Tennessee taxpayers pay millions to GM after increased lobbying

By TNWatchdog Staff on January 25, 2012
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By CHRISTOPHER BUTLER

General Motors has billions of dollars in cash reserves, and one would think that the company is self-sufficient and can operate without a helping hand from taxpayers — but that is not the case, especially in Tennessee.

Taxpayers in the Volunteer State, as well as those in many other states, are giving millions of dollars to subsidize GM’s operations, all as a result of the company’s increased lobbying efforts at the state level.

Last month, for instance, officials with the Tennessee Department of Economic and Community Development (ECD) announced that state taxpayers would pay GM more than $1 million to help the company expand its production plant in Spring Hill.

GM officials admitted to Tennessee Watchdog that their aggressive lobbying efforts have paid off handsomely in Tennessee and elsewhere. They said they are now expanding their lobbying efforts, from Washington, D.C. to the states.

“We are increasing our activity with the states obviously, in the communities in which we operate. In doing this, we’ve invested more than $6 billion (throughout the states) during the last five years and brought 15,000 people back to work. So, the activity at the state level is important to us. Our lobbying is comparable to what our competitors are doing throughout the states,” said GM spokesman Greg Martin.

GM has already accepted a $50 billion bailout from the federal government (with the federal government taking a 61 percent share in the company), also as a result of lobbying. GM officials told Tennessee Watchdog that their lobbying efforts at the federal level will remain just as active as they are at the state level.

Martin, however, would not address the following comment from GM CEO Dan Akerson, made during a television interview last year with CNN (stated at 3:24 into this video):

“We have about $35 billion to $40 billion of cash in our balance sheet. That’s a lot.”

Dan Akerson

According to records obtained from the Tennessee Secretary of State’s Office, the total aggregate lobbyist compensation paid by GM to Tennessee lobbyists has more than doubled in the past few years. In 2010, GM hired another lobbyist, this one based in Tennessee (the other was based in Kansas) in a possible attempt to enhance the company’s exposure in the state.

The benefits of those lobbying efforts also include ECD officials giving GM a $17 million job training grant in 2009.

State officials expected that the grant money would help GM train thousands of Tennessee residents for long-term jobs at the Spring Hill plant. They learned soon thereafter that, despite the taxpayer-funded grant, GM would relocate those jobs to a plant in Michigan.

Another GM spokesperson also would not address Tennessee Watchdog’s questions about why the company lobbies for millions of taxpayer dollars when the company already has $35 billion in cash reserve.

“Like most businesses, GM applies for grants, abatements and incentives for which the company is eligible.  These types of programs are an important component of developing a business case to expand or upgrade our operations,” said Kimberly Carpenter.

Kimberly Carpenter

Members of the Tennessee State Funding Board (composed of the governor, the state comptroller, the secretary of state, the state treasurer, and the commissioner of Finance and Administration) make the final decision on which grants go to whom.

Documents that the Secretary of State’s Office provided to Tennessee Watchdog say nothing about the board’s rationale for giving the $1.56 million to GM.

Meanwhile, documents from other states show that GM officials are also active with lobbying expenditures in other states — and those efforts are also paying off.

MARYLAND

In 2010, GM invested $129 million in the Baltimore Transmission Plant to build electric motors and related electric drive components. The company was selected by the U.S. Department of Energy for a $105 million grant for electric drive systems manufacturing.

In addition, Maryland is providing a $3 million grant through the Maryland Economic Development Assistance Fund (MEDAF) and a $1.5 million grant from the Maryland Department of Labor, Licensing and Regulation Workforce Training Fund.

MICHIGAN

Detroit News reports that GM wants $10 million in refundable or assignable tax credits for its Warren Tech Center.

• In September 2008, the facility was part of a retention and brownfield credit that was expected to cost the state $168 million.

• GM has been the recipient of at least 10 other deals from the Michigan Economic Growth Authority, which estimated incentives valued at the time of passage at more than $1.5 billion.

KENTUCKY

The Kentucky Economic Development Finance Authority gave preliminary approval for $7.5 million in tax incentives if GM invests $131 million in the Kentucky Corvette Plant.

TEXAS

General Motors Assembly Plant in Arlington applied for refunds on state sales and use tax payments through a state incentive program called the Texas Enterprise Zone Program. For GM, the savings would amount to $3.75 million. The tax breaks, tied to new investments, would come on top of other tax incentives the companies          might receive.

• GM had already been granted tax abatements over a 10-year-period from Arlington and Tarrant County, valued at $10 million for an expansion of its plant, where it builds large sports utility vehicles.

INDIANA

Fort Wayne city and Allen County officials announced in 2009 a $2 million incentive package to the General Assembly Plant in Allen County.

• The Indiana Economic Development Corporation offered General Motors up to $200,000 in training grants based on the company’s job creation plans at manufacturing operations in the state.

OHIO

General Motors was awarded a 50 percent Job Creation Tax Credit in 2010 for a seven-year term as a result of the company’s expansion in the City of Defiance. The value of the tax credit is estimated at more than $1.37 million.

• GM, in the Village of Lordstown, has been awarded a 75 percent credit for a 15-year-term for the company’s expansion of its facility. The value of the tax credit is estimated at $4.4 million.

• The Ohio Tax Credit Authority approved a 10-year, 50 percent tax credit worth $14 million that enables GM to keep its $74.8 million in annual payroll at the plant.

In total, GM has received $1.7 billion in state grants and abatements since 2008.

Christopher Butler is the editor of Tennessee Watchdog and the Director of Government Accountability for the Beacon Center of Tennessee. Contact him at chris@beacontn.org

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Posted under Featured, Federal Stimulus, Government Regulation, Government Waste, Misuse of funds, News, State Government.

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