On Wednesday, Governor Haslam unveiled a comprehensive plan that aims to build and sustain Tennessee’s economic growth and competitiveness for future generations.
The IMPROVE Act will have a tremendous impact on economic development and the recruitment of new businesses and jobs to Tennessee. From TNECD’s standpoint, the provisions in the governor’s plan will also encourage the expansion of existing businesses in Tennessee.
The governor’s IMPROVE Act is important for business recruitment in two key ways: First, it ensures that the State will be able to provide the safe and reliable transportation network needed to support future job growth. Great roads lead to great jobs.
In 2014, Area Development ranked Tennessee No. 1 for the best infrastructure nationwide. Business Facilities ranked Tennessee No. 2.
One of Tennessee’ s most desirable attributes when recruiting jobs is our location on the map. Together with our strong infrastructure, our central location makes Tennessee a destination for manufacturers and distributors that want quick access to markets throughout the country. The IMPROVE Act recognizes that our infrastructure is a vital asset for Tennessee’s economy.
TNECD strives to recruit companies that will call Tennessee home for the next hundred years. These kinds of stable, forward-thinking companies don’t just want to know that our road system is one of the best right now. They need to be confident that it will continue to be one of the best in the coming decades.
Governor Haslam’s comprehensive and sustainable plan to fund transportation and infrastructure projects well into the future – in debt-free, pay-as-you-go manner –means businesses will know that if they come to Tennessee, they will never have an issue getting their product to the market.
TDOT has worked closely with ECD to provide first and last mile highway access to new and expanding industries. This has been a critical factor when companies like Hankook Tire, Academy Sports, Under Armour and others have chosen to invest and create jobs in Tennessee. Ensuring our infrastructure remains strong is critical for future job creation.
Secondly, the IMPROVE Act would reduce business taxes for manufacturers by roughly $113 million annually.
The manufacturing sector makes up 16 percent of Tennessee’s economy. One-in-eight hard-working Tennessean has a job in manufacturing. From automotive companies to food manufacturers, Tennessee is known around the world for quality products made by our citizens.
In recent years, Tennessee’s manufacturing industry has had considerable growth. Tennessee is doing exceptionally well in recruiting new manufacturers and creating an environment where existing ones can grow. Manufacturing employment has grown more than 15 percent since 2010 – more than double the national average – and Tennessee’s manufacturing job growth during that time is the fifth largest in the nation. Since 2010, Tennessee has posted the second-largest percentage increase among Southeast state in manufacturing GDP, which reached $51.1 billion in 2015.
The governor’s plan would encourage even more of this type of growth for the manufacturing sector.
When it comes to the way our state taxes manufacturing companies, Tennessee is currently at a competitive disadvantage with our neighboring states – especially the ones TNECD competes with for the major projects that can transform a community. TNECD has missed out on several major business relocations because of it.
By changing the way Tennessee taxes manufacturing companies to a single weighted sales factor, the governor’s plan will make Tennessee more competitive when recruiting new manufacturing companies and jobs, creating an even better environment for job creation.
Attracting more manufacturing companies – especially original equipment manufacturers such as Nissan, Volkswagen and others – creates a multiplier effect with the suppliers they bring in, leading to more career opportunities for residents.
We have many homegrown manufacturing companies that have a rich history in Tennessee. Yet some have operations in other states that offer lower business taxes. Often times it is more cost effective for these Tennessee manufacturers to expand in another state where they have operations. Tennessee should be the most manufacturing friendly state in the Southeast – especially for our existing manufacturers, both small and large. We’re currently presenting our existing manufacturers with the difficult choice of having to spend extra tax dollars to grow their business here in Tennessee.
The tax changes proposed in the IMPROVE Act, however, would encourage Tennessee’s existing businesses to invest in the Volunteer State and create new jobs for our residents.
These two parts of the governor’s proposal – a balanced transportation plan that ensures our infrastructure is reliable and the reduction of taxes on manufacturers – make Tennessee even more attractive for job creators.
Ultimately, the IMPROVE Act will have provide more opportunity for small businesses, more opportunity for manufacturers and more opportunity for Tennesseans.