By John C. Mozena, president of the Center for Economic Accountability
September 30, 2022
Judge Brenda Holbert Trammell’s ruling against issuing the proposed Rivian bonds is a victory for taxpayers and the rule of law in Georgia. She shone a bright light on the way Georgia’s economic developers ignore the law, the public interest, state Constitution and basic common sense in their pursuit of headline-grabbing subsidy deals.
On the national level, this is a virtually unprecedented example of economic developers being held to their responsibility to represent the best interests of their communities, rather than cater to the demands of the companies they’re subsidizing.
These bureaucrats may have been expecting a judicial rubber stamp, but they got a hammer instead.
Judge Trammell had the responsibility to decide whether as much as $15 billion in bond debt would “promote the general welfare” of the community. Her decision was made easier by the complete failure of economic development agencies to do basic things like “employ an investment banker, economist, financial analyst or other third-party to evaluate the financial wherewithal of Rivian and its ability to commence and complete the project.” Government officials didn’t even review Rivian’s 2021 10-K or 2022 10-Q public SEC filings and “did no analysis as to the impact the Rivian plant would have on the local communities and the additional expenses of government services,” she noted.
Apparently, Georgia’s economic development bureaucrats do about as much due diligence into companies they’re handing billions of dollars to as you’d expect from some diamond-hands meme stock trader on Reddit.
Georgians should be very concerned that it took local activists doing their homework and a judge who took her role unusually seriously to derail a megadeal with such huge implications for local communities. Economic development agencies should be the ones holding companies accountable, but they’ve clearly defected to the other side.
Judge Trammell, in her technical role as the validator of the government’s plans to issue bonds, should not have had to be the one to raise the objection that the Georgia Constitution prohibits just this kind of transfer between the government and a business. “There is no statutory or constitutional mechanism in Georgia to abate taxes,” she pointed out, but “these types of transactions, in spite of no legislative or Constitutional enablement, are used regularly in investments of this type.”
This judge asked the right questions. Now, it’s time for Georgia’s taxpayers to do the same thing.
The Center for Economic Accountability (www.economicaccountability.org) is a nonpartisan and nonprofit educational organization that works to advance transparency, accountability and market-based reforms in state and local economic development programs across America.Photo of Mozena available here: https://economicaccountability.org/john-c-mozena-photo/