ii

Why would anyone listen to the Chamber on workforce? This question comes after Chamber initiatives of the Greater Memphis Alliance of Competitive Workforce (GMACW), 7 years ago and Upskill 901 2 years ago, and still no connected workforce development plan.

In a Memphis Business Journal article, the Chamber’s Beverly Robertson asserted the need for more research to change the workforce narrative, all while connected workforce development implementation is non-existent. What’s stunning is the County Commission continues to rely on the Chamber and douchebag elitists for guidance in developing the workforce. 

After years of ripping off and botching the workforce development system, the elitist need to “start pukin” up millions, if not billions to rebuild the workforce development system they destroyed. “Start Pukin” is my branded solution platform to solve an array of local challenges. 

Given these challenges, in many cases, no research is needed. Answers are in plain sight starting with the 12% Career Technical Education (CTE) concentrator rate in Shelby County Schools. A student is considered to be a CTE concentrator if they have completed at least 2 CTE courses (formerly known as vocational courses) in a single career pathway. 

Another huge gap is the seeming omission of vocational community colleges in the local workforce development discussion. K-12 and Universities are regularly featured in local public proceedings but not Southwest and the Tennessee College of Applied Technology (TCAT). In a recent Leadership Memphis webcast on workforce, neither Southwest, TCAT or Moore Tech were represented, leaving a massive gap in the discussion. 

All of this to say, increasing CTE enrollment and post-secondary 2 year and less degrees is paramount to successful economic development efforts. 

More on CTE

To summarize the table above, the CTE concentrator rate, per the State of TN report card in 2019 was 41.7% statewide. Arlington, Bartlett, Millington, Collierville and Germantown collectively had a 33.5% CTE concentrator rate with Shelby County Schools (SCS) at an abysmal 12%. SCS declined by 40%, in percentage terms, in 2018 from 20% to a 12% CTE concentrator rate. What happened ?

I don’t blame SCS for the low CTE concentrator rate. After all, there was supposed to be a number of “partnerships” to help propel SCS workforce and economic development programming over the years, that never seemed to happen for one reason or another. Like early literacy, CTE should be locally thematic, but it isn’t, fundamentally squandering economic development efforts. 

The Shelby County Schools CCTE website lists almost 80 partners that consists seemingly of every known entity in Memphis. This listing begs the question, “what did the partners do, tell students not to enroll in CTE?”

Its understandable why an urban school district would have below average ACT academic scores, but a 12% CTE concentrator rate ? Occupational demand easily supports a CTE concentrator rate at 50% or above. Such a rate is good for economic development as it is aligned with employer demand. 

Anyway, based on a State Report Card cohort of 7,900 students, increasing  the CTE concentrator rate to the state average of 41.7% would increase the SCS high school graduation rate by 2% or 164 students and annual post-secondary enrollment by 234.

This is based on this Congressional report that reveals that CTE concentrators have a 7% higher high school graduation and 10% higher post secondary enrollment rate as compared to non CTE concentrators. 

While there is a ton of work to do, having a connected workforce development system plan, not decreasing and increasing the SCS CTE concentrator rate and regularly engaging vocational community colleges is where we are at…..

Without any representation from elected officials at the Depot Board meeting, the above community advocates showed up at the EDGE/Depot meeting to protest the dissolution  of the Depot Board.  The advocates included: Frank Johnson, Marquita Bradshaw, Doris Bradshaw, Mr Payne and another.

Advocates expressed concerns regarding the Depot Board’s lack of community engagement, transparency and public fund use as well as concerns about public health and the environment. After a motion by Gerre Currie, the Depot Board delayed the vote and promised EDGE staff engagement with community advocates.  

While the former are valid advocate concerns, transparent but locally unpublicized public documentation exists regarding historic Depot Board transactions. To that extent, public documentation proves core city disinvestment and coming AFTER Depot proceeds funded EDGE!!!

Public documentation reveals, pre-EDGE Depot Board commercialization proceeds, funding both EDGE and the new Depot Board, to  be operated as a consolidated group of EDGE managed Boards. The initial funding included $15M for EDGE and $9.9M for the new Depot Board. 

The Depot Board was to support inner city economic development to fill the gap left by the economic dislocation of the Defense Depot departure in the late 1990s. But that is not what happened.

Taxpayer atrocities routinely take place in Memphis. This is just one example of such atrocities and supports a community ask of EDGE of approximately $15M for inner city and community directed economic development efforts as a whole.

Below is a summary of transactions that proves systemic inner city disinvestment and depletion of Depot Board funds. The below table references those transactions with public documentation links in the following reference section. See below: 

HISTORIC DEPOT BOARD TRANSACTIONS

References

2013 EDGE Financials (Comptroller)

2014 EDGE Financials (Comptroller)

2015 EDGE Financials (Comptroller)

2016 EDGE Financials (Comptroller)

2017 EDGE Financials (Comptroller)

2018 EDGE Financials (Comptroller)

2019 EDGE Financials (Comptroller)

2020 EDGE Financials (Comptroller)

2022 EDGE Budget – June 2021 Minutes

Notice: This blog has been corrected throughout as the Depot Board remains on the agenda. I was looking at the agenda from the last meeting and mistakenly thought the Depot Board had been cancelled. Also “South Memphis” replaced “Orange Mound”. 

Old White Dude says South Memphis representatives Commissioner Milton and Vice Council Chair Swearengen should have  a whole bunch of questions for the EDGE Board. Why?  Empowered by local legislative bodies to do so, the EDGE Board has consistently been raiding, so to speak, Depot Board funds. These are the very funds ($7 to 17M) that could be used to reinvigorate South Memphis, or for that matter, other core areas  of the city. 

And its true that EDGE has a Depot Board meeting for this Wednesday, to dissolve the Depot, while returning a measly $2K to taxpayers. 

Formerly centered in South Memphis, the Defense Depot shut down in the late 1990s. Historical press reports have peak employment as high as 5,000 and in the late 1980s 3,000. Unfortunately, Depot employment started to decline in the 1990s until the Depot’s Washington DC ordered closing in 1997. 

Following the closing, subsequent Depot Board economic development efforts, prior to EDGE were successful. The initial Depot Board commercialized properties, which attracted 1000+ jobs, while getting approximately $1M of new commercial property tax revenue on the tax rolls. While the Pre EDGE Depot Board’s efforts were impressive, those efforts appear not to have replaced the wage losses from 3,000 jobs.

In fact, based on economic modeling, using data obtained from historical news sources, on average, since the decline starting in 1990 from 3,000 jobs, South Memphis lost 1,700 direct jobs per year. At $50,000 per year per job, this would equate to, since the start of the 1990 decline to the present, $2.5 billion less in wages generated in South Memphis (Methodology and References At the End). 

To this extent, the Depot economic dislocation could help explain, over time, the decline of South Memphis property values.  This type of dislocation demands a sustained public intervention. But that is not what happened when EDGE took over the Depot Board. 

EDGE Board Disinvestment

First, in 2011, EDGE was initially funded with commercialization proceeds from the Depot Board, in the approximate amount of $15M. This left the Depot, which was consolidated as a related entity under EDGE management, with approximately $9M in cash. What has transpired since then can be described as a raid, so to speak, by EDGE, on Depot funds. 

With the former stated, while South Memphis was most impacted from the Depot closure, the entire City and County were impacted as well. In this way, it makes sense to prioritize South Memphis while systemically propelling the entire City and County. But that is not what has happened, with Depot funds under EDGE.  

While the effectiveness of $15M for EDGE  provided from Depot funds is a separate evaluation, this is what has happened with $9M in EDGE directed Depot funds. Many of the funds are Depot Board “loans” at 0%. And keep in mind, EDGE and related entities have $15M in cash (too much) on their balance sheet, which gives them plenty of money to fund the below without help from Depot funding. See below:

About $2M was spent on continued Depot commercialization efforts. This makes sense.

$4.6M was allocated to President Island through Depot “loans”

$1.1M in grants to Greater Memphis Alliance for Competitive Workforce (GMACW)

$900K to municipal chambers of commerce

$500K to the Memphis Tomorrow Fast Forward economic FOCUS plan development

With the above as a backdrop, the following are other actions that EDGE is planning to take related to the Depot. See footnotes in on page 4 of the EDGE Board June 2021 minutes: 

EDGE forgave itself for an approximate $1M Depot loan at the 6/17/21 EDGE Board meeting

EDGE extended the maturity date of the $2.5M loan to the Industrial Development Board to 2024 at the 6/17/21 EDGE Board meeting.  The loan had previously been extended in 2015 to 2020. Commissioner Lowery and Councilman Ford were not in attendance for this meeting.

Depot Board meeting to dissolve the Depot Board on 7/28/21 with $3.7M loaned to EDGE and the IDB.  See dissolution resolution. 

All of this to say, that the former is not typically press reported but to EDGE’s credit is distributed for public review following and in advance of their meetings. Old White Dude says, folks need to start asking questions…. 

Methodology of Economic Modeling

3,000 Federal Depot jobs were used as a 1990 basis, based on a CA article in 1996. Other press articles informed modeling of Depot commercialization efforts estimating jobs currently at 1,760. There were no available studies that I could find on the matter. References below: 

CA Article 1996

EPA – 2009

While this blog has rightly criticized the Greater Memphis Chamber (GMC) on workforce, there is no way the Chamber can be this bad ! No Way !  They must have powerful help. And they do from the spooner elitists and SCORE board. Its impossible to be this bad, unless even the GMC is being obstructed.

This blog will take a historical look at this cockblocking of the workforce development system, which will include a review of the entirely useless Shelby County Joint Economic Community Development Board (SC-JECDB). 

Keep in mind The SCORE Board, at the end of the legislative session, took a victory lap for phonics and ACT WorkKeys. While both have their places, they are hardly an innovation and I am a WorkKeys or like tool advocate. ACT WorkKeys, assess individuals’ academic competencies against workplace criterion references and is used to build common language in support of workforce and economic development. 

At the same time, and Blackjack will love this, history says that Tennessee was the first ACT WorkKeys state in the country. The implementation occurred in the 1990’s under Governor Ned McWherter and Dr. Charles Smith, Commissioner of Education. But the elitists soon killed WorkKeys while erroneously pushing a 4 yr college for all. Again WorkKeys, while a credible and needed tool, is not an innovation to take a victory lap about. 

First, lets review the last presentation on workforce involving the GMC on June 17,. 2021. I am convinced the elitists are even cockblocking the Chamber, just as the elitists have done for years with the regional economy. Gwyn Fisher, Greater Memphis State Regional Economic Development Director, opens up the presentation by commending the publicly treasonous and incestuous GMC / University of Memphis partnership. Then, without any representation on the panel from 2 yr colleges, Ted Townsend launches into a UofM/Chamber outsourced Brookings data presentation on workforce, all while the UofM pursues Carnegie R1 research status. Odd……

Anyway, the data presentation correctly emphasized Science, Technology, Engineering and Math (STEM) careers and diversity, while without 2 yr colleges on the panel,  seemed slanted toward 4 yr degrees (See page pg 14). This is unfortunate, as the labor market is paying for 2 yr degrees. Southwest CC 2 year wages are $45K and The UofM 4 yr wages are $46K. See SCORE Higher Ed By the Numbers report. 

At the same time, per the Integrated Post-Secondary Education Data System, Shelby County completion rates languish most, due to falling 2 yr and less post-secondary completions. Using STEM program completions, as defined by the Chamber, from 2014 – 19, Above 2 yr completions increased by 64%, while 2 yr or less fell by 38%. The greatest opportunity for quickly increasing completion rates is 2 yr and less degrees. And the labor market is paying for them ! 

Historic All Time Spooner Cockblock

Spooner cockblocking of the workforce development system goes back years in Memphis. I suspect the cockblock started, 20 years ago, right when Memphis Tomorrow started, as this corresponds with the beginning of local ecosystem decline. And then, to make it worse,  local elitists teamed up with the SCORE Board. Anyway, lets look at a timeline for this multi-billion dollar taxpayer cockblock.  

2009 – As early as 2009, connecting the workforce development system was a concern. See Shelby County Joint Economic and Community Development Board (SC-JECDB minutes)

2011 – County Commission later follows the disastrous advice of Mayor Luttrell to fund Memphis Tomorrow with $1M. See SC-JECDB minutes

2014 – Co-chaired by FedEx’s Christine Richards, Memphis Tomorrow Fast Forward FOCUS Economic Development plan is launched, and includes the Greater Memphis Alliance for Competitive Workforce (GMACW) initiative 

2014 – GMACW hires Dr. Glen Fenter of ASU Midsouth who supports ACT WorkKeys implementation

2015 – Spooner elitists rig a deal for Canadian provider that has little to no United States domestic experience in workforce development

2016 – Mayor Jim Strickland launches WorkKeys as a local initiative.

2016 and after – ACT WorkKeys never widely promoted and implementation fails to occur

2016 – Connected workforce development flounders and Haslam and Hyde launch Complete Tennessee initiative

2016– I join the Chamber and begin to promote my small business workforce development solution. 

2016 – With small business solutions in hand and workforce development locally disconnected, I file formal complaint of concern with County Mayor Luttrell, who also sat on the GMACW Board and chaired the SC-JECDB Board. Luttrell does nothing with complaint. 

2017 – Obstructed by the elitists, which is common, GMACW’s Fenter departs. (This seems to parallel the recent Dr. Damon Fleming departure from the UofM)

2017 – EDGE takes over GMACW

2017 – Complete Tennessee issues first report and states institutional ignorance of labor market in Memphis. This was a core deliverable of GMACW

2017 – I am kicked out of the Greater Memphis Chamber without cause or provision of Chamber bylaws while promoting my connected workforce development solution. As data shows, local elitists despise local small business. 

2019 – Complete Tennessee folds into SCORE

2019 – In October, Chamber launches Upskill901 workforce initiative, along with with Brookings out of DC and Burning Glass from Boston. 

2021 – SCORE Board takes victory lap for ACT WorkKeys legislation. 

2021 – Chamber appears obstructed by the elitists. 

2021 – Local disconnected workforce efforts remain.

Conclusion

The elitists have staying power and one has to stick with it for a while to find out what is really going on. History says, there has been a sustained and intentional effort to cockblock connected workforce development efforts in Memphis. And its not the rank and file but the spooner elitists that are botching the workforce development system. Think Blackjack, Puke, Orifice Ingram and Loser Frist. 

The public University of Memphis (UofM), in partnership with the Greater Memphis Chamber (GMC),  has moved the economic development goal posts. The moved goal posts come through a research partnership with the Washington DC based Brookings Institute, who in the last Memphis/Shelby FOCUS economic development plan, failed to deploy any measurement parameters whatsoever!

In typical Memphis rigged system fashion, the Brookings failure was rewarded with yet another contract by the UofM/Chamber partnership. The moved goal posts come in the form of Brookings establishing a more accommodative 10-member peer group (to be examined in the following section), than the 16-member group previously established by the UofM Memphis Economy project.

Riddled with conflict, the UofM / Chamber partnership is an act of public treason and could only be the brainchild of a civic, corporate socialist imbecile. It’s a partnership that surrenders public university thought leadership, on matters of public economic development, to the private GMC, all while the UofM hypocritically pursues Carnegie R1 institutional research status.

Keep in mind, the UofM touts $98M in additional annual wages or effectively $3M in estimated Memphis/Shelby tax revenue resulting, upon becoming an R1 institution. But what if, in 2017, the UofM had just been a solid R2 public university community partner?  In this way, the UofM would have  locally advocated the elements contained in the UofM “We Are Not Lost – Amazon Gave Us a Road Map”  publication, while leveraging their originally selected 16 member peer economic measurement platform.

Had the former occurred by the UofM, there is a good chance that the $3M increase in annual local tax revenue from R1, would be dwarfed from 1) tax incentive reform and 2) the implementation of a public workforce/economic development plan. Had these two items occurred, future local tax coffers would have likely seen $25M+ additional in annual tax revenue.

That’s not to mention that such a local public university, would not have been on binge, bullying the local taxpayer out of $45 in local grants and tax incentives. Let’s hope the UofM achieves R1. But in the end, being a good public partner and independent university thought leader, dwarfs R1 status for community benefit.  

And another aside to lacking local credibility was Dr. David Rudd, strangely finding it necessary, to assert a false top 25 ranking for UofM Men and Women tennis teams before the UofM Board of Trustees. The assertion came regarding the ridiculous $10-14M City participation in the $20M tennis center. In 2019, the UofM was not even in the Men’s or Women’s top 75 and that is nothing against the local tennis program and its great student athletes at all.  But sadly, false assertions seem to have become habit for the UofM under Rudd. See 15 minutes in the Trustee meeting video.

Its just such a strange and unneeded false assertion, when all that needed to be said is that “Our UofM Tennis teams are quickly becoming more competitive, as compared to recent years”. Anyway, back to the moved goal posts.

Moved Goal Posts and Consolidation???

The elitists will do ANYTHING to control the narrative, to include not measuring anything or moving goal posts to dodge accountability. That’s why nothing seems to change. The problem is not so much below average total wage growth but how much taxpayers have paid, in excessive tax incentives, for deficient growth.  Further, it appears the elitists want to talk about governmental consolidation, which while not transformational, does have merit.

But unfortunately, instead of just publicly advancing the case for consolidation, the elitists must move goal posts and seemingly rig data sets, for their presumed consolidation case. So here is what has happened to the previous 16-member peer group and data set. Gone are Charlotte, Greensboro, Jacksonville, Omaha, Cincinnati, Tulsa, and Little Rock. New, to the now 10-member peer group is Milwaukee and includes: Birmingham, Louisville, Nashville, Indianapolis, St. Louis, Kansas City, Memphis, Oklahoma City, New Orleans, and Milwaukee.  

Most alarming, is the illogical exclusion of Charlotte from the peer group, who like Memphis, is a southeastern non-consolidated border city with a significant 33% Black population. The non-consolidated Charlotte also led the previous peer group in total wage growth. So, it appears, if you can’t beat them, exclude them and a high performing non-consolidated city vanishes from the data set. 

Also illogical is the new addition of Milwaukee to the peer group, which is a northern non-border city, with a lower than Charlotte 27% Black population and lower total wage growth than Memphis. In the end, the new peer group allows Memphis “economic developers” to shave 4% points off their 10 yr. total wage growth deficiency, against a lower peer average of 36.5% down from 40.3%.

To get a complete understanding, the below table contains both old and new peer groups, with recently excluded members shaded in red. The chart at the beginning of this section, visually depicts the impact of the  moved goal posts. Also below, are tables and charts for Tennessee municipals.

TN Peer Group

Senate Bill 623 (SB0623) should be vetoed by Governor Lee. This education bill was thoughtlessly amended at the last minute of the legislative session, with from from Memphis, Representative Mark While and Senator Brian Kelsey co-sponsoring the measure. The bill, originally a technical housekeeping bill, was amended with a heavy social studies instructional mandate, which included punitive local education agency (LEA) funding sanctions if not followed. 

As written, the most controversial part of the bill, would require “impartial” instruction regarding some of history’s greatest atrocities. If not followed, LEA funding could be withheld. To further complicate implementation, while putting LEA funding at risk, the heavy mandate contained no funding support for educator professional development. Professional development was not even discussed during the floor debate. Given the omission of professional development, for this reason alone, SB 0623 should be vetoed. 

Like with the controversial Reading 360 initiative, advocated for by SCORE, no educator testimony was entertained regarding SB0623. But even SCORE is opposed to the thoughtless SB0623 bill. 

While much of the hour long floor debate revealed a lack of understanding of state standards, the bill amendment sparked a healthy and robust debate. Strong points regarding social studies instruction were made on both sides of the debate. The presenting amendment sponsor, Representative John Ragan of Oak Ridge, was under the mistaken impression that classroom social studies instruction could not deviate from the state standards, as did other legislators.  

State standards layout minimum learning outcomes for Tennessee K-12 students. Instructional time is typically prioritized around the standards to best insure student performance on standardized tests and compliance with state law. At the same time, other content beyond what is specifically addressed in the standards can be covered in classroom instruction.  

One question that came up during the debate was would instruction concerning Critical Race Theory be disallowed in Tennessee classrooms? Let’s explore. 

Critical Race Theory (CRT) and Conclusion

Regardless of one’s beliefs in CRT,  there is nothing that would disallow the instruction of a data supported theory in Tennessee classrooms. In fact, such a theory facilitates student research and exploration on both sides of the issue. At the same time, given CRT is not included in the Tennessee standards, CRT is likely to be covered at varying levels throughout the State of Tennessee. 

Given the arguably overamplified racial polarization in the country, professional development is needed to support teachers in introducing theories as theories and not as fact, for age appropriate exploratory research and classroom discussion/debate. The use of reliable source documents should be part of professional development as well.

Its rather sad, but it would be a shame if the K-12 classroom becomes divided like the electorate, while sourcing competing “fact” documents from the likes of CNN, Fox, OAN and Newsmax.  

Given this discussion, while I believe racism exists in our society, I do not believe we live in a racist society. To that extent, professional development is needed to help educators engage facts, theories and other controversial subject matter in such a way that it helps to unite rather than divide for a better state and country. 

In the meantime, SB0623 should be vetoed. 

In the nationally low cost Memphis business operation center, through a range of public “economic development” programs, Memphis excessively subsidizes corporate/real estate interests while small business and workforce are left behind. As one would expect, this misguided policy landscape, creates imbalances that result in deficient economic development outcomes. 

A few years back, after paying $29 for retail downtown public garage parking in Philadelphia, a day later in Memphis, I found garage parking for $6 ! Upon discovering this, I became breathless, while sweating profusely, thinking I had been warped back in time.

Recently, I learned that public parking is highly publicly subsidized in Memphis, which helps to explain my experience just a few years pack. Public parking is subsidized largely for the benefit of corporate and real estate development interests. This has resulted in an oversupply of downtown public parking and subsidized corporate parking rates for the likes of First Horizons and ServiceMaster. 

For example, First Horizons pays $3.50 per day, not even the $6 cost of a Big Mac and Fries, for daily public garage parking, At the same time, the taxpayer, through the Office of Planning and Development, pays $8.25, which based on analysis, would be about the daily rate that is needed to cover public parking costs. 

Meanwhile, ServiceMaster pays nothing, for 1,000 spaces,  as a result of an economic development subsidy awarded in 2016. This subsidy is not publicly quantified anywhere, as is common with a tax abatement, but should be. The value of this ServiceMaster parking subsidy, over 15 years, is approximately $32M. And First Horizons parking gets subsidized, even though the bank, over its 150+ year history, only knows as home, Downtown Memphis.  

So why not course correct and subsidize areas of need like workforce development ?

Progressive Vision of Course Correction

Paul Young, the new Downtown Memphis Commission (DMC) CEO, could provide the progressive course correction the City of Memphis needs. After all, Young did not create these imbalances and he must know that the bulk of economic development improvement, resides in workforce and small business development. 

Think about it. Young has plenty to work with. Either shutting down the $138M PILOT Extension Fund (PEF) or redirecting its future excesses to workforce development, would be a major progressive course correcting step, to serve local economic development needs. 

With including interest cost, approximately $92M of $138M of the PEF committed, that leaves $46M for workforce over the next 25 years. And getting First Horizons and other corporate parkers, to at least pay the super business friendly $6 cost of a Big Mac and Fries for daily corporate parking, would result in more effectively covering public parking costs. 

After all, with $77M committed on top of $75M already spent, Memphis is set to have the best public parking in America, with a $152M total scheduled public spend over 40 years. This will result in a massive annual $3.8M subsidy, for downtown public parking over 40 years, which for the most part, should typically be a self supporting enterprise. 

And don’t forget about the opportunity Young has to reduce downtown PILOT term lengths to the more common 10 yrs, while disallowing PILOT extensions, all for the benefit of the taxpayer and public general funds. 

So with significant resources in hand, there is hope for course correction. We shall see……

The winners are Patrice Robinson, Martavius Jones and performance of local government. Robinson/Jones should feel confident about their job tax incentive reform proposal made at yesterday’s Joint City Council / County Commission session. See table above. 

Here’s why they should feel confident. The market is set. FedEx is paying $20 per hour w/ benefits and Amazon, without tax incentives after a $200M capital investment, is paying $15 per hour w/ benefits. In present day Memphis, the market does not get any more clear than that, with a sweet spot at $17 per hr.

Through tax incentive reform, Robinson/Jones demonstrated a savvy intuition to strike the right community balance between market forces and public needs, that support increasing tax revenues and wages with a $17 per hour with benefits target. Away from eliminating incentives and futuristic modeling that has historically paved the way for excessive incentives, the proposal is brilliant in its simplicity, balance and alignment with community needs and market conditions.  

The Robison/Jones proposal supports property tax abatements starting at 71% declining  to 30% based on the percentage of jobs paying at least $17 per hour with benefits. The proposal needs more work, as eluded to by Councilor Rhonda Logan. Such work likely includes resolving PILOT term lengths and provisions that check any abatement of already existing property taxes in PILOT awards. Abating existing taxes brings significant opportunity costs, that should require trade off analysis by local legislative bodies. 

Richard Smith of FedEx gave a thoughtful video presentation, calling for more oversight, transparency and accountability, aligned with a published economic development plan, while not “giving away the store” with excessive incentives. Smith seemed, in many ways, hungry for public leadership. Its a public economic development plan that is needed, which has always been the public sector’s job to author.

To that extent, local government staffs, on their own, put together two legislative packages, rich with useful information highlighting excessive tax incentives when compared with other municipalities, references to independent research, tax incentive approval process maps and an eroding EDGE approval process. Local government should gleam with confidence and know they got this !

Over the years, the Greater Memphis Chamber has been unable to author a public economic development plan, which can be explained by the fact that the private sector, not the public is the Chamber’s customer. On the other hand, it would seem that the Chamber would see it in their interest to bring public incentives in line with market conditions. After all, while being a significant consumer of both local public services and and tax incentives, even FedEx, would likely be hard pressed to understand publicly incenting jobs much less than their very own $20 per hour. 

Ultimately, the data compiled by local government staffs reveal a need for tax incentive reform to reverse an eroding job incentive approval process, while not giving away the store. 

Erosion and Process

Page 10 of the legislative package, assembled by local government staffs, revealed significant erosion in the EDGE job tax incentive approval process, with average wages declining, over time, for approved PILOTs. The table, on page 10, is entitled “Countywide Average Wages vs PILOT Projects”. Informed by the table, the chart above graphs, in blue, EDGE’s average wage PILOT approvals over time, with actual countywide average wages, informed by BLS, appearing in orange. 

Erosion is shown with the EDGE average wage approvals declining and in fact, descending below actual average county wages. As far as historic approval process, Councilman Jones remarked that legislative bodies did better than the independent EDGE Board that started in 2011. Jones is correct. 

Further details in the legislative packet document other municipalities requiring local legislative approval. With this possibility looming of a possible return to local legislative approval, Councilman Worth Morgan prioritized speed in the process as preferable, while for the most part, defending the status quo. Morgan also remarked that only gains occur with PILOTs, but the fact is that taxpayer losses do occur, when abating existing property taxes, which often results in significant opportunity costs. 

Commissioner Whaley asserted changes must be made in light of local economic development outcomes and Commissioner Sawyer stressed the need  for legislative action, the need for community engagement and involvement in the educational system by PILOT recipients. 

Folks seem to like, what is an unreliable measure, the benefit cost ratio. It it is to be used, it should be correctly calculated, while not calculating in already existing property taxes, when figuring project revenue, as that artificially inflates both the benefit cost ratio and overall project revenue.    

Conclusion

The winners are Robinson, Jones and local government. All should be confident. They nailed it while having all community stakeholders and taxpayers in mind…..