State auditor Stacey Pickering says his office’s Performance Audit Division has done yeoman’s work ensuring companies that receive state assistance to locate or expand here meet the conditions attached to it.
That oversight authority, he added, needs to expand to include all public-private economic development projects, though, and not just those created under certain statutes.
“We’ve been a role model for best practices for other states to follow, when we do these economic incentives programs, because the auditor’s office monitors the jobs created and taxes paid and makes sure they are meeting the agreement they made with the state,” Pickering said in an interview in his office this week.
Those conditions are usually spelled out in a memorandum of understanding, or MOU, and can include jobs created and maintained, taxes paid, employee salaries and a slew of other requirements.
Pickering’s office currently has purview over 15 projects, representing a total of $990 million in bonds issued by the state and 13,725 jobs created and maintained. The private investment in those projects is just under $3 billion. Pickering said of those 15, two have failed to meet the obligations spelled out in their MOUs with the state.
Viking Range Corp. and DeKalb packaging company Pharma Pac had to pay back a total of $409,866. Both companies fell short of their job-creation requirements, and both failures occurred in the middle of the recession that hit in 2008 and 2009.
“They both did that without any argument, any protest,” Pickering said of the repayments. “Once we went through and validated the numbers, we knew exactly where they stood. They looked at it and agreed. It protects the taxpayers of Mississippi. The program works. It’s been a great success story.”
The auditor’s office issues quarterly reports detailing results of the performance checks.
That oversight does not extend to every project that gets public assistance. State law allows Pickering’s office to monitor projects whose assistance is granted under the Mississippi Major Economic Impact Act, which usually includes large projects like Toyota and Schulz pipe manufacturing facility in Tunica and often involve large state and private investments.
Projects created under other incentive-authorizing statutes — like the Advantage Jobs Act — don’t expressly grant Pickering’s office the authority to monitor them.
“There’s a hole in the middle of this donut,” Pickering said. Pickering said the inability for his office to monitor projects that receive state assistance is risky. He listed as an example the failure of Mississippi Beef Processors, the North Mississippi cull cattle plant that received a total of more than $50 million in public aid but never really got off the ground. Several private executives connected to the project served prison time after being convicted of offenses ranging from fraud to making improper donations to political candidates.
The last handful of economic development projects to receive some form of public incentives, Pickering said, have been authorized under the Advantage Jobs Act. Unless the MDA specifically requests it, or it’s written into the MOU, public auditors cannot automatically pick through company records to ensure that they’re meeting the terms of the state handout.
But permission via an MDA request or MOU terms is not granted very often, Pickering said. “And it’s not that they’re bad folks, but it’s like anybody else. I had a (public) entity share this week that they’d rather have $12 million with no oversight than $20 million with oversight.”
Two bills that would have granted the auditor’s office blanket authority to monitor every project that gets public help died during the legislative session that ended. The Senate bill died in its original committee. The House bill cleared that chamber but died in its assigned Senate committee. This was the first session the bills had been filed.
Pickering said his office would push the legislation in next year’s session. Until then, he said his office would concentrate on pushing the merits of his office’s oversight program.
“We’ve got some legwork to do to educate the Legislature, to make sure they understand what role we play, understand how we safeguard the system,” Pickering said. “There has to be confidence that when the governor calls a special session to deal with a project, they know we’re going to be looking over their shoulder.”