Image Credit: Canva
***Note from The Tennessee Conservative – this article posted here for informational purposes only.
The Center Square [By Kim Jarrett] –
Two companies that received Tennessee grant funds for job creation but failed to meet their obligations are repaying them, according to a spokesman with the Tennessee Department of Economic and Community Development.
FastTrack grants are awarded to companies as incentives. An investigation by The Center Square found that some companies failed to fulfill their contracts, prompting clawback requests by the state. The money for the grants comes from the state’s general fund budget, which is made up of a mixture of tax sources, including the state sales tax.
Clawbacks are calculated on a sliding scale based on how far a company falls short. According to a template contract provided by the department, a company that creates fewer than 90% of its pledged new jobs must repay a proportional share of the grant award, while a company that creates fewer than 50% must repay the entire grant.
In June, the Department of Economic and Community Development sent a demand letter to Novonix, a Chattanooga battery materials company that received a $3 million FastTrack grant in 2021. The company promised 290 jobs but created only 85, according to records obtained by The Center Square.
Novonix paid $250,000 on July 21 and will make payments, including interest, on the remaining $2.75 million over the next 12 months, according to Chris O’Brien, a spokesman for the department.
The Center Square was unsuccessful prior to publication getting comment from Novonix.
Nippon Paint, which promised to create 150 jobs in 2019, paid back the $1,125,000 grant on July 2, he said.
The Center Square was unsuccessful prior to publication getting comment from the company.
Documents show that the Department of Economic and Community Development has pursued 71 companies since 2016 that did not fulfill their end of the contract for FastTrack grant money. In total, the 71 had been awarded $169 million in grants through Tennessee’s FastTrack program, with the aim of creating more than 24,000 jobs combined. Only 7,400 jobs were created by the companies.
The state obtained judgments against eight companies, but has collected only $8.8 million of the more than $10 million owed. Another $6.1 million in grant money is part of ongoing litigation against five other companies, according to information from the department.
A recent $30 million FastTrack grant to Starbucks, which is opening an office in Nashville, renewed scrutiny of the program.
State Rep. Ryan Williams, R-Cookeville, told The Center Square that Tennessee needs FastTrack grants, though. They’re one of the few tools for growing the tax base in a state with no income tax, he said.
“Whenever we add a job, we’re adding a sales taxpayer,” Williams said. “So when you look at it from an incentives basis, yes, we’re distributing well-fought-for dollars from our citizens into these businesses. But the goal here is to look at … what do we think our return on that investment is going to be through those utilization taxes that we have, because we have no income tax?”
