GREENWOOD — When Mississippi lawmakers give away tens or even hundreds of millions of public dollars to land a new factory or help an industrial start-up get off the ground, they do so primarily on trust.
They trust the governor to not bring them a pig in a poke. They trust the handful of lawmakers in the governor’s inner circle to actually have read and studied what the state is getting in return for what it’s giving away. More than anything, they trust the Mississippi Development Authority, the state agency responsible for vetting these economic development projects, to do the due diligence.
MDA, though, can’t be trusted.
It says in its literature that it “takes its fiduciary responsibility seriously” so that all of these taxpayer-funded incentives are wisely awarded. What it seems to take most seriously, however, is helping whoever is governor boast about how many jobs he is creating, all the while ignoring how many he is costing by heavily subsidizing some companies over others.
The recent $600 million megadeal with Continental Tire typifies how MDA and the politicians who empower it operate. They came to the Legislature with a complicated 200-page bill, they gave lawmakers no time to read it, they lined up the state chamber of commerce to help lobby for it, and they implied that lawmakers better act now or this opportunity might go elsewhere.
All the while, they offered figures that were either incomplete or misleading in order to obscure the absurdity of giving away $240,000 apiece to land $40,000-a-year jobs.
When it was “selling” the Legislature on approving the Continental deal, MDA provided a one-page, unvetted analysis by an economist on the state payroll that claimed the project would net almost $500 million for the state’s general fund over the next 24 years. MDA conveniently left off the value of tax breaks and rebates, which doubles the state’s cost. Nor did it provide any proof that the revenue projections in the analysis are realistic. Three weeks after the Legislature approved the subsidies, the only person who knows how the economist, Dr. Bob Neal, got his revenue totals is supposedly Neal.
This pattern of suspect number-crunching is pervasive throughout MDA.
Case in point.
Blake Wilson, CEO of the Mississippi Economic Council, wrote an op-ed column in The Clarion-Ledger recently in defense of the Continental megadeal and others like it. He offered the following statistic to support his argument: for every public dollar in incentives the state spends, it is matched by $10.61 in private corporate investment.
Wilson is a good guy and well-respected in the business community. But, as head of the state’s chamber of commerce, he’s also expected to be an unabashed cheerleader for almost any economic development project that comes down the pike.
I asked him where he got that $1-to-$10.61 ratio. He referred me to MDA, which provided as backup its annual report to the governor and Legislature on the myriad of Mississippi incentive programs.
The report is mathematically dishonest.
It is peppered with duplication on its job and investment counts. If a company gets state help from two different incentive programs, for example, the amount of money it is promising to invest and the number of jobs it is promising to create get counted twice. The double-counting on two heavily subsidized manufacturers alone, Nissan and Yokohama Tire, inflated the return on investment by 15 percent for the five-year period covered by the report.
The report also omits, unsurprisingly, any calculations for tax breaks and rebates, and it grossly overstates the number of jobs it claims to have “saved” at existing manufacturers. For example, in 2012, MDA awarded Viking Range Corp. of Greenwood $20,000 of “job protection” funds. MDA pretends that relatively modest grant saved all of the company’s 893 jobs in Leflore County at the time.
All of this questionable accounting makes it appear that the taxpayers are getting a better deal than they are and hoodwinks lawmakers into keep the money coming.
What is the true return on investment on these corporate giveaways? I don’t know. But neither does MDA. I asked if they kept an unduplicated calculation.
Bet you can guess their answer.
Kalich is editor and publisher of The Greenwood Commonwealth.
