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Mississippi takes an incentives licking, keeps on ticking

biz graphicBy Jack Weatherly

If the Pew Charitable Trusts gave Mississippi the stick in 2012, it seems to be trying the carrot this time.

Mississippi economic development officials thought the respected independent nonprofit organization was harsh in its assessment of how the state was tracking its incentives.

“It sounded like like they were unfairly indicting the model we were using,” senior state economist Bob Neal of the University Research Center said last year as the Legislature was in the process of crafting a more systematic method of evaluating the outcome of incentives.

Since then, Mississippi and nine other states, as well as the District of Columbia, have passed laws that require regular, periodic evaluation, the nonprofit reports.

The Mississippi Legislature last year passed legislation and Gov. Phil Bryant signed it into a law that calls for a report by the end of 2015.

Incentives have become an especially sensitive issue in Mississippi in the past few years.

The initial Pew report and the followup encompass the years in which the Mississippi Legislature approved loans totaling $100 million to two tech startups that have failed —Twin Creeks Technologies and KiOR Inc., which were to produce solar panels and biofuel, respectively.

Neal has said that in the past he had taken the measure of programs on a case-by-case basis but not overall and on a continuing basis.

The 10 states that have passed laws are a cross-section of American society, but for Mississippi, often considered the poorest state in the union, “every dollar is precious,” said Bob Zahradnik, director of state and local fiscal health for Pew.

Zahradnik said in an email this week that the 2012 report found that roughly half the states and the District of Columbia “were trailing behind in generating the information they need about whether tax incentives are delivering a strong return on investment.”

The nine other states that are implementing the evaluation programs are Alaska, Florida, Indiana, Louisiana, Maryland, New Hampshire, Oregon, Rhode Island and Washington state. The nation’s capital is also doing that.

Neal, who is spearheading the Mississippi, evaluation that is due by the end of the year, says the process is not simple.

Separating out how individual incentives work when a company is awarded several cannot not always be crystal clear, Neal said, adding that he knows of no other state that has been able to do that.

Plus, some get aid from other sources. For instance Yokohama Tire Manufacturing has commitments totaling nearly $85 million for the first phase — which is projected to create 500 jobs in the first phase — from state and local governments, as well as the Appalachian Regional Commission, the TVA and Atmos Entergy.

The state has “clawback” provisions of $35,000 for every job that the tire maker falls short of its goal.

Ultimately, Yokohama hopes to employ 2,000.

Adding to the complexity of the evaluation process is that fact that Mississippi has about 80 incentive programs, roughly two-thirds of which are under the aegis of the Mississippi Development Authority. some of which are “pretty obscure.”

And about half of the total number of incentives will not produce sufficient data or have confidentiality limitations, Neal said.

Nevertheless, “you start with what you can do,” Neal said.

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About Jack Weatherly

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