Monday, January 11, 2010

And we just set ourselves back 75 years...

Apparently over the weekend, several water lines around downtown Jackson froze and then burst, forcing the city to cut off water to the Capitol.

In true Mississippi style, state government has chosen to "hitch up its britches" one more time and bring sewer service to the Capitol via a port-a-john building in the front driveway. This has been the biggest news story of the day with local news stations. I'm sure Leno will get hold of this and show how far indeed we've come.

Wednesday, January 6, 2010

Incentives for Tunica Plant Ok'd

Yesterday, the Mississippi Legislature approved incentives for the Wilh. Schulz GMBH-planned pipe facility in the Delta. The plant will employ 500 full-time workers (average salary will be just over $30K) within five years of its opening. The company will make a private investment of $300 million and the state approved incentives of $35.1 million.

Of the $35.1 million, $15 million is a loan to Tunica County, who will build the building. The building will then be leased to the Shulz Company, and those lease payments will cover the debt service back to the state. Another $20 million of state money will be a bond in case the company defaults on their loan (the company is borrowing $40 million for equipment from banks), so the $20 million will likely not come into play. Another $100,000 will cover the issuance of those bonds.

While I'm excited when any area of the state gets new jobs, typically, when it comes to recruitment-based economic development, I grimace when we get the final tally on how much the state is having to put up. I'm a big believer in a balanced economic development strategy, where we place a major focus on entrepreneurship, and then complement that with recruitment, tourism and retention. Because in many cases, the recruitment game in economic development, over time, has evolved into a contest to see which state will put up the most incentives. While there are other factors that site selectors also weigh (infrastructure, school system, labor force), states bank on being able to provide major incentives to lure employers to the state.

However, I don't believe that was the case in this project. You have an area in the Delta that is starved for jobs. The $15 million in guaranteed incentives come in the form of a loan that will be paid back to the state. There are also solid clawbacks (provisions that give the state the ability to recoup those incentives if the company doesn't hold up their end of the deal) in HB 338. If the company fails to meet the employment benchmarks (500 within 5 years), the state (via the Mississippi Development Authority) can recoup any portion of that $15 million. This protects the state and helps ensure we don't experience another beef plant debacle.

Anyway, HB 338 easily passed the House and then the Senate, all in one day. Questions on the House floor centered on if there were clawbacks (there were), if local residents would be trained (they would be), if local residents would get first dibs on jobs/contracts over people living in neighboring Arkansas and Tennessee (no way to guarantee it, but it's probable) and if the project would follow bid guidelines (they would follow an expedited bid process, which is typical of economic development projects, because it allows construction to begin quicker).

Tuesday, January 5, 2010

2010 Session Underway

At noon, we officially gaveled in the start of the 2010 Legislative Session for the Mississippi Legislature. We welcomed in newly-elected Rep. Scott Delano (R-Biloxi) to the Mississippi Legislature, who replaced Rep. Michael Janus in a special election this past summer. Visiting the Capitol also was Mr. James Meredith, the first African American to attend Ole Miss.

When everyone asks what the big issue for the Mississippi Legislature will be this year, it's a very easy response- the budget. This seems like a very cliche answer, and I can tell folks from the local media may get frustrated with us, because when asked on the issue of the day, it's always the same: the budget. But indeed, how we pay for the state's needs when the money just isn't there this year remains a huge unknown. We can't appropriate more money than we have revenue to cover. And everyone and every agency understands that, until it's their agency or program that's going under the knife.

The budget problem will be one that in many cases, is solved behind closed doors. About 10 people in the Mississippi Legislature (actually it's probably less than that) control the final budget proposals, and once you get those 10 to agree, then the rest of us have an opportunity to vote a proposal up or down. While any legislator can be as influential as he chooses to work for in terms of general policy and legislation, "fighting for funding" for a program or agency important to your district doesn't involve great speeches or progressive legislation- it really comes down to constantly being in the ear of the Chairman, and hoping, at the end of the day, there's enough revenue to go around.

And so we're off and moving now. I know I say it every year (and by every year I mean this is the third year I've said it), but here's hoping we finish everything in three months and avoid special sessions.