Proposed TN amendment would let state own banks, company shares

On March 22, 2022, Sen. Ferrell Haile presented Senate Joint Resolution (SJR) 0913 to the Senate Judiciary Committee that passed out of committee unanimously and proceeded to be passed out of the 112th General Assembly.

By Gary Humble / Tennessee Stands

The next step would be for this resolution to pass the 113th General Assembly by 2024 and then be voted on in the general election of November 2026.

Since 1870, Article II, § 29 and 31 have remained unchanged. Section 29 allows counties and municipalities to extend their credit to and become stockholders in private companies and associations, but only with a 75% majority vote of all qualified voters. That is an incredibly high bar and I am unsure if that has ever happened in the state of Tennessee since this constitution was ratified in 1870. Perhaps some joint ventures between counties and private medical institutions may fall into this category.

But Article II, § 31 is explicit. It states:

The credit of this state shall not be hereafter loaned or given to or in aid of any person, association, company, corporation or municipality; nor shall the state become the owner in whole or in part of any bank or a stockholder with others in any association, company, corporation or municipality.

Seems like common sense, right?

Think about recent happenings with the nearly $1 billion of your tax dollars being invested into the Ford Motor Co. for a West Tennessee plant and the $500 million bond boondoggle for a new Tennessee Titans stadium in Nashville further subsidized by a one-point increase to Davidson County’s hotel sales tax. But now, let’s take that a step further.

Imagine a constitutional amendment that would now allow Tennessee to invest funds with companies like Ford and the Titans and become legitimate shareholders where the success and failure of both the state and the corporate entities are inextricably linked. Imagine Tennessee being able to extend its credit to private companies like Facebook and Amazon. Consider a future where the state of Tennessee is now part owner in a bank that might underwrite your small business loan.

This amendment to our Constitution is now officially on the table here in Tennessee. Here is the proposed amendment and new language for Article II, § 31:

The credit of this state shall not be hereafter loaned or given to or in aid of any person, association, company, corporation, or municipality. The state shall not become the owner, in whole or in part, of any bank or a stockholder with others in any association, company, or corporation. Notwithstanding the foregoing, the governing body or state official charged with carrying out the purpose or objectives of a fund or trust that is administered or invested by the State Treasury and that contains state funds, in whole or in part, may adopt, with approval of the Treasurer and the Comptroller of the Treasury, an investment policy to authorize all or part of such fund or trust to be invested such that the state would become an owner, in whole or in part, of any bank or a stockholder with others in any association, company, or corporation. (emphasis added)

Now, I want to make absolutely certain that you understand what is happening here. The Treasurer and Comptroller of this state (an appointed, not elected position) would now have the sole authority (with no required legislative approval or vote of the people) to invest ALL of a state fund or trust (your tax dollars) giving the state the ability to become a 100% owner of any bank or corporation.

Does that sound like Tennessee or China?

It is no surprise that this proposed amendment was brought before the legislature by the Department of the Treasury itself. But is it surprising that no Republican in office questioned the constitutional validity of this amendment? No one asked the question in committee, “should the state own private companies and banks?” No one seemed to consider the future implications of entangling public and private interests and that perhaps giving the state this kind of power and/or a corporation this kind of leverage over the state might be a threat to liberty and constitutional order.

No. The only concern seemingly raised was one of risk and return on investment. Senator Jon Lundberg raised the question in the Senate Judiciary Committee that allowing the state to invest in equities would put the state’s investments (your tax dollars) at greater risk. Treasurer David Lillard, Jr. seemed to satisfy those concerns by communicating his team’s ability to manage portfolio risk and procedures for diversifying investments to weather the storm.

That is all well and good when we are talking about business and private equity. But the question we should be asking is, “What is the proper role and function of government?” I am continually dumbfounded that our state legislators seem to be wholly unconcerned with this central question and when deliberating legislation and amendments to our Constitution, they are more worried about portfolio risk than securing the rights and privileges of the citizens of this state.

In a free society, should a state government own, in whole or in part, a corporation or bank? The answer is unequivocally, NO. Yet, here we are.

Looking a bit further into this question and considering the broader implications, you will find that this conversation is happening in other states and around the globe. Wyoming had a measure on the November ballot asking citizens to approve an amendment to their constitution that would allow the state’s legislature to approve of local governments investing their funds in stocks and equities thereby becoming owners of private companies.

In May 2020, Yale School of Management released an article, Governments Support Businesses through Equity Investments, detailing strategies being employed by governments in Germany, the U.K., France, and the EU, “designed to support companies facing difficulties due to the COVID-19 pandemic.” Of course, the support comes in the form of a loan from the government that upon due payment, can be converted to equity at a 20% discount to the government whereby they now become shareholders in the private company.

Put all of that together and think about the broader context. Consider the United States’ increased cooperation with China. Consider that Governor Bill Lee attended the U.S.-China Collaboration Summit in Kentucky in 2019. Think about predictions by the World Economic Forum that private property ownership in some cities will disappear by the year 2030.

And lastly, consider the rise of social justice efforts and progressive agendas leading toward the implementation of ESG (Environmental, Social, and Governance) scores that tie equities, investments, and one’s ability to engage in the marketplace directly to how woke you or your company might be. Per Dun & Bradstreet, Prioritizing ESG Is Not Optional Anymore. Meaning, if you want to play ball in the investment world, you need to make sure that bowing down to Black Lives Matter, implementing Diversity, Equity, & Inclusion initiatives (DEI), paying attention to climate change, and becoming a member of the LGBT alphabet club is at the top of your priority list.

Let me assure you, passing this constitutional amendment here in Tennessee would be disastrous and puts Tennesseans that much more in the crosshairs of the global cabal. The unintended consequences on this would be unending and would most certainly introduce external and global pressures not only to our economic future but to the actions our legislature might take under duress to further erode the liberties of the people.

My guess is that the powers pushing this initiative in Tennessee know quite well the warnings laid out here. Therefore, this attempt will be done as quickly and as quietly as possible. I would expect SJR 0913 to quickly make its way to the floors of the Senate and the House once we come into session in 2023.

We’ll be watching and so should you. This measure cannot pass. We cannot continue to erode the foundations of liberty, allow government to increase beyond its prescribed boundaries, and blur the lines between state and private interests.

Gary Humble is the founder and executive director of Tennessee Stands, an organization working to secure liberty and hold elected officials accountable to the Constitution through legislation, litigation, and education. Follow Gary @garyhumble and visit www.tennesseestands.org.