Commercial Appeal: Bill would require Tennessee governments to disclose payments to companies

The Commercial Appeal recently did a story about a bill in the Legislature, supported by TCOG, that would solve the issue of business entities claiming that government documents about payments made to them are confidential because the payment they received constitutes a trade secret.

It flies in the face of the Tennessee Public Records Act that states “all documents … made or received pursuant to law or ordinance or in connection with the transaction of official business by any governmental entity” are public records. But the business are getting away with it. See below for an example with Google and the Montgomery County Industrial Development Board, and the University of Tennessee’s payments to its investment manager for managing university endowments and other funds.

Here’s the bill’s wording:

Notwithstanding any law to the contrary, the monetary value of any government payment, fee, or other form of financial benefit paid or bestowed, or agreed to be paid or bestowed, by a governmental entity to a private entity must not be deemed to be a confidential trade secret or proprietary information, or otherwise deemed confidential business information, constituting an exception to § 10-7-503(a)(2)(A), unless the transaction or proposed transaction falls under a specific exception as prescribed by state or federal law.

Here’s the Commercial Appeal story:

A proposed Tennessee bill would stop governments from hiding payments to companies. The proposal comes after Montgomery County officials granted extensive secrecy to Google in an economic development deal.

The background: The Silicon Valley corporate giant broke ground last year on a big new data center in the Montgomery County and Clarksville area, which is in middle Tennessee near the Kentucky state line.

The Montgomery County industrial development board agreed the company wouldn’t have to pay taxes for 20 years. The board also reached an unusual secrecy deal with Google.

The industrial development board agreed to hide a wide range of information from public disclosure, including the number of employees hired, the amount of investment made, and the value of the taxpayer-owned land itself.

The reason: Google considered these and other items “trade secrets.”

“And so they get this tax break, but it can’t be public because they claim the value of the government land is confidential,” said Deborah Fisher.

Fisher is executive director of the Tennessee Coalition for Open Government, an alliance of citizens, media and civic groups that works for government transparency.

The Commercial Appeal’s executive editor is on the coalition’s board of directors.

Fisher’s organization is backing House Bill 0370, which says any government payment or benefit given to a private entity cannot be considered a trade secret. The only exception in the text of the proposed law is if the transaction falls under a specific exemption in state or federal law.

“So we want the government agencies to be accountable for what they’re giving to private entities,” said the bill’s sponsor, State Rep. Martin Daniel, R-Knoxville. “We want to know how much it is and whether it’s worth it from a taxpayer point of view.”

The bill is scheduled for debate in the legislature’s House Public Service & Employees Subcommittee on Wednesday.

The state representative introduced the bill following conversations with Fisher.

Fisher said the proposed law wouldn’t apply just to Google, but to any situation in which a government gives money, land or some other benefit to a company. The proposed law aims to stop what she describes as a growing trend by companies to treat such information as confidential.

“The more I have looked at this, the more I have realized this is probably going on a lot and we don’t even know it,” Fisher said.

For instance, the bill would likely apply to the University of Tennessee, which successfully lobbied the legislature in 2017 for a law that would hide certain details of university endowment money allocated to hedge funds and other “alternative investments.”The university said certain money managers would refuse to work with the UT endowment if the university disclosed their strategy and other details to the public.

Though the word “fee” doesn’t appear in the text of the 2017 endowment investment law, the university has interpreted the law to mean that fees paid to alternative investment money managers are secret, too.

Drew Lonergan, a political consultant working with Martin, the state representative, said HB0370 would require disclosure of the UT endowment’s fees to these managers.

Fisher said her organization hopes to stop Tennessee from experiencing the same restrictions on payment information that Texas has seen.

In 2015, the Texas Supreme Court voted to make it easier for private companies to hide details of their contracts with the state of Texas and local governments, the Texas Tribune reported.

A pair of Texas legislators recently filed a proposed law to open up these records.

Fisher said she doesn’t know if more details of Google’s existing deal in the Clarksville area will become public if the law passes. In any event, she said her organization hopes for more transparency in deals going forward.

Commercial Appeal story by investigative reporter Daniel Connolly. Reach him at 529-5296, daniel.connolly@commercialappeal.com, or on Twitter at @danielconnolly. 

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