(The Center Square) – Some lawmakers and taxpayer watchdog groups have recently expressed a loss of faith in Tennessee’s FastTrack economic development grant program following the controversial awarding of a $30 million grant to Seattle-based Starbucks to open a new Southeast corporate office in Nashville.
The company has promised to create 2,000 jobs with an average annual pay of $125,000. The State Funding Board voted to award the grant in May despite a series of corporate downsizings by the coffee giant in recent years – including a May announcement that it would eliminate 300 U.S. corporate jobs and close several regional support offices, laying off around 900 corporate workers in September.
Starbucks laid off 1,100 corporate employees in February.
At least three Tennessee gubernatorial candidates have questioned why a deep-pocketed company such as Starbucks needs a taxpayer-funded financial incentive to open offices in a bustling city like Nashville. Starbucks has been moving positions out of the state of Washington after lawmakers there approved a millionaire’s tax on residents, though company officials have not directly linked the move to the tax.
The Center Square examined how the state recoups money from companies that don’t fulfill their contractual obligations. Records provided by the Department of Economic and Community Development show that Tennessee has clawed back $92.4 million from companies for not meeting job goals, with $20.1 million still owed.
Republican gubernatorial candidates Monty Fritts, R-Kingston, and U.S. Rep. John Rose, R-Tenn., both called the grant “corporate welfare.”
“I’m against all the corporate welfare,” stated Fritts during a June 25 candidates’ forum in Chattanooga. “We are conditioning a behavior in them that when eight to 10 years out, they have a balance sheet that doesn’t look the way they want it to, they’ll stick their hand out again and say we’re thinking about moving to Sheboygan if you don’t give me a few thousand dollars.”
Rose has also criticized the Starbucks grant and gubernatorial candidate U.S. Sen. Marsha Blackburn’s support of it.
“They’ve got a $250 million annual payroll, 2,000 jobs, the opportunity for more growth in our state,” Blackburn said in an interview with a Memphis television station. “Within six months the state will have recouped every penny.”
Rose said Tennessee, which does not have an income tax, does not collect payroll taxes.
“Marsha Blackburn is standing up for Starbucks, not Tennessee,” Rose said in a social media post. “When it comes to companies bringing DEI agendas to transform our state, she seems more interested in money and influence than defending family values that have been cultivated for generations.”
Democrat Jerri Green, a gubernatorial candidate in the Aug. 6 primary, told The Center Square in an email that she doesn’t support the FastTrack program in its current form.
“The FastTrack program operates as corporate welfare that forces taxpayers to shoulder the risk when mega-corporations fail to keep their promises,” Green said. “How can we justify giving Starbucks, a company known for its unfair labor practices that raked in billions in profit last year, a $30 million payday while hardworking Tennesseans struggle to put food on the table?
“I would fundamentally overhaul the program by scaling down its budget to fund public services like childcare and medical debt relief, enforcing strict taxpayer clawback rules on companies that fail to deliver, and requiring any subsidized business to guarantee living wages and worker protections.”
The Center Square was unsuccessful prior to publication, getting comments from Democratic candidates Carnita Atwater, Tim Cyr, Adam Kurtz and Kevin Lee McCants.
Gov. Bill Lee’s office said FastTrack remains an important tool in competing for economic development projects.
“The FastTrack program has been a key driver of Tennessee’s economic success, attracting more than 1,300 business projects since 2012. Those projects represent nearly $60 billion in private capital investment and more than 225,000 job commitments, creating opportunities for hardworking Tennesseans in communities across the state.,” said Lee spokeswoman Elizabeth Johnson.
