Economic development?

by

Published: May 16,2010

Tags: editorial, Mississippi Business Journal

In one of the poorest states in the Union, Mississippians are constantly talking about economic development. We clearly need all the help we can get. Nationally, with the last couple years of stimulus money, the government has made many — sometimes disputed — claims that it has “created” jobs.

Currently in Mississippi, the biggest proposed economic development project is the Kemper County clean coal project, which will cost $2.4 billion, create approximately 1,000 construction jobs and more than 200 permanent jobs.

But what does a “job” mean? What does “economic development” mean? We’re not all working off the same definitions.

According to the Encyclopedia Britannica, “economic development” is the transformation of poor countries dependent on agriculture or resource extraction into prosperous countries with diversified economies. It goes on to say that economic development projects have typically involved large capital investments in infrastructure (roads, irrigation networks, etc.), industry, education, and financial institutions.

Critics of the American Reinvestment and Recovery Act (ARRA) say the federal government doesn’t “create” jobs. Stimulus money is simply a temporary redistribution of tax dollars. Stimulus money can’t create a job — at least not a self-sustaining, long-term job. Unless a company or agency’s revenue stream increases, that company or agency won’t be able to continue to pay an employee hired with stimulus money after the federal dollars run dry.

Gov. Haley Barbour made a similar point several times during recent budget cut discussions with the state Legislature: Stimulus money was a one-time deal, and Mississippi’s tax revenues are continuing to decline. Don’t depend on federal money. It won’t keep coming.

Mississippi Power Company’s proposed Kemper County clean coal plant has gained the spotlight again since the Public Service Commission issued an order giving the company a green light for the project with conditions.

Now, the company has asked the Commission to reconsider and remove some financial restrictions, one of which caps the cost of the plant at $2.4 billion, making the company responsible for cost overruns.

Countless politicians and economic development organizations continue to speak in favor of the plant. The Commission’s order encourages Mississippi Power to hire Mississippi workers if and when it builds the plant.

But how many of those will actually be tax-paying Mississippians?

And will the engineers hired for the plant’s permanent jobs all be from Mississippi? The plant will use cutting-edge technology, both for the lignite coal gasification process and carbon capture.

From a true economic development perspective, less than 190,000 people in Mississippi Power’s 23-county service area will pay $2.4 billion for 1,200 jobs – 1,000 of which will not be permanent. Is that really a good deal?

If the plant goes forward and its new technology works, Mississippi and Mississippi Power Company will be put on the map as national energy leaders.

If the plant is built and becomes operational, ratepayers could benefit from stable fuel costs provided by on-site Mississippi lignite coal. If natural gas prices remain low and stable as they are now, ratepayers will have lost out, paying much higher costs for power than they would have if a natural gas-fired plant had instead been chosen to fill the energy generation need.

If the plant doesn’t work, Mississippi ratepayers will pay for it anyway – along with interest for Mississippi Power. All utilities have a responsibility to provide services to their customers and have the right to be paid back for their investment by the ratepayers they serve. By law, the Public Service Commission can allow the utility to recoup any expenses deemed prudent.

One thing is certain: If the Kemper plant goes forward, Mississippi Power Company will make money. Kemper will truly be economic development for MPC.

But is calling Kemper an economic development project for the people of Mississippi really a good argument for the plant?

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One Response to “Economic development?”

  1. Twitter Trackbacks for Mississippi Business Journal » Blog Archive » Economic development? [msbusiness.com] on Topsy.com Says:

    […] Mississippi Business Journal » Blog Archive » Economic development? msbusiness.com/blog/2010/05/economic-development – view page – cached In one of the poorest states in the Union, Mississippians are constantly talking about economic development. We clearly need all the help we can get. Tweets about this link Topsy.Data.Twitter.User[‘donarafaiel’] = {“photo”:”http://s.twimg.com/a/1273694933/images/default_profile_5_normal.png”,”url”:”http://twitter.com/donarafaiel”,”nick”:”donarafaiel”}; donarafaiel: “Mississippi Business Journal » Blog Archive » Economic development?: In one of the poorest states in the Union, Mi… http://bit.ly/c5XYr8 ” 22 minutes ago view tweet retweet Filter tweets […]

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