NASHVILLE, Tenn.) – Legislation which provides accountability for state grants invested to bring new or expanding businesses was recognized recently at a ceremonial signing in Nashville. The bill, co-sponsored by Senate Finance Committee Chairman Randy McNally, provides that the Tennessee can hold back funds awarded through the Department of Economic and Community Development (ECD) if a company receiving a grant does not live up to their promise to bring new jobs to the state.
“This is a bill that protects taxpayer money for being used to provide grants to a company that promises to bring new jobs to our state, but does not deliver them,” said Chairman McNally. “The Commissioner and the Governor ought to be able to say if these jobs are not coming, then funds can be withheld.”
Before the legislation was passed, state law did not have a clawback provision, which is a term referring to any money or benefits that have been given out but need to be returned due to special circumstances. The new law allows ECD to execute a separate agreement in conjunction with any FastTrack development grant or loan contract that reserves the right to recover the amount of money, grants, funds, or other incentives if the person or entity benefitting fails to fulfill their commitments.
“If we use taxpayer money to recruit jobs to Tennessee, the recipient company must be held accountable,” McNally added. “This legislation simply gives the Governor and the Department of Economic and Community Development a tool to ensure that these funds are used appropriately and within the terms of the agreement.”