Carjacking the taxpayer, by the small few, is the currency of decline in Memphis. In fact, some dismiss this claim, labeling it personal attacks or name calling. And they are correct, it is personal attacks based on the data supported facts of normalized decline, carjacking the taxpayer, violating and feeding on a Memphis community in need. Much of the carjacking is done under the heading of “government efficiency”. But there is nothing that is as inefficient and nationally embarrassing as the FedEx/Memphis Tomorrow public-private complex. 

Carjacking the taxpayer comes in the form of excessive incentives and an unmeasured FedEx/Memphis Tomorrow complex that is down in all categories over almost 20 years using your federal, state and local tax dollars. Runaway elitism, fueled in large part by poverty, is not offensive to an archaic and nationally embarrassing leadership complex that has racked up an estimated $100B in below average GDP growth, $50B in deficient wealth creation and $1.5B in taxpayer shortfalls.

Fred Smith or former Mayor Mark Luttrell could not hold anyone’s jockstrap in a debate defending the runaway elitism and outcomes of the FedEx/Memphis Tomorrow complex. 

History says, the FedEx/Memphis Tomorrow Complex has failed….

So who do elitists turn to when they want to carjack the taxpayer? None would be better than former lawman and Mayor Mark Luttrell. When they needed someone to botch the workforce development system and stifle small business, they turned to Mark Luttrell. I know. I made a formal professional complaint to Mayor Luttrell’s office as connected workforce development efforts were seriously behind schedule at the time in 2016. Luttrell turned around and carjacked the taxpayer and stifled local small business leaving the workforce development system in an indefensible mess when he left office costing taxpayers an estimated and now recurring $15M per year. 

When the elitist wanted to implement systemic and fiscally liberal corporate socialism, in the form of EDGE, they turned to lawman Mark Luttrell to carjack the taxpayer. And when FedEx wanted to carjack the taxpayer with a new PILOT for the FedEx World Trade Center (WTC), they turned to lawman Mark Luttrell. But what’s even more alarming about the new FedEx WTC PILOT, FedEx did not even want to abide by the new PILOT and pay the 25% PILOT based on an examination of public records. 

FedEx World Trade Center (WTC) PILOT

The fiscally liberal FedEx WTC PILOT approval led by lawman Mark Luttrell, came on the heels of a 20 year 100% PILOT valued roughly at $70M+. The excessive new 75% PILOT is valued at $64M over 15 years. And that is on top of FedEx’s other PILOT $34M Downtown PILOT. Can anyone say “Runaway Elitism” ? How about “Corporate Socialism”? You can’t talk in those terms in Memphis. 

But here is what is worse. After receiving all of this tax break consideration in the already nationally low business cost operation center of Memphis, FedEx did not even abide by the new 75% abatement PILOT. They wanted to stay on the old PILOT with a 100% abatement.

Somehow, after the Collierville IDB approval of the new 75% PILOT abatement in 2016, FedEx was granted an extension of the old 100% PILOT abatement without Collierville IDB approval, resulting in an annual County taxpayer loss of $750K per year or about $1.5M over the extension term. This can found by examining the dates contained in the 2017 Shelby County Trustee and 2018 Trustee reports for properties located at 60 Bailey Station and 0 FedEx. 

The additional challenge of this information, is it is published and questioned nowhere. Its not part of the public discourse, as flat property tax revenues are discussed amidst a range of community challenges. There is not a consolidated incentive database that would let taxpayers and policymakers know how much corporations and/or real estate owners are getting in total local tax consideration.

FedEx total tax consideration can only be found by making a series of public information requests from the Assessor and the Collierville Industrial Development Board and examining documentation by multiple tax abating agencies in EDGE and Downtown Memphis Commission. (As a note, John Duncan of the Collierville IDB was helpful and expeditious in servicing my public information request)

Further, there is no investigative press with the press either owned by or seemingly taking cues from the corporate elitists within a community without public university thought leadership that questions runaway elitism. Poverty is well documented by Elena Delavega’s Poverty Fact Sheet. But under the FedEx/Memphis Tomorrow Board of Trustees, UofM public university thought leadership on economic development policy that confronts runaway elitism is non-existent.

Heck the University of Memphis itself is busy getting local tax consideration under its FedEx/Memphis Tomorrow Board of Trustees while its Memphis Economy project, partnered with EDGE, leaves the economic development complex wholly unmeasured. 

Conclusion

Memphis lacks informed taxpayer advocacy in the public discourse. The elitist effectively disembowel the practice of taxpayer advocacy through a rigged system. Without public university thought leadership, aggressive public oversight, public measurement and non-investigative press led, in part, by editors like Eric Barnes of the establishment owned Daily Memphian, Memphis remains sheltered. 

Barnes rejects editorial submissions, without reading them, while calling citizen taxpayer advocacy in private blogs as name calling. And for that matter, it is name calling in calling out the offensive, normalized and destructive practice of unbridled and unchecked runaway elitism that violates and feeds on a Memphis community in need. In the real world, outside of Memphis, the former is nothing more than the basic practice of taxpayer advocacy.

Memphis is brainwashed and beat down believing that they would be nothing without FedEx. But FedEx would be nothing without Memphis. That is food for thought. Meanwhile, the Memphis taxpayer is carjacked, falls behind in the global economy with excessive incentives and high poverty levels while Barnes and publications like the Daily Memphian remain unoffended and offended at the calling out of the authors of runaway elitism. 

As far as my personal financial and small business mugging by Fred Smith, Mark Luttrell and Pitt Hyde, they feel entitled to financially mug local residents and small business within the public-private complex, while implementing systemic decline and ripping off local small business ideas, only to see them shipped off to Canada and Boston. Then, with their finger strategically placed, they wonder why small business struggles in Memphis.

Meanwhile, as you are getting financially mugged, you turn around and figuratively bust them in the mouth where this is locally termed, “inappropriate and politically incorrect”. Smith and Hyde would be bankrupt over and over if they just paid 1/2 the debt they owed Memphis. And allowing them to continually carjack the taxpayer only makes the debt worse on a debt they could never repay. Smith, Hyde and Luttrell are in effect taxpayer carjackers. And History Says, They Suck !

PS. My rejected Daily Memphian submission was data supported, professionally written without so called name calling and can be accessed here.

Memphis is not investing in its workforce. This was stated last week in a meeting of workforce practitioners. For years, Memphis has been transferring wealth, under the heading of “economic development” to real estate developers and corporations to serve global audiences. At the same time, by design, Memphis falls behind in the global economy while dismissing a major economic development asset – its youthful population. 

Last week, in Commission Chambers, I asked if Memphis Tomorrow, Republicans or Democrats had any research to support that excessive tax incentives actually work. There were no answers and the data shows they don’t work. So how might local legislators renegotiate economic development more around workforce development ? The simple answer is by using research. 

First, it has to be determined that excessive incentives is a budget committee issue. And to renegotiate economic development in favor of workforce, budget chairs will need the support of those committee chairs that are over youth and workforce development.

While connecting the workforce, youth and workforce development chairs would be advocating for economic development funding for programs like the Southwest CC Foundation, 9-12 Early Postsecondary Opportunities (EPSOs), Memphis Office of Youth Services, Junior Achievement and professional development. Legislators would further call for major private sector assistance to help Memphis catch up in the global economy while renegotiating economic development funding. 

Renegotiating Using a Research Base

Next, in this sample renegotiation, Dr. Timothy Bartik’s research Making Sense of Incentives will be used. The research is designed specifically for policymakers. In his research, Bartik states that less than 25% of economic impact is derived from incentives. The 25% is referred to as the “but for” percentage meaning that less than 25% of the time but for the incentive the economic expansion would not take place. 

In his economic modeling, Bartik uses a 12% “but for” percentage. Local policymakers should do the same in their renegotiation of incentives. To that extent, customized for Memphis conditions, we can model a sample renegotiation of Memphis/Shelby tax incentive policy. 

Commissioner and Councilman Jones and Jones, using a research base, would like Bartik, start the negotiation at 12%. Then corporate/real estate incentive advocates would push back and claim Memphis needs greater incentives due to high crime, workforce challenges and a high property tax rate. 

Jones and Jones would recognize these Memphis challenges while stating that Memphis has a low business cost operating environment negating the high property tax rate claim while adding 5% for each high crime and challenging workforce which actually needs more funding. Legislative workforce advocates would lend their support to the Budget Chairs. And a “but for” of roughly 25% would be derived for the average incentive.

In this way, we can apply the adjusted “but for” percentage and recalculate EDGE’s economic impact from their EDGE SCORECARD down from $1.4B to $356M. This recalculation would show EDGE operating at a total projected taxpayer loss of $236M. So over a 10 year span, there is a $24M per year in excess going to corporate/real estate incentives and not to workforce for years to come and where advocates for a better workforce should be up in arms. With flat property tax revenues, service gaps in public transit and workforce challenges, the recalculation makes sense of the current environment. 

At any rate, in this modeling, the 25% is the average “but for” percentage. To get to a sensible implementation of economic development policy to arrive at an average “but for” of 25%, low wage warehousing jobs and existing companies would have a “but for” percentage much less than 25% while companies relocating to Memphis in target industries would have a “but for” higher than 25% in calculating and sizing incentives. 

Making the Economic Development Case in Favor of Workforce

Bartik’s research has gifted advocates of workforce development with a research based tool to make the case for workforce within the context of economic development. The chart below, from Bartik’s research,  shows the economic impact of investing in workforce compared to incentives. 

For example investments in Southwest Foundation would garner a 8.15 taxpayer benefit to cost ratio compared to 1.52 for incentives. And investments in EPSOs, which is a K-12/Post Secondary investment,  can be calculated using the below chart, to have a 6 taxpayer benefit to cost ratio compared to 1.52 for the average incentive.  

In the current environment, Memphis workforce development practitioners, should feel confident in making the research based business case for workforce development public and private sector funding within the context of economic development. 

Conclusion

With flat property tax revenues draining off needed public funding for workforce development, the data is clear, sufficient economic development investments are not being made in workforce.

Excessive corporate/real estate incentives and unmeasured public-private initiatives are keeping Memphis behind in the global economy. Based on available benchmarking data, Memphis incentives are even excessive even compared to the environment that Bartik is questioning in his research.  

Renegotiating economic development with corresponding major infusions by the private sector in workforce is the only path to competitive growth while helping Memphis catch up in the global economy.  

About Bartik’s Research

Dr. Timothy Bartik’s Making Sense of Incentives research that centers on state incentives, is designed for policymakers and specifically mentions local legislative bodies. While there are a number of ways to evaluate incentives, Bartik’s work provides just another research based methodology to evaluate incentives. 

The corporate elitist formula is on full display for taxpayers. That formula is to bully taxpayers into a corner, with no good options but to fund a public service that the community needs and the corporate elitists massively consume – public transit. Not funding transit through an increased $20 fee/tax actually makes life worse for Shelby Countians, especially it’s most vulnerable.

The revenue shortfall to fund public transit stems from excessive corporate/real estate incentives and a botched workforce development system over a number or years administered by the Memphis Tomorrow public-private complex. As a result, when coupled with slow growth, Memphis/Shelby taxpayer revenue shortfalls exceed $50M per year.

The challenge for local legislators is that they need new revenue now. And the only way to get new revenue now is to tax the general population. Revenue shortfalls to support growth, which includes, in part, funding for public transit, are already scheduled and baked into future budgets with previously approved excessive corporate/real estate incentives for years to come.

And while yes, some savings can be had here and there, maybe like $500k-$1M from the community enhancement program, massive revenue shortfalls to fund scheduled business growth still remain from the formula product of runaway corporate elitism. So the public and legislators are backed into a corner with the $20 fee as the least bad option. But there are research based solutions to limit future revenue shortfalls that come in the form of true economic development for all.

Solution: Bartik’s Research

In the current environment and with no economic development plan, Dr. Timothy Bartik’s Making Sense of Incentives research should be required reading for local legislators. Bartik’s work was provided to me by Charles Gascon of the St. Louis Federal Reserve. After all, there is nothing research based about bully corporate runaway elitism. 

To that extent, like this blog, while not being opposed to the use of tax incentives, Bartik documents a number of leakages in common tax incentive modeling. Bartik further makes clear that economic modeling assumptions are critical in effectively understanding economic and fiscal impact. In his research, that focuses primarily on state incentives, Bartik communicates the following benefit cost ratios for economic development:

Public transit was not part of Bartik’s consideration in this case above but would certainly be part of overall economic development efforts in helping the most vulnerable get to work. But, while leveraging his research, in a City Lab interview on incentives and specifically in regard to the Amazon HQ2 package, Bartik says about the winning Virginia incentive package that was not the most lucrative:

“In Virginia’s case, a lot of the “incentives” were public-service enhancements: a new campus of Virginia Tech in Northern Virginia, improvements in public transit, enhancements in job skills. This kind of package makes more sense than just throwing a lot of cash at the company.”

The currently proposed tax incentive fiscal note impact (TIFNI) platform fully leverages Bartik’s research based approach to sizing tax incentives. TIFNI accommodates assumption modeling and opportunity costs into its calculations. There are research based approaches to economic development but runaway elitism is not one of them.

Legislators should consider this reality moving forward, while knowing that even within the tax incentive environment Bartik aggressively questions, that Memphis/Shelby tax incentives are still $250-400M excessive when benchmarked against other cities. 

Conclusion

Memphians should know that runaway elitism has been culturally normed. After all, there are a vast number of local leaders that stand by while the workforce development system is botched, cheer on excessive corporate/real estate incentives and turn around and pray for Memphis. 

While becoming aware of culturally normed runaway elitism and bullied into a corner, with no good options, legislators and the public need to bite the bullet on the $20 fee while moving forward with measurable research based economic development efforts. These efforts include massive incentive reform while confronting runaway elitism.

With major employers either tax exempt or getting 75% abatements, there is no money for community evolution. The LOSB and TIFNI research based economic development solution is ready to go and will help confront runaway elitism of the type that requires persistent tax increases while amplifying community imbalances. Implementation of TIFNI will help avoid future revenue shortfalls. 

With no good options, legislators should rest easy voting for the $20 fee while coming back and confronting the fiscal liberalism of the corporate socialists through aggressive economic development reform. In this way, legislators address both short term and long term community needs for years to come….

The Republican Party likes to “smoke their own dope” when talking “fiscal conservatism”. Showing up to oppose a $20 fee to help the poor get a lift to work, while ignoring fiscally liberal runaway elitism, is hardly fiscally conservative. Maybe, Republicans need to check their own house.

In their defense., perhaps its because of Republicans’ own ignorance that stems from a non-investigative local press that fails to communicate the fiscal realities of local affairs. And the reality is no city in America can support growth or even the status quo with major employers either property tax exempt or getting a 75% abatement. Its math. 

Memphians, in many cases, unknowingly live in a community of runaway elitism administered by the FedEx/Memphis Tomorrow complex of Fred Smith and Pitt Hyde where excessive tax incentives roar for the small few – while Memphis Tomorrow public/private initiatives are down in all categories while using your federal, state and local tax dollars. Its a design for decline occurring without public measurement of the public/private complex. 

Its been going on for almost 20 years while racking up below average GDP growth that has cost taxpayers $1.5 billion over time and deficient recurring annual tax revenue totaling $200M. Deficient revenue growth shows up as services gaps in for example public transit as well as others. And local Republicans participate in the wreckage.

Cary Vaughn has sat on two local workforce development boards that have failed to connect workforce development programming costing taxpayers an estimated $15M per year. These botched workforce development efforts have put Memphis 5 years behind in workforce development in a global economy. With no sense of urgency, Vaughn’s mistake was not leading, breaking from his board and going public to confront deficient public-private board leadership on workforce matters. 

And Vaughn also sits on the EDGE Board where he just voted for the excessive $38M tax incentive for UPS that was going to happen nowhere else but Memphis as well as the recent LeSaint Logistics PILOT that abated $4.5M in existing taxes for 52 low wage warehouse jobs. To give Republicans some idea of EDGE’s recklessness, consider the below EDGE approvals:

EDGE job incentives at $500 million + exceed the $335 million in total job incentives in both Indianapolis and Nashville combined.

Three of 96 EDGE tax incentive awards  — involving International Paper, Nike and Technicolor at $148 million  — exceed all of Indianapolis job incentives awards at $135 million involving 110 projects while Indy has greater job growth

In short, EDGE job tax incentives are $250 million+ in excess when benchmarked against other cities. This has resulted in slow growth and lack of available public transit, public safety and workforce development resources.

Further, involving all 13 Shelby County abating agencies, Memphis has 431 PILOT parcel contracts compared to 50 or less for each Nashville, Knoxville and Chattanooga. While these excessive incentives occur, in Commission EDGE oversight proceedings, Commissioner Mick Wright has yet to protest the associated fiscal liberalism as practiced through excessive incentive awards. 

It would certainly be nice to see the Shelby County Republican Party show up in legislative chambers to raise concerns against excessive corporate/real estate incentives or $3.3M Riverfront grants that contain no schedule of deliverables or a $3M UofM tennis center grant without economic impact justification or competing proposals. 

But apparently blind to runaway elitism, perhaps because they know nothing else, Republicans show up to claim the “fiscal conservative” mantel to oppose a $20 annual fee to help the poor get a lift to work. Meanwhile Commissioner Brandon Morrison leads. 

With No Good Options, Morrison Leads

With no good funding options, Morrison leads. I believe she has done thorough research and found that there is no other option available for a dedicated transit funding source. I know she is capable of thorough financial research. And the transit funding dilemma is not new, dating back 3 years when funding was identifed as the primary obstacle to adequate public transit. As a result, again, Memphis falls 3 yrs behind. 

Morrison appealed to her own Republican Party, was rejected and led forward. The $20 fee is the best bad option while supporting advocated business and economic development interests. In committee, Morrison effectively said the ad hoc committee is kicking the can down the road, predicting a version of the fee as the final outcome. She has done her homework. 

To that extent, I hope the Commission quickly passes a $14 or $20 transit fee while expeditiously moving to reform excessive incentives and implementing publicly administered measurement of the vast nonprofit public-private complex. That is where the greatest cost to taxpayers resides in excessive incentives and under performing public – private initatives. 

The proposed tax incentive fiscal note impact (TIFNI) platform provides a fiscal note for every abatement while providing a measurement platform for public-private initiatives. Through the use of a fiscal note, TIFNI helps to right size and reform tax incentives. 

Conclusion

Now Republicans know; a $20 fee is nothing in the overall scheme of things. A city cannot be adequately supported while major employers are either tax exempt or getting 75% abatements. And a city can only decline when the FedEx/Memphis Tomorrow complex is down in all categories while using your federal, state and local tax dollars. 

Its ok to call it a tax. The poor are already being unfairly taxed with inadequate transit. A $20 annual tax on the rest of us, is not much to ask. 

And finally, maybe Commissioners should consider the community debt and ethical invoice to the FedEx/Memphis Tomorrow complex of $1,500,000,000 payable upfront in the wake of 20 yrs of runaway elitism.  

The “Continuing the Legacy” of MLK event came up short on next implementation steps for furthering MLK’s legacy in Memphis where runaway elitism reigns supreme. The event was moderated by Wendi Thomas, with panelists Drs. Elena Delavega, Earle Fisher and Charles McKinney. 

First the good  and appropriate for MLK day, there was high quality oration by powerful speakers in Drs. Charles McKinney and Earle Fisher while referencing MLKs work. Fisher was the primary architect of the Upthe901 Vote campaign. Having produced the groundbreaking Poverty Report, Dr. Elena Delavega used data to support the need to continue the MLK legacy while Wendi Thomas’ pioneering journalism regarding the cessation of medical bill lawsuits involving the poor was celebrated. Thomas journalistic efforts saved local residents $11.9M !

Fisher mentioned concern with Memphis Tomorrow, the author of much of the runaway elitism in Memphis, but an attack on Memphis Tomorrow who is down in all categories while their initiatives use your federal, state and local tax dollars was not sustained by the panel nor was there a call for PILOT reform or concerns over the botched workforce development system. Currently major employers are either tax exempt or getting a 75% tax abatement leaving no money to adequately support business growth much less transformational economic development.

Cited was MLK’ s quote of “I have almost reached the regreatable conclusion that the Negro’s great stumbling block in his stride toward freedom is not the White Citizen’s Counciler or the Ku Klux Klanner, but the white moderate, who is more devoted to “order” than to justice; who prefers a negative peace which is the absence of tension to a positive peace which is the presence of justice; who constantly says: “I agree with you in the goal you seek, but I cannot agree with your methods of direct action”; who paternalistically believes he can set the timetable for another man’s freedom; who lives by a mythical concept of time and who constantly advises the Negro to wait for a “more convenient season.”

McKinney extended the “moderate white” from MLKs quote to include moderate blacks and others. Common themes that rang out were  the need for radical activism, higher wages and taxes, checks on over policing / local public safety agenda and speaking to power. Next steps for over policing were for attendees to sign a petition against amending the consent decree. But beyond that, next steps for continuing the MLK  legacy were hard to find. The need to organize was consistently referenced but with a focus on 2021 ???

Radical Activism ? Maybe Basic Taxpayer Advocacy First

Across the board, implementation is the problem in Memphis with runaway elitism, arguably the #1 problem. Failed publicly funded initiatives routinely occur with a plethora of social justice organizations locally silent in the practice of  basic taxpayer advocacy in public chambers. This occurs while everyone remains in planning mode and in the case of “Continuing the Legacy” planning for 2021.

The social justice complex routinely fails to prosecute the business case against runaway elitism in that it is in fact antibusiness as evidenced by peer bottom GDP growth under the corporate socialism of the FedEx/Memphis Tomorrow complex over almost 20 years. People aren’t pissed about that ! Runaway elitism is not even good for the FedEx/Memphis Tomorrow complex.

Much less radical activism, social justice organizations are never  in public chambers protesting against excessive incentives for the small few, botched public-private workforce development initiatives that have occurred over 5 years or public subsidies for favored nice to have projects. In fact, one questioner asked where is the activism in Shelby County School Board meetings ? Great point, as one of the area’s economic development assets is its youthful population.  If social justice organizations are trying to impact change and are not present in chambers, where decisions are made, they might as well pack it up. 

Earlier this year, I applied to be a journalist for MLK50. As on old white dude, my thinking was that I would add a degree of diversity to the MLK50 effort while focusing my journalistic efforts on making the professional business case against runaway elitism which has not locally occurred.

The business case against runaway elitism would be made though the lens of the taxpayer in a majority African American city with the idea that social justice starts with taxpayer justice. Its an easy case to prove and make with authoritative public data. I am not a professional journalist and was hopeful and open to coaching and editing by such a journalistic professional as Wendi Thomas and her team. But I never heard back for even an opportunity to pitch the idea. That made me wonder if the local social justice effort even wants to sustain and make the easy business case against almost 20 yrs of runaway elitism. 

Upon expressed concern to the panel over the lack of basic taxpayer advocacy by, in many cases, publicly funded social justice organizations in public chambers, certain panelists seem to question the “method” and right of the questioner to raise concerns saying that raising such concerns dismisses the work of Wendi Thomas. Wendi Thomas was not even mentioned in the questioner’s remarks. 

At the same time, the “Continuing the Legacy” event seemed ripe for planning immediate next steps in the practice of basic taxpayer advocacy in public chambers like for the next City Council, County Commission or EDGE meeting. Instead of radical activism, the unachieved threshold, at this point, is sustaining mere taxpayer advocacy. EDGE is easy to raise concerns with $250M in excessive incentives on the heels of a $38M excessive UPS incentive approval. 

But the overall next steps charge seemed to be planning for 2021. For whatever reason, planning is implementation in Memphis where growth has stagnated over 20 years. Maybe its because everyone is planning.

Conclusion

The remarkable accomplishments of the panelist should be celebrated – $11.9M ! And the historical references and oratorical representation of MLKs work were second to none and so appropriate for MLK Day. But at the end of the day, vitality and taxpayer advocacy is missing in public chambers for a Memphis community in need as planning seems to be the norm in a 20 year wake of runaway elitism….

So what is the priority, workforce or excessive incentives ? For years now the local establishment says that workforce is the #1 priority but connected workforce programming has never taken place. But what takes place regularly is EXCESSIVE incentive awards. For Workforce to be #1, public funding must be prioritized to serve the need. 

Louisville, KY., just last fall awarded UPS with a $40M incentive package for 1,000 announced jobs and a $750M capital investment. Memphis awarded $38M for 25 jobs and a $261M capital investment. UPS is making strategic geographic investments. The $261M Memphis investment was always going to be in Memphis and the $750M investment was always going to be in Louisville.

But in the current economic development climate, with “but for” gone in practice, some local incentive can be defended for the $261M UPS investment in Memphis. Using the TIFNI tool and applying generous assumptions, we recently right sized the UPS incentive down from $38M to $27M. 

TIFNI assumes a corporate expansion fiscally paying for its growth with the taxpayer netting at least as much as the corporate beneficiary in sizing job incentive awards. What’s good for the taxpayer is good for business. But if you benchmark the UPS Memphis incentive against Louisville’s UPS incentive, TIFNI assumptions are liberal. 

Here is what the benchmarking reveals about the UPS Memphis vs Louisville abatement while calculating in the higher Memphis/Shelby property tax rate and using 300 jobs for the Louisville. 300 jobs as opposed to 1,000 jobs is used for the Louisville analysis because the puff 1,000 jobs is not promised to materialize until 2035.

Louisville abated 35% of the estimated total projected new tax revenues to include taxes from wages and property and Memphis abated 68% with their UPS project. Had Memphis abated 35% of the new UPS project revenues, the Memphis abatement would have been $19.5M not $38M. See the $18.5M excess ?

With this $18.5M excess and no connected workforce development implementation, excessive incentives remains the local priority. 

Sizing Incentives, Taxpayer Advocacy and Process

New Councilman JB Smiley just wrote a Daily Memphian editorial where he discussed increased oversight for external agencies but Commissioner Martavius Jones tried that with his “reeling in” initiative. Jones’ initiative went nowhere. In fact, Jones has seemed to harden on EDGE reform while not allowing citizen subject matter expertise testimony in Budget committee on excessive incentives. Leadership in Memphis constantly dismisses the taxpayer which is why Memphis has fallen behind in the global economy. 

The new Council missed a major reform opportunity by approving the reappointment of 3 EDGE Board members which will result in service on an abating board of up to 16 years; 8 years longer than they can serve on the Council. As a result, just last week, the EDGE Board just approved 2 tax incentives in UPS and Blues City that can be shown to be $20M in excess. And that was only 1 EDGE meeting ! Generally, EDGE overall incentives are $250M in excess. 

And regarding external agencies, there is a bunch of them with 13 abating agencies in all of Shelby County. But starting with EDGE is a good start while working through the standard committee process without the creation of “Task Forces” that don’t work. 

Basic data driven decision making and taxpayer advocacy, evident in other communities, is missing from the Memphis discourse. Take for example the $3M riverfront Commission approved grant which did not contain a schedule of deliverables or $3M tennis center without hearing other proposals or having economic impact justification or the lack of rigorous EDGE oversight for 8 years. That’s not to mention the simple middle school math problem that is “if your major employers are tax exempt or getting 75% property tax abatements can business growth be adequately supported ?”

Anyway, EDGE is a good place to start with taxpayer advocacy and reforms. And they better put a stop on abatements as they consider reform or EDGE will ram a bunch of excessive crap through the system before reforms take hold. With a hold in place, research is available to reform and size incentives. Dr. Timothy Bartik’s work,  “Making Sense of Incentives“ ,  contains a diagram on page 23 that identifies leakages in typical economic incentive modeling.

Leakages that need accounting for in tax incentive economic modeling include:

75% of the time, incentives do not impact business location decisions

Few jobs go to residents that are not employed

Higher public support cost due to new residents

Incentives displace business for existing businesses that trade regionally

Currently local leaders have a both a measurement and data problem with incentives. The measurement problem is that the above leakages are not accounted for in current projection accounting and the data for incentives is not consolidated in one centralized database. The Shelby County Trustee for years has been calling for a consolidated database and Trustee Regina Newman has shown favor toward the TIFNI approach. 

The tax incentive fiscal note impact (TIFNI) platform proposes to provide a fiscal note for every abatement with all tax incentives consolidated in a centralized database with a taxpayer centric measurement platform for public-private initiatives. 

Conclusion

For years the community has viewed those from the FedEx/Memphis Tomorrow complex as economist. They are not. They are businessmen and their advice has resulted in an implementation of corporate socialism in the form of excessive incentives and a botched workforce development system.

If local legislators quit listening to the same people in the FedEx/Memphis Tomorrow complex, use data, start thinking for themselves while practicing rigorous oversight and view the taxpayer as the customer in publicly funded initiatives, Memphis will move forward with workforce as the #1 priority. 

These economic social justice panels are constantly running in Memphis. Such a panel is scheduled for Monday, MLK Day, entitled “Continuing the Legacy”. The panel touts a “radical economic agenda” while featuring Wendi Thomas, Drs. Elena Delavega, Charles McKinney and Earle J. Fisher. But with major employers either tax exempt or getting 75% tax abatements, by design, there is no money for a transformational economic agenda. 

Many of these panels appear to be more pageantry than activism as they run in parallel to a culture of runaway elitism in Memphis while rarely intersecting the unmeasured FedEx/Memphis Tomorrow complex. While still imperfect in other communities, a meaningful degree of taxpayer advocacy is just part of the discourse, where checks and balances are implemented, policy change advances and course correction occurs. But not in Memphis, all while social justice panels seem to run in parallel with runaway elitism. 

Meanwhile, the FedEx/Memphis Tomorrow complex is down in all categories while their initiatives use your federal, state and local tax dollars. Memphis has persistently declined as a competitive ecosystem, over almost 20 years without an external event. Folks should be pissed off about the former but they are not as decline has just become normalized. And without university thought leadership and an investigative traditional press, the public white, black, Republican, Democrat, male, female is ignorant of anything else other than systems of decline. 

The social justice civic confrontation that one would expect to regularly occur as part of the public discourse never really happens. The lack of civic confrontation results in a system without the vitality to grow while contributing to lacking checks and balances. The lead to the “Continuing the Legacy” event discusses a “radical economic agenda”.

Radical in Memphis is mere taxpayer advocacy. That is advocacy that comes with a more vibrant discourse in legislative chambers that confronts runaway elitism – while insisting on measurement of an unmeasured public/private complex –  that awards excessive corporate/real estate incentives for the small few. Such a vibrant discourse with checks and balances, evident in other communities, is just non-existent in Memphis.  

And with a plethora of social justice organizations in Memphis, such organizations are rarely seen in public chambers objecting to excessive incentive awards at an EDGE meeting, or objecting to the reappointment of EDGE Board members, or objecting to a $3M riverfront grant that contains no schedule of deliverables or objecting to a $3M UofM tennis center grant without hearing competing proposals. 

Just as a matter of standard process, even if everything were going fine which its not, abating board members should have only 4 year terms with only 1 allowed reappointment resulting in 8 years of service at the most. Currently, abating board members can serve twice as long as the Mayors or local legislators ! Anyway most of the above wreckage occurred just in the last 2 weeks with the EDGE Board reappointments approved by your new City Council. 

At the same time, these panels convene regularly calling for more programs when there is no public money to support transformational programming. The money has already been transferred to corporate/real estate interests in some $250M in excessive incentives while other growth tax revenues have been stifled with a dismissed small business sector and disconnected workforce development system.

Routinely, these panels fail to prosecute the business case against runaway elitism. It’s a simple case. Elitism is, always has been and always will be anti-business. 

The Business Case Against Runaway Elitism

The business case against elitism is that it does not work for business as shown in the above chart. If the cities in the chart were unknown and someone said that the city in the orange trendline is rigged and has stagnated with the same rotating band of players sitting on boards while the small few benefit from runaway elitism, that would be easily believable to most. That is the simple business case against runaway elitism but the social justice complex never prosecutes the case.

Recently, Charles Gascon of the St. Louis Federal Reserve was in Memphis speaking. Above is a chart using the same data set and source that Mr. Gascon used in his speech but dating back to when the FedEx/Memphis Tomorrow complex began in 2001.

It shows Memphis Gross Domestic Product (GDP) being effectively flat vs the GDP peer average that consists of 16 cities over 17 years. Tired of Nashville comparisons, also included in the chart is Louisville, a similar to Memphis border, river and transportation hub city. Cities like Nashville, Charlotte, Jacksonville, Oklahoma City reside above the black peer average trendline.

So what does this mean in dollars? It means approximately $150,000,000,000 in accumulated business GDP shortfalls in the Memphis MSA vs the peer average since FedEx/Memphis Tomorrow began. This translates into about $1,500,000,000 in accumulated local tax revenue shortfalls while now annually recurring at $200M vs the peer average since 2001. Explained with $200M more per year, is the fulfillment of local public safety, adequate transit, education, roads, trash and utility infrastructure needs with lower property tax rates for all. 

The policy stack of FedEx/Memphis Tomorrow consists of the excessive incentives that we all know about as well as a vast public-private network that leverages taxpayer dollars for community betterment. But again, decline is normal in Memphis with the public and  social justice organizations seemingly unalarmed by the fact that Memphis Tomorrow is down in ALL categories while using taxpayer money over almost 20 years. All occurring as Memphis declines and corporate/real estate incentives roar for the small few with taxpayers paying increased fees. 

I communicated with Gascon after his presentation. And he shared a presentation with me that he gave in St. Louis and not Memphis. The presentation in  slide 6 aggressively questions the economic impact of incentives. The slide validates much of the projection accounting in the proposed tax incentive fiscal note impact (TIFNI) platform and the type of projection accounting that is not presently occurring with Memphis tax incentives. Maybe Gascon will share slide 6 with new St Louis Fed Board appointee Carolyn Hardy.

More expanded references for Gascon’s summary points found in slide 6, can be found in Dr. Timothy Bartik’s work, “Making Sense of Incentives“. The work contains  a diagram on page 23 that identifies leakages in common economic incentive modeling. The diagram supports the devlopment of a more complete accounting model for incentive projection accounting.

Anyway, TIFNI proposes to provide a fiscal note for every tax incentive while erecting a measurement platform for public- private initiatives. Based on research, other communities are doing some degree of TIFNI already, based on their incentive sizing, but not Memphis with the award just this week of a $38M UPS incentive for an investment that was going to happen nowhere else except the Memphis Airport. 

Conclusion

All in all, the business case against runaway elitism is easy to make, as expressed through excessive incentives and an unaccountable public-private complex. But for whatever reason the social justice complex is not making the business case. That is the case that runaway elitism is not good for business or the community as whole.

While commonplace elsewhere, radical in Memphis, is taxpayer advocacy. Basic taxpayer advocacy is where to start. But if the panel wants to be radical, maybe they should send the FedEx/Memphis Tomorrow complex a data supported invoice for $1,500,000,000 payable immediately for deficient community results occurring as a result of runaway elitism. 

And the elitist don’t care about your race, they will in a sense, “carjack” any taxpayer regardless of their demographic.

Maybe something will change and be sustained in the public discourse following the “Continuing the Legacy” panel. We shall see…..

The Memphis/Shelby economic development plan is excessive corporate/real estate incentives. That’s it. And measurement of taxpayer funded economic development work is occurring in a bubble. According to EDGE Board Chairman, Al Bright, the EDGE Scorecard, which has consistently been shown to be unreliable and bogus, is the Memphis/Shelby measurement tool for economic development. 

On Wednesday, with barely a quorum of 5 of 9 members present, the EDGE Board approved a $38M tax abatement (5-0) for UPS and $3.6M Blues City Brewery abatement (4-0) with Al Bright recusing himself from voting. As a matter of note, neither Commissioner Lowery or Councilman Morgan were in attendance. With already existing PILOTs, under their belts in UPS and Blues City, neither of these capital investments are going anywhere else other than where they sit right now. We will dig deeper on these PILOTs later.   

And meanwhile, after 2 years, with the existing failed Brookings FOCUS plan going unmeasured, still, there is no new economic or connected workforce development plan as excessive incentives roar for the benefit of the small few. Excessive corporate/real estate incentives is the plan, while runaway elitism leaves a community behind in the global economy. 

Lower Expectations – “But For” Gone

Some local bloggers still rightly assert the “but for” criteria for tax abatements. The “but for” criteria is based on the philosophy that “but for the tax abatement the capital investment will not take place”. “But for” imposes a much more stringent requirement on awarding tax abatements.

In reality, “but for” left the building in 2012 with the $25M Valero award for a plant, that for all practical purposes, cannot leave. This recent UPS abatement is a repeat of Valero in many ways for an expansion that would not occur anywhere else other than at the Airport where it sits today. And pretty much the same goes for Blues City which already has a tax abatement with a well established facility in Southwest Memphis. 

But as expected, with an entity such as EDGE that is incented to award large tax abatements, one can predict that more stringent requirements like “but for” will be effectively nullified lowering the performance expectation to the detriment of the taxpayer. Lowering performance expectations for the public-private establishment is core to the FedEx/Memphis Tomorrow public-private complex. This lower expectation reality has been reluctantly accepted even by this blog by recognizing that “but for” is gone. 

As a result, today, $42M in future tax revenue was abated for corporate/real estate interests. With, “but for” gone what is the standard ? Well there really isn’t one. Seems all major employers are tax exempt or are getting a 75% abatement leaving no money to support growth and community evolution. But in the current environment, with “but for” gone, let’s at least try and apply some standard to see if we can get any recognition of the taxpayer. 

TIFNI – UPS and Blues City 

With “but for” gone, the tax incentive fiscal note impact (TIFNI) platform recognizes the taxpayer by sizing tax incentives based on reliable economic and fiscal impact analysis while insuring that the taxpayer benefits at least as much as the corporate/real estate interest. Applying fiscal analysis insures that growth can be publicly supported while the taxpayer return helps the community competitively evolve by addressing local service gaps in for example workforce, transit and public safety. 

In effect, while recognizing that “but for” is gone, TIFNI implements both a business and taxpayer friendly arrangement based on the philosophy “what is good for the taxpayer is good for business”. In this way business growth can be publicly supported while bettering the workforce, transit and public safety for all. 

UPS – When applying the TIFNI approach to UPS, the $38M abatement is $11M in excess and should be approximately $27M. Pretty business friendly for a UPS entity that was going to expand nowhere else. But what’s in it for UPS ? They are better insured of a quality workforce, safer streets and better transit all of which helps the UPS bottom line while retaining UPS in Memphis for the long term.

Blues City- When applying the TIFNI approach to Blues City, with 155 new projected employees, the $3.6M abatement works for Blues City. But here is the problem. After promising 500 employees following ramp up, overall, Blues City has underperformed on their already existing PILOT by approximately $1.6M in resulting local tax revenue. This analysis was done using EDGE Performance Reports and Project Details.

Given this underperformance, the EDGE Board should have not considered the new Blues City project or at a minimum reduced the abatement from $3.6M to $2M while stringently enforcing employment and wage requirements on the new project in the future. At the same time, performance requirements have not been enforced on this project while the EDGE Chairman, Al Bright, recused himself from voting. 

But even with the underperformance, TIFNI could manage to see a $2M abatement for the new Blues City project. Not bad for an underperforming project and pretty business friendly for a Blues City project that is going absolutely nowhere else. 

Conclusion

Clearly, with flat tax property tax revenues, Memphis/Shelby tax incentives are excessive leaving the taxpayer and the poor holding the bag. TIFNI provides a business and taxpayer friendly approach to tax incentives while effectively measuring public-private partnerships for the customer taxpayer. 

Additionally, given the findings of this analysis, governmental entities should directly fund, manage and oversee performance auditing away from the EDGE fox guarding the chicken house approach while implementing the business and taxpayer friendly TIFNI platform.

And appointing different people to local boards would likely help evolve local thinking. Mayor Strickland just reappointed Al Bight, Johnny Moore and Mark Halperin to the EDGE Board where they may serve as long as 16 years !  More of the same. So Sad. Also, Carolyn Hardy was just appointed to, yet another board,  in the St. Louis Fed Board. B-O-R-I-N-G !!!

Anyway, the idea of real measurement in Memphis is highly revolutionary. All of the above gets measurement out of a bubble while recogning the taxpayer as the customer in publicly funded community and economic development work. So, what can it hurt ? Why not give real measurement and the potential for subsequent economic growth a try……