The Mississippi Senate passed two bills Thursday that would overhaul the state’s labyrinthine code of financial incentives for companies seeking to relocate to the state or expand their existing facilities.
There are two bills that were authored by state Sen. David Parker, R-Olive Branch.
Senate Bill 2822, known as the Mississippi Flexible Tax Incentive Act or MFlex Act, would simplify the economic development incentive process.
SB 2967 is a companion bill that would repeal some incentives that include a payroll tax credit for businesses relocating to poor counties, tax credits for clean energy generation and aerospace industry enterprises and a tax credit for airport cargo facilities.
There are 39 incentives offered by the state to try to lure new businesses to the state and either retain existing ones or help them expand. Parker said these are very complex and many of them are never used.
Both bills passed unanimously, with a reverse repealer attached to SB 2967, which allows lawmakers to perform more work on the bill, which could include eliminating other unutilized or under-utilized tax credits.
“The goal is to attract new businesses to our state and expand the businesses that are here already,” Parker said. “The catch-line of MFlex is that it is performance based and not promise based. We’ve had instances in the past where businesses made promises to us that have not been fulfilled.”
MFlex would streamline these incentives into one easy-to-use calculation on initial investment, jobs, wages and benefits while making the one incentive competitive with other states. Parker also said that the bill would increase transparency so that citizens and business leaders understand whether the incentive is useful and fulfills its intended purpose.
Each business would provide its estimates of its initial investment, jobs and wages and they will only receive credits based on what they produce. The minimum number of jobs created to receive an MFlex incentive would be 10 jobs and the minimum investment would be $2.5 million. Part-time jobs couldn’t be combined together to form a single full-time position to qualify for MFlex incentives.
Lawmakers say these reforms will be an ongoing process. Parker said he’d like to bring a bill forward next session that would help businesses below the $2.5 million MFlex investment threshold, either through incentives or allowances.
The changes come after the state has bet poorly on some projects with taxpayer funds. Some of those projects, such as biofuels manufacturer KiOR, solar panel builders Stion and Twin Creeks and electric automaker Greentech, have already shuttered their facilities and have been the subject of negotiated settlements or pending litigation.
In the past 25 years, taxpayers have provided $1 billion in incentives to Nissan, $354 million to Toyota, $263 million to Continental Tire and $130 million to Yokohama to build new manufacturing plants in the state. Those incentives were considered by a report from the Institutes of Higher Learning to have provided a net benefit to taxpayers.
The same report also said the state might have too many economic development incentives and some of them have “no stated purpose.” The report also said economic development incentives rarely influence a firm’s location decisions and that they lobby lawmakers for incentives because they’re easily obtained and will lower their costs.