Archive for September, 2009

Feathers already flying in third round of tanker bidding

September 30th, 2009 No comments

The third competition between Northrop Grumman/EADS and Boeing to land a $35 billion contract to replace the Air Force’s ancient fleet of refueling tankers officially began last Friday. Tuesday, the first serious allegation surfaced.

A Northrop Grumman executive accused the Pentagon of sharing his company’s pricing information from the second bid — which Northrop Grumman won but was overturned after a Boeing protest — with Boeing, without returning the favor in the other direction. The first bid, won by Boeing, was thrown out after a corruption scandal blew up and sent a Boeing executive and an Air Force official to prison.

Clearly, with this much money on the line — the overall impact of the contract to the area that lands it could exceed $100 billion — both companies have their chin straps buckled extra tight.

It goes without saying (actually, Magnolia Marketplace said it recently) that the Mississippi Gulf Coast would reap untold impact cash and supplier jobs if Northrop Grumman wins the bid and ends up building the planes in Mobile.

Tuesday’s development probably is the first of many accusations and allegations Boeing and Northrop Grumman will hurl at each other before this thing is over. Stay tuned.

Floor mats force recall of 3.8 million Toyota and Lexus vehicles

September 29th, 2009 1 comment

In response to a recent accident in California that involved fatalities, Toyota is issuing a recall of 3.8 million Toyota and Lexus vehicles because the company says the floor mats can interfere with the accelerators.

Included in the recall is the 2005-2010 Prius Hybrid. The Prius is scheduled for production in Blue Springs, though a starting date has not been set.

The 3.8 million vehicles is the largest U.S. recall the company has ever issued. Magnolia Marketplace ran a Google search and was able to come up with only one link, which is here.

UPDATED AT 3:40 p.m. : Details of the accident responsible for the recall can be found here.

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PSC hears from Mississippi Power, and a golf course opens

September 29th, 2009 No comments

Is there anything better than the first sign of autumn? Yesterday evening just before sunset, as I made the final approach to the barn on the Official Horse of Magnolia Marketplace, the temperature had settled into the 60s and brought a welcome contrast to the broiler of the past few months. Swell. Just swell.

Anyway, there are a few items to pass along.

I’ve been meaning to post this since Friday, but it has somehow escaped the to-do list. Lake Caroline Golf Club, which is reopening after lying dormant for two  years, rolls out the welcome mat tomorrow. Randy Watkins bought the place and has been refurbishing the course and clubhouse the past few months. Kyle Sisk, Caroline’s director of golf and an Official Friend of Magnolia Marketplace, has worn just about every hat imaginable as he oversees the day-to-day operations, refereeing subcontractors and groundskeepers, coordinating a marketing campaign and squeezing in a few hours’ sleep.

The course looks ready. After a sneak preview  Saturday, Magnolia Marketplace is proud to report the clubhouse is ready and the LCD televisions on the wall project college football games beautifully. Well done, Messrs. Watkins and Sisk.

The Mississippi Public Service Commission and Mississippi Power Co. will tee it up next week. The Commission will hold Phase I hearings on the company’s petition to seek a Certificate of Public Convenience and Necessity for its Integrated Gasification Combined Cycle plant in Kemper County.

The IGCC plant, says the company, would capture 65 percent of carbon dioxide emissions and employ lignite to power the process. Mississippi Power estimates the $2.2 billion project would generate 260 jobs once it came online. Ideally, the company would like to begin construction next year and begin operations at the plant in 2014. That might be a tad optimistic, because several environmental groups, including the Mississippi chapter of the Sierra Club, oppose the plant and would probably challenge it in court.

The hearings run Monday through Thursday next week in the PSC’s courtroom on the first floor of the Woolfolk Building.

Hosemann holding Stanford hearing

September 28th, 2009 No comments

Secretary of State Delbert Hosemann will hold a hearing next Monday at the Capitol in which alleged victims of Allen Stanford’s Ponzi scheme will testify before Hosemann, Kentucky Secretary of State Trey Grayson, who is the president of the National Association of Secretaries of State, and Dave Massey, the president-elect of the National Association of Securities Administrators.

The hearing is in room 113 of the Capitol and is scheduled to last from 1-2:30 p.m.

A press release from Hosemann’s office didn’t mention any details other than the victims’ testimony. Stanford has been in jail since he was indicted and denied bond on 21 charges, including fraud, as part of the Madoff-style financial funny business the federal government says bilked investors out of a total of $7 billion.

Stanford’s alleged victims probably smiled a little bit when news broke over the weekend that his time in the clink isn’t going well.

Categories: Allen Stanford, News Tags:

Janus resigns from House

September 28th, 2009 No comments

Rep. Michael Janus, R-Biloxi, has resigned from the Mississippi House to start his new job as city manager of D’Iberville.

State law prohibited Janus from serving in the Legislature and as D’Iberville’s city manager at the same time, so his resignation took effect this morning at 7:59, one minute before he started his new job.

Janus had served as the representative of District 117 in Harrison County since 1996. His committee memberships included insurance, ways and means, ports, harbors and airports, management, public health and human services and public utilities. Janus told a Gulf Coast television station that one of his first official acts as city manger will be to attend a ribbon cutting for the opening of a retail center. Janus has an economic development. He was a mortgage broker when he wasn’t at the Capitol.

In a letter to Secretary of State Delbert Hosemann, Janus said he was “returning home to Biloxi and the Gulf Coast, in a very real sense Mississippi is also my home and I shall always stand ready to serve should the time or need arise.”

Gov. Haley Barbour will set a special election to fill the open seat.

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Economist: State fiscal outlook dire

September 24th, 2009 No comments

The Joint Legislative Budget Committee concluded its budget hearings this afternoon with a 1.99 percent increase in funds from the Mississippi Insurance Department and a plea for new software from the Mississippi State Tax Commission.

Commissioner of Revenue J. Ed Morgan told lawmakers that the corporate tax collections component of the 35-year-old software the MSTC uses has crashed and the sales tax collections component is dying.

“The prognosis of our patient is bleak,” Morgan said.

The Legislature promised funding for the $30 million software during the last legislative session, but the money wasn’t there when the FY10 budget was finalized.

House Speaker Billy McCoy,D-Rienzi, told Morgan the state would find a way next session.

“We will give you the ways and means this year,” McCoy said. “You’ve convinced us thoroughly.”

The dire straits of the MSTC presentation carried into the overall revenue forecast state economist Dr. Phil Pepper gave to end the four days’ worth of hearings.

“We’ve lost 50,000 jobs in Mississippi the last year and a half,” Pepper said. “We had more people employed in 1997 than we do now.”

Pepper said the economic outlook for calendar year 2010 is still one of negative growth for the state and the national economy.

Revenues for FY2010, which started July 1, are $31.7 million (about 5 percent) below the sine die estimate made in June. Year-to-date, revenue is off more than $40 million compared with 2008.

Pepper cautioned lawmakers that reports of economic indicators experiencing an uptick since May are false. Rather, he said, their rate of loss has slowed. As opposed to heading up, they are heading downward more slowly.

“Restructuring may be required in state and local government (to cut costs),” Pepper said. Pepper’s assessment comes just a few hours after IHL Commissioner Dr. Hank Bounds told the JLBC that consolidation of some functions within the university system may be necessary to offset a loss of state funding.

The Revenue Estimating Group is scheduled to meet in October once September revenues are available. September marks a critical month for corporate tax collections. The REG will set a revenue estimate for FY11 in October, the JLBC will meet in November to review it and it will be released and adopted by the committee the first week of December.

Pepper’s presentation makes it likely the numbers then won’t be any prettier than they are now.

“We have hard times ahead,” he said.

Categories: News Tags:

IHL confronts fiscal reality

September 24th, 2009 No comments

“We are not here to moan and cry.”

That was College Board President Scott Ross’ opening line to the Joint Legislative Budget Committee this morning as the Institutions of Higher Learning presented its FY2011 budget request. The JLBC has spent this week telling state agencies that money is slim and could get slimmer before the next fiscal year begins next July.

IHL submitted a request that is $42.8 million more than it received in FY2010. Seventeen million dollars of that will pay for a cost of living adjustment that will allow for colleges and universities to keep the purchasing power it has as the price of goods and services rises, IHL Commissioner Dr. Hank Bounds told lawmakers.

The bulk of the rest of the additional funding is made up of $21 million for the University of Mississippi Medical Center.

“Our big need is to increase our school size,” said interim UMC Chancellor Dr. James Keeton. UMC has 120 medical students, which is all the school can handle with its current size and resources, Keeton said. “We would like to grow that to 150.” While the extra $21 million wouldn’t cover the full cost of growing the student body to 150, it would be a start, Keeton said.

In a nod to the state’s dwindling tax revenue, Bounds said he has talked with all eight university presidents about the idea of consolidating some functions like purchasing, the contract 403(b) notification requirement administration and the IRS 125 administration.

“They are all open to that,” Bounds said.

Lt. Gov. Phil Bryant said he was “stunned” at that announcement, since the consolidation of any state service has long been a subject most lawmakers and state agencies have refused to even discuss.

“We can’t afford to wake up three or four years from now and have mediocre programs,” Bounds said. “We have to think differently. We also recognize that if all (economic) prognosticators are accurate, we could see some really tough days ahead.”

Bounds did not have a cost savings estimate consolidation of some functions might provide. He did say that IHL is preparing to receive fewer state funds in future budget years, and that there is a plan in place to operate the system in such an event.

The budget Bounds and other officials presented Thursday morning, which totals $841.5 million, is about $200 million less than the budget they originally planned to present. The first budget, Bounds said, would have brought funding for Mississippi’s colleges and universities up to the Southeastern average.

Bounds spent a several minutes selling higher education as a driver of economic development in Mississippi.

“I really believe we can only educate ourselves out of the financial crisis,” he said. “It is absolutely clear that if Mississippi is going to move forward we have to produce a better-educated citizenry.”

Mississippi needs more graduates who fall into the STEM category — Science, Technology, Education and Math, Bounds said.

The funds available for the Mississippi Tuition Assistance Grant, which awards $500 per semester to entering freshman who have at least a 15 on the ACT and a 2.5 GPA, are low. The funds are at the same level they were in 2000, but the number of students who are eligible has seen “an appreciable gain,” Bounds said.

With state money in a sharp decline and enrollment up at nearly every institution, Bounds could not rule out tuition increases to make up the difference.

“We will do everything that we can (to prevent tuition increases),” Bounds said. “But I can’t guarantee they won’t go up.”

House Appropriations Committee Chairman Johnny Stringer, D-Montrose, told Bounds he would do “all I can” to get IHL’s budget funded at the level it requested.

The IHL’s presentation took up the vast majority of this morning’s hearings. Afterward, the Mississippi Development Authority presented a budget request of $22.6 million, which is the same amount it got in FY10. The MDA’s state funding has been basically level since 2003. Federal money makes up most of its budget.

“We cannot afford to lose momentum right now,” MDA Executive Director Gray Swoope told the Committee.

Swoope said that Nissan continues to fulfill the Memorandum of Understanding it signed with the state regarding direct job numbers — the company employs about 3,100 people directly — and Toyota is still “fully committed to Mississippi. They are going to build vehicles in Blue Springs.”

Categories: News, Nissan, Politics, Toyota Tags:

More numbers and a big charge end day three of budget hearings

September 23rd, 2009 No comments

The third day of budget hearings featured three fiscal heavyweights, piles and piles of numbers and one serious allegation from Division of Medicaid executive director Dr. Robert Robinson.

Robinson and his team presented a budget request that is roughly $201.9 million more than the $451.3 million the agency received in FY10.

As big as those figures are, that wasn’t the most explosive part of Medicaid’s time before the Joint Legislative Budget Committee.

Once lawmakers and Medicaid staffers finished haggling over the numbers — most of the increase depends on the state replacing federal stimulus money — Robinson was asked by Rep. Percy Watson, D-Hattiesburg, about fraud and abuse in the Medicaid system.

Robinson said the fraud among the 609,000 beneficiaries is negligible. But on the provider side, he said, it’s rampant.

“Behavioral health centers are wearing us out,” Robinson said. Robinson, without naming the place, mentioned one behavioral health outfit that received $24 million in Medicaid reimbursements it should not have gotten.

He wasn’t done. “We can’t get anybody to prosecute them,” Robinson said, adding his agency had presented evidence of the wrongdoing but had been turned down by the U.S. attorney’s office and state Attorney General Jim Hood.

“Bob, you and I have been friends for a long time but I just don’t believe state or federal prosecutors wouldn’t have time to track down $20 million,” House Speaker Billy McCoy, D-Rienzi, said at the beginning a lengthy and incredulous rant at Robinson’s assertion. “Hell, we’ve got 40 people that can work on it. I’ll get to the bottom of it personally.”

The Medicaid presentation was the most lively part of a dry, numbers-based day of budget hearings at the Woolfolk Building.

The State Board of Community and Junior Colleges requested $64.7 million in additional funding for FY11, to bring the system into compliance with state law that requires spending on community and junior college students to be in the middle of per-pupil spending on K-12 public schools students and per-pupil spending on students at Jackson State University, Delta State University, Alcorn State University and Mississippi Valley State University. Another $13.8 million would fund a dropout recovery initiative that was given $1.5 million in FY10, bringing the total increase to $78.5 million and the total budget request to $331.4 million.

Dr. Eric Clark, former secretary of state and current executive director of the SBCJC, spent several minutes after the financial parameters had been laid out to lawmakers advocating the mid-level funding law legislators passed in 2007.

“It’s a good law,” Clark said. “It passed unanimously in the House and the Senate and (Gov. Haley Barbour) signed it. It’s a moral obligation just like MAEP. I’m asking you to make it a priority.”

Clark said community colleges provide crucial workforce development programs potential businesses and industry require before they set up shop in Mississippi. “We’re growing the pie,” he said.

Senate Appropriations Committee chairman Alan Nunnelee, R-Tupelo, told Clark it would be “difficult” to get the full $13.8 million. “But I didn’t intend for this  year’s money ($1.5 million) to be the end, either,” he said.

Mississippi Department of Public Safety Commissioner Steve Simpson asked for an 8.4 percent budget increase. The $15 million would fund a trooper school to replenish the Highway Patrol’s personnel. Simpson said 71 troopers have either left or retired from DPS since November 2007. House Appropriations chairman Johnny Stringer, D-Montrose, said it would be “real hard” to operate a trooper school in FY11 and proposed that troopers who have already retired be allowed to work part-time, similar to what a lot of Mississippi teachers do, as a cheaper alternative than a trooper school to raise staffing levels.

The budget increase would also go toward the Mississippi Crime Laboratory and the state law enforcement academy, along with upgrades to DPS’ outdated computer technology, Simpson said.

The Mississippi Public Service Commission and the Mississippi Gaming Commission each submitted requests that contained no additional funding. Joel Bennett, of the PSC’s finance division, told lawmakers that the Commission “respectfully reserves the right” to alter its budget request after the legislative session starts in January.

“I think they’re all adjustable,” Lt. Gov. Phil Bryant said.

Categories: News, Politics Tags:

Department of Education makes pitch to JLBC

September 23rd, 2009 No comments

A quick recap of this morning’s proceedings at the Woolfolk Building as the Joint Legislative Budget Committee continues to hear budget requests from state agencies.

As expected, the presentation by interim State Superintendent of Education Dr. Daniel Jordan and Board of Education President Bill Jones drew the largest crowd yet in the JLBC’s hearing room.

The numbers: Education is asking for an increase of $173 million over FY10 funding. That figure operates on the assumption that about $160 million in federal stimulus money that was appropriated this year will be available next year. Without it, the increase would rise to roughly $330 million. Those numbers fully fund the Mississippi Adequate Education Program, whose full-funding number rose $47 million from last year, add ons like the National Board Certification teacher salary supplements and a 3 percent pay raise for all teachers.

“No one is naive about the (revenue) situation,” Jones said. “The numbers are what they are.”

“We understand these are critical times,” Jordan said.

MAEP’s total figure was broken down into two categories: $97 million that was made up of $61 million for full funding in FY11 and $36 million in the restoration of funds that were diverted from the program the past 10 years. The remaining $66 million of the program would fund teacher recruitment initiatives, the high school redesign program and the 3 percent teacher pay raise.

Rep. George Flaggs, D-Vicksburg, asked Jones which of the two facets of MAEP held more priority — the base funding or the add ons.

“That’s like asking me which child I want to shoot,” Jones said.

“Well, you may have to,” Flaggs responded, adding he would “lay his life on the line” to ensure the $97 million base formula was fulfilled.

Several lawmakers brought up the idea of school consolidation as a means for the state to trim some of the $2.3 billion cost from the education budget. Consolidation has traditionally been a political hot potato.

“Find me two schools that want to merge with each other and we’ll do it,” Jones said.

After education presented its budget request, the hearing room held a much smaller crowd to hear Mississippi Department of Agriculture and Commerce Commissioner Lester Spell asked for $9.5 million for FY11 — the exact figure his office got in FY10. Spell noted that since he took office in 1996, his staff had shrunk from 362 folks to 251, while his budget had grown from $8.5 to $9.5 million.

State money makes up about 61 percent of the Department of Agriculture and Commerce’s total budget, with federal money filling in the rest.

Because the JLBC was about 20 minutes late starting this morning, the Public Service Commission’s presentation was pushed to 1:15. Magnolia Marketplace will have the details as soon as they are available.

Categories: News, Politics Tags:

Former Toyota counsel amends complaint

September 22nd, 2009 No comments

The budget hearings continue this afternoon at the Woolfolk Building, after a marathon session this morning, but Magnolia Marketplace is at the Official Magnolia Marketplace Cubicle working on some stuff for the paper edition of the Mississippi Business Journal. That doesn’t mean we can’t pass along some news.

I wrote a story for the Sept. 14 edition of the MBJ that detailed a former Toyota lawyer’s suit against the company. The attorney, who was the architect of the company’s defense against rollover lawsuits that were so popular several years ago, claimed that Toyota destroyed evidence and hindered his investigations into accidents, both of which allowed vehicles that did not meet federal roof crush standards to remain on the road.

In response to the lawsuit, Toyota issued a blistering statement that basically said Dimitrios Biller, the plaintiff, had failed to perform his duties while employed by the company and had “grossly mischaracterized” Toyota’s reporting to the National Highway Traffic Safety Administration.

In his response to the press release, Biller has filed an amendment to his original complaint that accuses Toyota of defaming him. The details are here.

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