By JACK WEATHERLY
The first ever analysis of state economic development incentives paints a limited picture of their effect on Mississippi.
Of the roughly 30 programs examined by the University Research Center of the Institutions of Higher Learning for 2014, only nine could be measured and seven of those were positive.
Twenty-three could not be measured, for various reasons. The programs did not lend themselves to analysis for the following reasons: no statutory definition of intent, 5; no awards given, 7; fewer than five awards given, 2; insufficient data, 9.
The sketchiness of the results from the analysis mandated by the Economic Development Programs and Tax Incentives Evaluation Act of 2014 “was not unexpected,” said Bob Neal, state economist with the center and author of the report.
The center had suggested to the Legislature that “it was our opinion that the agencies collect the data that we would need to analyze” the programs, Neal said this week.
The list of incentives was compiled by the University Research Center in collaboration with the MDA and the Mississippi Department of Revenue.
The report notes: “If a truly worthwhile incentive is successful in fulfilling its programmatic goals but generates a negative monetary return to the state, it may still be a better economic tool than an incentive that only marginally improves the lives of the state’s residents but generates a modest positive monetary return to the state.”
The analysis acknowledges the unavoidable ambiguity that occurs when a firm receives more than one incentive.
The study was made public in late January, and one of the co-authors, Sen. David Blount, D-Jackson, has received it.
Blount said by telephone on Thursday that “this legislation is meant to the be the first step to provide accountability for all the state incentives . . . . There is bipartisan agreement that all these programs need to be looked at to see if they’re in the best interests of the taxpayers.
“We’re going to work with the Department of Revenue and the IHL to see if there is anything we need to change to make that report more useful. ”
The other co-author, Rep. Brad Mayo, R-Oxford, failed in a re-election campaign in November.
The Mississippi Development Authority, which administers the programs, has not examined the analysis, spokesman Jeff Rent said Tuesday.
However, on Thursday the agency sent the following email:
“MDA is still reviewing this comprehensive analysis of Mississippi’s tax incentives programs, not all of which are administered by MDA. It is MDA’s goal to have the most competitive and fiscally responsible incentives programs for the state. The current study, and future studies, will make clearer which programs are the most effective at helping accelerate Mississippi’s economy by creating new career opportunities for the people of our state.”
The programs that lent themselves to analysis for 2014 were as follows:
» Advantage Jobs Incentives, for creation of 25 jobs or more and paid more than the state or local prevailing wage, whichever is lower. Five hundred forty-seven direct jobs, 1,145 secondary. Incentives paid totaled $918,000, net return to state general fund was $1.9 million.
» Ace Fund provided $14.2 million in “deal-closing” grants, with a net return of $18.3 million and creation of 3,200 direct and 2,317 secondary jobs.
» Job Protection Grants for at-risk industries. Five grants totaling $996,178 produced 2,622 jobs created or retained.
» Motion Picture Rebates totaled $891,812 in cash to seven projects. Return to state was $413,272 for a net loss of $478,540. Due to the short-term nature of direct jobs created, no measurable secondary jobs were generated.
» Industry Incentive Financing Revolving Fund awarded $9 million in loans and $53.2 million in grants to 10 firms. Of those totals, $45.8 million was spent and 2,928 jobs were created plus $521 million in private capital investment. The estimated return is $6.7 million.
» Development Infrastructure Program provided $9.4 million in grants; jobs created or retained was 1,099; $167.9 million in private capital investment, though, in one instance that a $440,000 incentive, as “MDA implies,” led to an $80 million commitment by the firm “strains credibility.”
» Ad Valorem Inventory Tax Credit paid 696 firms’ ad valorem taxes totaling $7.2 million. “There was no indication in the authorizing legislation that the intent of this incentive was either to recruit or retain businesses or create or retain jobs.”
» Jobs Tax Credit: $2.4 million in credits awarded to 24 firms, ranging from 2.5 percent of payroll to 10 percent. Estimated .jobs creation ranges from approximately 400 to 900.
» Rural Impact Grant Program provided $1.4 million for publicly owned infrastructure for expansion or location of businesses. Return to the state is estimated at $779,000 for a net loss of $580,967, but creation of 137 jobs created after construction.
» Major Economic Impact Act: No funding awarded in 2014, but $130 million in bonding authority was awarded to Yokohama Tire in 2013, of which $57.8 million had been spent by 2014. Jobs creation is expected to total 500 in the first phase.