheet. When a physician can make a diagnosis in minutes instead of days, or when a student can learn from an expert thousands of miles away, that adds real value to the community."

Republican Gov. Bill Haslam took issue with the Beacon Center's assessments of wasteful "pork."

"That's been their view for a while," the governor said Tuesday. "The truth is we live in a very competitive world, and I don't think we're just going to unilaterally disarm and say we're going to quit doing that."

Staff writers Mike Pare and Ellis Smith contributed to this story.

Contact staff writer Andy Sher at or 615-255-0550.