Odd coalition of Dems, GOP question governor's plan to give company millions for aluminum plant

by Geoff Pender and Bobby Harrison, Mississippi Today
November 1, 2022

Some Democrats in the Mississippi Legislature are questioning plans to dole out about $240 million in incentives to a big company while not addressing health care and water infrastructure crises facing the state. Some Republicans question whether it's “corporate welfare” or crony capitalism.

Neither group is likely to derail Gov. Tate Reeves' plan for lawmakers to provide millions in taxpayer funded incentives for a company to build an aluminum plant in the Golden Triangle. But both are asking why they aren't being given more information and for more time to vet the deal.

The Republican governor announced on Monday that he was calling the Legislature into special session Wednesday at 10 a.m. to take up the incentive package in what he said he hopes will be a one-day special session. As of mid-afternoon Tuesday, rank-and-file legislators still had not seen the particulars of what would be provided to the company, which is yet to be officially named by the state.

“I have been in the Mississippi Legislature for going on 12 years, and I am always concerned when legislators have to rush in and approve economic development projects in one day,” said Sen. Derrick Simmons, D-Greenville, who is the Senate minority leader.

READ MORE: Gov. Reeves calling in lawmakers to pass incentives for $2.5 billion aluminum plant

Members of the small but vocal Mississippi Freedom Caucus of conservative Republican lawmakers on Tuesday complained about a lack of information being provided ahead of Wednesday's special session and questioned whether they were being asked to provide “corporate welfare” to a business.

“With no advanced warning, the governor is calling a special session for Wednesday to consider some kind of ‘economic development' legislation,” Rep. Dana Criswell, R-Olive Branch, said in a Freedom Caucus release. “We don't have many details at the moment, but we're concerned that GOP leaders will try to push some kind of corporate welfare package through with little debate and oversight … We will also not sit back as state leaders spend your money on pet projects and on crony capitalist ideas.”

But Simmons said calling the special session quickly with legislators convening with little or no information and being asked act quickly “is par for the course.” He said that is dangerous because there have been instances when the companies did not meet commitments they made, “leaving taxpayers on the hook” for those funds.

Democrats are also voicing concern that the extraordinary special session is being called for the Columbus project while other emergency needs in the state are not being addressed. Both Simmons and his counterpart, House Minority Leader Rep. Robert Johnson, D-Natchez, said other emergencies facing the state need to be addressed as soon as possible.

“The governor describes the economic development project as an emergency,” Johnson said. “It is not an emergency. But if he is going to call it an emergency, we need to look at other issues that are emergencies while we are in session.”

Those emergencies, Johnson and Simmons said, include hospitals potentially closing, particularly in the Delta; lack of reliable, clean water in Jackson; and a government corruption scandal involving at least $77 million in welfare money for the poor being stolen, misspent or diverted to supporters of powerful state leaders.

Johnson said he supports the economic development project, but he does not rule out voting against it “to call attention to those who are not being heard.” He said the state has the revenue, including hundreds of millions in federal COVID-19 relief funds that can be used to address those emergencies.

Simmons said, “I have always supported economic development projects anywhere in the state,” but said there needs to be efforts to bring economic development projects to depressed regions of the state, such as the Delta and areas of southwest Mississippi.

READ MORE: Hosemann pushes to overhaul business incentives, avoid boondoggles of past

Reeves, who previously served eight years as lieutenant governor presiding over the Senate, said on Tuesday he understands the frustration of legislators concerned about the lack of notice for the special session.

“At the end of the day (legislators) come together to pass economic development projects” by large bipartisan margins, Reeves said, adding he is moving quickly to pass the project at the behest of the company. He said the talks on the project began four months ago and have moved quickly. He said the legislation would have “claw back” provisions where the state would be reimbursed if the company did not live up to its commitments.

“I am of the utmost confidence this deal is going to get done and benefit the taxpayers of this state significantly,” Reeves said.

He said there is a good chance that more than 1,000 will be employed and that the average salary, when factoring in bonuses, will be more than $93,000 the company has committed to pay.

Impromptu, hurry-up-and-vote special sessions have become the standard for Mississippi governors to push major incentives for corporations through the Legislature, at least since the Nissan auto plant deal in 2000. Citing the need for secrecy to complete such deals and prevent other states from swiping them, governors and their economic development teams have often provided scant details to only a handful of others before the deals are agreed to.

Nearly three years into his first term, this is Reeves' first major economic development and incentives deal, but his predecessors, including Gov. Phil Bryant, had several such deals, including the Continental Tire plant near Clinton in 2016.

Some such mega-deals, such as the Nissan plant, have created thousands of sustained jobs for Mississippians and spinoff growth. Others have been taxpayer-funded boondoggles.

Scratching for jobs and development for a poor state, governors and lawmakers over many years have provided dozens of tax breaks, credits and incentives for new or expanding businesses. Lack of oversight on the incentives has in the past resulted in businesses taking the incentives then defaulting on providing promised jobs and investments, leaving the state on the hook for millions with little way to recoup.

Around 2010, the state gave seven “green” energy companies more than $400 million in loans and incentives on the promise of them creating at least 5,000 jobs. Instead, many of the companies failed or floundered, creating a little over 600 jobs. KiOR, a company pledging to make cheap bio-crude, received about $75 million in loans and other state incentives, but went bankrupt leaving taxpayers a $69 million bill.

Nearly two decades ago, the state saw the famous “beef plant scandal,” where a Yalobusha County beef processing plant heavily subsidized by the state cost taxpayers millions when it went belly-up after just three months.

In a recent report on economic development programs and tax incentives, the state Institutions of Higher Learning reported that of 20 state incentives it examined for 2020, only nine “generated a positive return on the state's investment and two generated a negative return.” Others had not been used in recent years, and “five could not be analyzed because of insufficient information.”

It noted that the Department of Revenue had no info available on how much tax breaks for the Tourism Tax Rebate Program had cost in forgone taxes, despite 11 projects receiving the rebates, including the Biloxi and Pearl baseball stadiums, a children's museum, the outlet mall at Pearl and the King Edward Hotel in downtown Jackson.

This article first appeared on Mississippi Today and is republished here under a Creative Commons license.