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Taxpayers owe $500 million for Nissan project, says Fordice

Former governors debate state incentives to attract Nissan

BILOXI — Is the Nissan project in Canton worth the amount the state is investing?

That was the question asked of three former governors — Kirk Fordice, William Winter and Bill Waller — at a recent Mississippi Association of Planning and Development Districts convention.

Kirk Fordice was the most skeptical.

“There is a point beyond which you cannot and should not go in economic development if you are ever able to pay it back,” Fordice said. “I believe that for the Nissan project you taxpayers are committed to $500 million. From what I know about the economic development model, there is no way to come out.”

Fordice said that when he was governor working to attract the Mercedes plant to Mississippi, an economic development model was used to determine the amount of incentives the state could give to Mercedes and have returns to justify the investment. That figure came to $170 million, which was what Mississippi offered. The plant ended up going to Alabama, which offered $350 million.

“We weren’t even in the ballpark,” Fordice said. “Our model said that $170 million is what you can spend if you ever want to hope to come out.”

Fordice was also critical of the secrecy surrounding just how much the state is obligated to pay. He said The Associated Press has requested information under the Freedom of Information Act to find out what taxpayers are obligated for.

“No one knows what that number is,” Fordice said.

Former Gov. Bill Waller was also skeptical about the Nissan deal.

“I just hope the company is strong enough to operate after the plant is built, and I hope the economy justifies the millions being invested,” Waller said. “If Nissan is successful, it could foretell other similar industries coming into Mississippi. I just hope in a shaky economy Nissan is strong enough to justify it.”

Waller was skeptical of the large amount of state incentives being given to automakers to locate plants in the South. He said Alabama has given the industry “the front door and the back door. Let’s just hope they will stay in the house for a while.”

Winter said without knowing the details of the Nissan project, it does appear to be a significant commitment. But he said that Mississippi has been a pioneer in creating a structure to allow industrial development to take place, and previous similar efforts have been successful. Winter pointed to the $130 million in general obligation bonds approved to build Ingalls Shipbuilding in the 1960s.

“It was controversial at that time,” Winter said. “It was the largest general obligation bond in state history. I know how much concern there was that the bond issue would prove beneficial. History tells us that was a good investment.”

Winter said competition for new industrial development has gotten stronger and stronger, and Mississippi is now able to play in the same ballpark as other states in the U.S.

“Have we paid too much for the Nissan plant?” Winter asked. “Only time will tell. But as a former governor I’m delighted to see us able to attract a huge investment like Nissan is prepared to make in Mississippi.”

The former governors also discussed the current state budget problems.

“In 2001, the state is in a terrible financial state,” Fordice said. “Where did the money go? We had built up a $260-million rainy day fund by the time I left office. It is rapidly dissolving. The situation has totally reversed itself, and we are taking money out of the rainy day fund as fast as we can. This is due to irresponsible spending and not paying attention to what is going on. We could be much more efficient and operate on a whole less than we are operating on.”

Fordice said that during his tenure the welfare rolls were reduced almost to nothing, but there was not a corresponding decrease in employment at the Department of Human Services.

“Somewhere government has to face up to the reality that they are not welfare programs to give people jobs,” Fordice said. “Government could be much more efficient.”

Winter, who served at a time when the state was also experiencing financial difficulties, said the current problems aren’t unique to Mississippi.

“Every state is having the same problems,” Winter said. “We are committed to substantial obligations to provide essential services.”

Winter said the state isn’t spending enough on education, and is spending far too much building unneeded correctional institutions.

“The correctional budget has exploded, and that is eating us alive,” Winter said. “We have to reduce the number of inmates we are providing room and board for. It costs more to keep an inmate in Parchman than to send two or three students to Ole Miss.”

Waller was critical of spending for corrections, for sheriff’s departments and for law enforcement officials with the Mississippi Department of Wildlife, Fisheries and Parks. He was particularly critical of legislation that requires an inmate to serve 85% of his or her sentence before being eligible for parole.

“Everybody is trying to stay in office by being tough on crime,” Waller said. “The Bible said we are supposed to forgive people, not throw them away for life. The parole board should have more authority. The 85% rule is wrong. I think we are wasting money. Let’s get these kids out of the penitentiary, and better manage the budget.”

Contact MBJ staff writer Becky Gillette at mullein@datasync.com or (228) 872-3457.

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