The Nashville Business Journal reported today that government attorneys believe it’s OK to redact information in a document put before a vote of Metro Nashville’s industrial development board.
That members of a governing body were kept in the dark and apparently had no concern about it demonstrates just how far we’ve come in our local and state government culture. It’s sloppy government and the citizens of Tennessee deserve better.
It concerns AllianceBernstein, which is moving its global headquarters from New York to Nashville.
From the Business Journal, as reported by Adam Sichko:
What the state has disclosed is a $17.5 million jobs grant tied to the money manager’s decision to uproot its executive team and an estimated 1,050 back-office jobs from New York City and move to Music City. State officials won’t say anything about another vital piece of the pie: tax credits that AllianceBernstein (NYSE: AB) expects to tap once it begins filling those forthcoming jobs.
The existence of those extra benefits is revealed in a non-binding memorandum of understanding the Nashville Business Journal obtained through an open-records request. The state blacked out all information in the section of the document (seen here) titled “estimated tax incentives,” except for four letters indicating that AllianceBernstein is poised to receive at least four types of tax credits. Not even members of a Metro-level board know those details, even though they voted to adopt the redacted document and become a signatory to it.
The state Department of Economic and Community Development, consulting with the state attorney general, denied the NBJ’s appeal of the redaction. The head of the state Office of Open Records Counsel, an advisory office that does not have authority over state agencies, called the redaction “most likely appropriate.” That official said it was “difficult” to determine that with certainty because he was not privy to the information that was shielded.
The head of the Tennessee Coalition on Open Government, a nonprofit watchdog organization, called the situation “ludicrous.”
The upshot is that the public doesn’t know the full scope of the benefits used to snag one of the splashiest, most notable headquarters to ever move to Nashville. As is often the case in such deals, the state effectively gave AllianceBernstein a blank check, agreeing to an incentive package with details still unknown, relying instead on forecasts and projections. AllianceBernstein’s headquarters won’t be fully operational until four years from now, by which point the state will begin to know the actual amount of tax credits the company will qualify for. Some business tax credits have a shelf life of 15 years or longer, meaning AllianceBernstein might be able to use tax credits earned in 2022 to reduce its tax bill in 2037.
Has the extreme confidentiality around economic development tax incentives suddenly trumped the more commonsense notion that members of a governing body should not be approving documents when they don’t know what is in them?
Ginger Hausser, chair of the industrial development board, was unconcerned, noting that the document was simply a memorandum of understanding and not binding.
So where did all this come from? An exemption in state law allows tax information to be confidential. That makes a lot of sense in a lot of ways. No one should be able to know what you put on your tax returns, or how much a business pays in state taxes. I think most people would agree that should be confidential information.
However, many of the tax credits given out by state in economic development deals appear to me a different animal.
In many instances, they are part of a total incentive package considered by a company in moving to Tennessee. Any direct grants are made public, but what the company expects to qualify for in tax credits is kept secret — even if it’s been calculated and included in a Memorandum of Understanding or in a final contract.
Shouldn’t our elected and appointed representatives who are voting on an incentive package have the full picture? Shouldn’t the public? How does anybody know if the incentive packages are worth it? Or are fair to existing businesses and other taxpayers?
In the story by Sichko, I was quoted as saying that it is horrible that you have public officials voting on a contract when they don’t even know what is in it. It goes against good government and it goes against transparency. This wasn’t a binding contract, but I hardly think the “memorandum of understanding” lives up to its name.