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Programs must be administered properly

‘Empowerment zones’ have potential to be effective, but…

Economists agree that federal empowerment zones and other federal programs can be effective — if the programs are properly administered.

“For many years, programs in Puerto Rico with the same tax incentives weren’t effective until the government took advantage of it, worked the program, and then it was highly successful,” said Marianne Hill, senior economist with the Institutions of Higher Learning in Mississippi, who worked in Puerto Rico.

In 1994, an area in the Mississippi Delta that includes 17 municipalities in Bolivar, Holmes, Humphreys, Leflore, Sunflower and Washington counties was designated as one of three federal empowerment zones in the U.S.

The U.S. Department of Agriculture was asked to administer a $40-million, 10-year program aimed at luring developments in the rural area. The Mid-Delta Empowerment Zone Alliance was established as the governing commission and 75 members were appointed to its board. Among its incentives — businesses receive a $3,000 annual tax credit for each employee who lives in the area.

Midway through the 10-year program, only $2 million had been disbursed, with $16 to $18 million committed for various projects, including $4 million earmarked for the Workforce Training Center at Mississippi Delta Community College that has not yet been built. MDEZA posted successes in drawing Dollar General’s distribution center to Rosedale, with 450 employees, and new jobs to the recently built Viking Specialty Products’ plant in Itta Bena.

In early June, Jimmy Heidel, executive director of Mississippi Department of Economic and Community Development, asked the federal government to step in and correct management problems. The USDA is awaiting results of an audit ordered by Jill Long Thompson, head of USDA’s Office of Rural Development.

“Jimmy was right to do what he did,” said Robert Ingram, executive director of economic development for the University of Southern Mississippi in Hattiesburg. “He’s got to make sure it’s run properly. There were so many factors that it couldn’t be run properly without some adjustments.”

Ingram said the size of the MDEZA board, appointed “only for political reasons,” has been an obstacle that’s difficult to overcome.

“You can’t effectively do anything with a board larger than 12 to 15 people because there are so many opinions,” Ingram said. “You run into so many problems and nobody really has control. Also, with new programs, you have inexperienced people dealing with a wide scope of guidelines. Any time mass amounts of federal monies flow into a community, there are almost inevitably going to be problems with mismanagement.”

Federal empowerment zones have the potential to be effective, Ingram said.

“Companies will certainly want to look at locating in a federal empowerment zone,” he said. “Federal empowerment zones can’t create jobs if the training is not there. The tax dollars and incentives will quickly be eaten up by other factors. The community has got to be prepared to go beyond the empowerment zone to persuade companies to locate to the area because of the quality of life, education, community amenities and so forth.”

State Sen. Neely Carlton (D- Greenville) agrees.

“I am familiar with other organizational structures for empowerment zones, examples we could follow if we were to perhaps restructure the MDEZA board,” Carlton said. “For example, an empowerment zone in Texas has a small board, with 20 to 25 members on their board. Because of the more manageable size of the structure, they are able to be more efficient and you don’t quite have the personality problems that I believe have affected the abilities of MDEZA.”

During President Clinton’s tour of Clarksdale earlier this month, he talked about his new program, New Markets Initiative, that includes promises of tax breaks, financial assistance and economic development.

Companies are looking for more than tax incentives, Carlton said.

“The New Market Initiative is promoting tax incentives for companies to set up in rural areas that haven’t quite seen the benefit from the present economic boom that other rural areas in the U.S. have,” she said. “When you have the right elements at work, it can be very effective. Some of the problems we have in the Delta — recruiting business, for example — are not solved by tax incentives.”

Building a bridge between knowledge, teamwork and implementation isn’t all that’s needed for federal programs to work, Hill said.

“Just to have the tax incentives without getting the word out and getting people involved won’t work,” she said. “A problem could be getting workers to the jobsites. There may be plenty of workers available, but without reliable public transportation or proper training, the program can’t be successful.”

Calls to the Mississippi Department of Economic and Community Development and to Harry Buie, co-chairman of the MDEZA, were not returned for this story.

Contact MBJ contributing writer Lynne Wilbanks Jeter at lwjeter@yahoo.com.

About Lynne W. Jeter

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