A recent report issued by the Office of the State Auditor highlights a number of failed economic development projects for the state over the past few years.
The failed projects, which include Twin Creeks, KiOR, Stion, GreenTech Automotive, Aphagen, Eco-Elite and others, represent $185.6 million in disbursements, the report said.
Despite the fact that the report pointed out Mississippi is still operating in the black in terms of successes in economic development – the State Auditor says the state’s multiple funding programs have generated $8 billion in capital investment from incentives recipients and has a $12 return on every dollar spent on economic development projects – many have chosen to focus on the failed projects numbers instead.
Many of the failed companies were not traditional job creators, the report points out, and were operating with “unproven startup technology” when they received the incentives.
Most of this is not news to Gov. Phil Bryant, who when elected governor in 2012 said that he preferred to focus on traditional and proven manufacturers, rather than the more risky ventures former Gov. Haley Barbour’s administration frequently gambled on.
There are many out there who would like for economic development incentives to go away, like, yesterday.
Many of my colleagues in the media rail against the state government having the power to gamble taxpayer money on projects that may or may not create jobs.
They point out that the government is often able to pick winners and losers through incentives, and small businesses, which are key to Mississippi’s economy, rarely receive the level of benefits some national and international companies receive in exchange for job creation.
These are all really good points, and if you did a survey of economic developers, most of them would come up with 10 more reasons why incentives are bad.
That’s right. Most hard-working economic developers would prefer to market their communities and their development sites on their own merits and not have to reach deep into taxpayer pockets to close large deals.
The only problem is that you would need about 3,000 other counties, and in some cases Mexico and Canada, to agree to compete without the use of tax incentives.
In other words, this is the system we have, and if we didn’t play it, much of that $8 billion capital investment that has come from these incentives-laced projects would likely go to states and countries willing to cough up the money.
What should probably concern Mississippians more than lost incentive money is the fact that Mississippi isn’t issuing a ton of tax incentives for job creation right now.
Back in November, Golden Triangle Development Link CEO Joe Max Higgins hinted that Mississippi might be heading for what he called a “five-year drought” when it comes to landing economic development deals.
Higgins said that leadership at the Mississippi Development Authority is attempting to steer projects toward its preferred sites, rather than allowing site selectors to choose which sites in Mississippi best suit their clients’ needs.
If this is true, then it could be problematic, and it could be the reason why Mississippi has not landed a proverbial buffalo since Continental Tire announced in early 2016 plans to build a plant and create over 2,000 jobs in Hinds County.
Higgins relies heavily on having a good relationship with MDA and its director Glenn McCollough, so the fact that he is so vocal about this issue speaks volumes to its seriousness.
Higgins, and others like him, work very hard just to get site selectors to the site visit stage of a project, sort of the rounding second base point. You would hate to have a state agency come to the table and say “Hey, before you head to third base, we have a whole other ballpark we’d like you to see.”
Higgins claims Mississippi has lost projects due to MDA attempting to steer projects to its preferred sites. McCollough has denied this.
This rift between MDA and one of its most powerful generals in the field comes at a time when the Delta is ramping up its economic development efforts through Delta Strong.
Millions of private dollars have been invested throughout over a dozen counties to create this regional approach to economic development.
Most site selectors prefer some sort of regional pact.
Delta Strong promises to leverage the resources and strengths of the entire region to help create jobs, and that is not a bad strategy.
Even better, I have been told it is a matter of policy not to steer companies to one county or another. They allow site selectors to choose the best site for their clients.
At the end of the day, if one county wins a project, the other 15 did not lose, because they weren’t competing. We’re all in this together, so to speak.
Regardless of which county is courting a project, it is my hope that if the state becomes involved in the latter stage of the deal, it would only use its incentive leverage to try to close the deal and not use it to steer a company and jobs away from our region.
The Delta has a lot to offer companies, but with systemic issues that affect education and labor force readiness, we don’t have a lot of margin for error. In other words, companies are not going to be patient if local leaders and state leadership start bickering at the negotiation table.
Sunflower County and the Delta are due for some wins. If MDA is our third base coach, hopefully they will wave us around, instead of throwing up the stop sign.