3 days ago
Conflicted Tennessee Senate overwhelmingly passed business tax refund
Sen. Shane Reeves, R-Murfreesboro, received a $1 million grant from the Tennessee Department of Economic and Community Development to start a business which has since received a tax rebate from the state. (Photo: John Partipilo/Tennessee Lookout)
Thirteen of Tennessee's 33 senators declared a conflict of interest before voting on a $1.9 billion business tax break in 2024, including one whose companies reaped the benefits of the cut and a prior state grant.
Two years before winning the seat in 2018, Republican Sen. Shane Reeves of Murfreesboro received a million-dollar FastTrack grant from the state Department of Economic and Community Development when he opened TwelveStone Health Partners in Rutherford County in 2016. The company invested nearly $15 million to create 200 jobs for the packaged medication, healthcare services and medication equipment company.
A pharmacist by trade, Reeves started the business after he and his former business partner, Rick Sain, sold Reeves-Sain Drugstore and EnTrustRx, a specialty pharmacy business, to Fred's Inc. for $66 million. TwelveStone has expanded several times over nine years, opening infusion centers in multiple locations, including Virginia and Georgia.
Senators declaring a conflict of interest with tax rebate bill:
Paul Bailey, R-Sparta
Ferrell Haile, R-Gallatin
Joey Hensley, R-Hohenwald
Jack Johnson, R-Franklin
Adam Lowe, R-Calhoun
Jon Lundberg, R-Bristol (no longer in office)
Bill Powers, R-Clarksville
Kerry Roberts, R-Springfield
Paul Rose, R-Covington
John Stevens, R-Huntingdon
Page Walley, R-Savannah
Bo Watson, R-Hixson
Dawn White, R-Murfreesboro
Ken Yager, R-Kingston
Nearly a decade later, TwelveStone Health Partners and TwelveStone Holdings are two of 16,000 Tennessee businesses receiving a franchise tax refund of more than $10,000 after Republican lawmakers pushed the measure backed by Gov. Bill Lee through the legislature last year.
Reeves told the Lookout this week that TwelveStone met all requirements for receiving the 2016 grant and now employs nearly 300 people. Asked whether he's concerned about the appearance of double-dipping, Reeves described himself as a 'part-time citizen legislator' the first four months of the year and chief executive officer of TwelveStone the rest of the time.
'My job is to do what's best for our company. I would never expect any more or less for my business than anyone else's,' Reeves said in a text statement.
Chairman of the Senate Energy, Agriculture and Natural Resources Committee, Reeves said he is 'comfortable' with the reporting ranges in the refund law, calling them a 'fair compromise' for transparency.
Listings on the state Department of Revenue website show categories for companies receiving refunds up to $750, between $750 and $10,000 and more than $10,000. The lists totaling 60,000 companies were posted May 31 and are to remain available to the public for 30 days.
Senators were reluctant to publicize any of the companies when they took up the bill last year, passing it 25-6, with former Sen. Art Swann of Maryville the only Republican to vote in opposition. Two members did not vote.
But the House demanded some form of transparency, though Democrats and public records advocates say the ranges aren't specific enough considering the amount of money rebated to some of the world's largest companies, including FedEx and 13 subsidiaries, Ford Motor Co. and AT&T. The House passed the measure 69-23, largely along party lines.
The Tennessee Senate uses a policy called Rule 13 as part of its code of ethics that allows senators to declare a conflict of interest, without giving details, but allowing them to vote based on their conscience and obligation to constituents. The House has no rule requiring members to state a conflict of interest before votes that could affect them or their businesses financially.
In addition to Reeves, Democratic Sen. Jeff Yarbro of Nashville, who voted against the tax cut and refund, declared Rule 13 before last year's vote.
World's top businesses, Lee Company receive biggest Tennessee tax rebates
Yarbro told the Lookout this week he pulled out of the partnership track at Bass, Berry & Sims law firm so he wouldn't be part of its financial decisions.
'I'm not opposed to any business or citizen taking a refund from the government. Who wouldn't? If I qualified for a refund, I'd take it. But I still think it's bad public policy,' Yarbro said in a statement to the Lookout.
Yarbro added that, while he felt the bill ran contrary to public interest, he understood it would benefit many businesses in his Senate district, including the firm where he works, thus he declared the potential conflict of interest before the vote.
Yarbro and state Rep. John Ray Clemmons of Nashville also proposed a bill they said would enable the state's franchise tax law to withstand constitutional muster without making rebates. Republican leaders declined to consider it.
When the matter arose last year, the Department of Revenue told lawmakers it received a challenge to the state's franchise tax on business property, leading most to say the tax cut and refund was justified in averting an expensive legal fight. Attorney General Jonathan Skrmetti also advised lawmakers to avoid litigation.
Other key legislators such as House Majority Leader William Lamberth of Portland said the reductions were simply good tax policy and not necessarily based on concern about a legal threat. No lawsuit was filed against the state in advance of the vote.
Republican Sen. Brent Taylor, former owner of Brentwood Funeral Services in Shelby County, voted for the measure last year after declaring Rule 13 but didn't apply for the tax refund.
'I just didn't think it was appropriate for me to have voted for the franchise tax cut and then go out and benefit from it, because I knew I'd have reporters … calling and wanting to know if I thought it was appropriate to take the refund and also vote for it,' Taylor said.
