Lawmakers pass $247M in incentives for aluminum mill

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Lawmakers pass $247M in incentives for aluminum mill

The Mississippi Legislature, in a one-day special session with only a handful of dissenting votes, approved $247 million in taxpayer-funded incentives to help a company build an aluminum mill and other operations near Columbus and create at least 1,000 jobs.

Lt. Gov. Hosemann said Mississippi was in competition with at least two other states for the project. Gov. Tate Reeves said Monday when he called the special session on short notice that the incentive package needed to be approved quickly to help the company with “speed to market” and ensure the mill was built in Mississippi.

State officials said they agreed not to name the company until the deal was inked, and referred to the deal as “Project Triple Crown” during Capitol deliberations Wednesday. But numerous sources and industry trade journals said the parent of the deal is Fort Wayne, Indiana-based Steel Dynamics, the third-largest producer of carbon steel products in the U.S.

The company already has a steel plant in Columbus. Over the summer, Steel Dynamics announced plans to build three large facilities — including one in the Southeast — to supply the automotive and packaging industries with flat-rolled recycled aluminum material. An officer for Steel Dynamic recently filed paperwork with the state registering Aluminum Dynamics LLC in Mississippi.

“A $2.5 billion project doesn’t come to Mississippi very often,” Hosemann said, “but it will be happening more often because Mississippi is open for business.”

House Speaker Philip Gunn, R-Clinton, said the project “would be a big economic development opportunity for the Golden Triangle, creating at least a 1,000 jobs and hopefully economic prosperity.”

(Note: Details of deal are itemized below in this article)

While there were few dissenting votes on Wednesday, Democrats and even some Republicans questioned why lawmakers rushed to pass the incentives deal while ignoring other problems pressing the state.

When asked about why lawmakers were not spending or passing policy to tackle water infrastructure woes, hospital closures and other urgent issues, Hosemann noted that only the governor can call lawmakers into special session and set the agenda. He vowed the Legislature will tackle such issues when the regular session starts in January.

“In about eight weeks you’ll see us tackling all the rest of it,” Hosemann said. “This particular Legislature has not been timid in looking at issues and I anticipate those issues will range from water and sewer to hospitals and just about anything else the Legislature thinks should be addressed.”

The bills for the incentives passed the 122-member House with only five “no” votes — all from conservative or Libertarian leaning Republicans who oppose “corporate welfare.” Four House Democrats voted present. In the Senate, the measures passed with no dissent and only Kathy Chism, R-New Albany, present.

Rep. Robert Johnson, D-Natchez, expresses his concerns during a press conference about Gov. Tate Reeves’ plan for an economic development project after the Senate passed it during a special session at the Mississippi Capitol in Jackson, Wednesday, November 2, 2022.

But legislative Democrats held a conference during Wednesday’s session to point out emergency needs facing the state.

“No one here is arguing that economic development isn’t a good thing,” Rep. Robert Johnson of Natchez, the House Democratic leader, said Wednesday on the south steps of the state Capitol. “But while we’re in this building, facing a crisis that affects each and every Mississippian, we should talk about solutions. It would be malpractice to walk out of here, at the height of this crisis, without passing legislation that would begin to address the myriad issues facing our state’s system.”

Given past boondoggles that left Mississippi taxpayers on the hook for millions when companies went belly-up or didn’t deliver jobs for incentives, legislative leaders assured their colleagues Wednesday that this deal includes stringent “clawback” and other measures to protect the state.

“I think these are the strictest clawbacks we’ve ever done,” said Senate Finance Chairman Josh Harkins, R-Flowood. “In large part, it wouldn’t even be clawback — it’s on reimbursement. We’re not just going to cut them a check up front. It will be provided as reimbursement once they’ve done certain things … This is a strong, performance-based contract, if you will. They’ve got to produce to get incentives.”

Tax rebates and abatements would be suspended if the company didn’t meet job and investment benchmarks laid out in phases, lawmakers said, although state Rep. Shanda Yates, I-Jackson, noted during floor debate that the language in the bills said the Mississippi Development Authority “may” enforce clawbacks and suspensions, not “shall.”

House Ways and Means Chairman Trey Lamar said this was to give MDA ability to negotiate with the company to get it back in compliance and he assured colleagues state taxpayers would be protected. He said that all clawback provisions are with the parent company, which is “well-heeled” and not a start-up like some of the companies that burned the state in the past.

Reeves and others called the deal the largest economic development project in state history, and said the company is promising the average salary for the jobs will be $93,000 a year. Hosemann said he was told the lowest salaries for the project would be “$58,000 plus bonuses.”

Lamar said: “This will be life-changing money for families not used to making that much money here in the state of Mississippi.”

Some highlights of the “Triple Crown” deal:

  • Lawmakers authorized state borrowing up to $246.7 million — enough to cover the entire incentives package the company wants, including grants, road work, tax breaks and land. This was to ensure the company all incentives are guaranteed. But lawmakers approved spending $81.1 million in cash up front, and said they hope to not borrow any money for the deal but pay cash as it goes along as long as state finances remain rosy. The first borrowing would not take place for three years, regardless, Hosemann said.
  • The incentives include $155 million in grants for the company. This would include $54 million in a first payment, then other “tranches” as various buildout and hiring goals are met. The state is also loaning $18 million to Lowndes County to purchase the remainder of the 2,100 acres the company plans to use. The grants also include $25.1 million in state road work for the project.
  • The incentives include up to $92 million in tax incentives and rebates, much of this tied to jobs created. Because the state is still considering massive tax cuts or elimination, the state will guarantee up to $45 million in a reserve account if the company keeps adding jobs, even if lawmakers eliminate or cut taxes further. Lowndes County is also providing major local tax breaks for the company.
  • The company is pledging to invest $1.9 billion in a recycled aluminum flat rolled mill and create 700 jobs. It pledges to invest $150 million in a “Renewable biocarbon facility” and create 40 jobs. An MDA official told lawmakers this plant would burn organic material to create ash that would provide feed stock for steel production.
  • The company has pledged $200 million in investment and 160 jobs from other businesses — customers and suppliers — locating at its new aluminum mill campus. Lawmakers said that although this would be other companies, the parent mill company would be on the hook for this as part of the incentives deal. The company has also promised to invest $250 million in a “Future project to be named later” and create at least 100 jobs.

Flanked by the primarily African American Democratic legislative caucus, Johnson dropped to ground bills that would:

  • Expand to provide coverage to primarily the working poor.
  • Provide $40 million to the beleaguered Jackson water system to deal with immediate issues regarding accessible and quality drinking water.
  • Provide grant funds for rural hospitals.

He said those bills were ready to be taken up immediately if the governor would include them in the special session. The governor has indicated those issues can be considered during the regular session.

Johnson pointed out state Health Officer Dr. Dan Edney recently said as many as six hospitals were in danger of closing.

The closure of the hospitals would negatively impact Mississippi’s health care outcomes that already are the worst in the nation. The hospital woes are occurring, Johnson said, as state officials projected an additional 5,000 births per year with the Supreme Court decision giving states the right to ban as Mississippi has done.

In addition to being issues of life and in terms of having quality water and accessible health care, the Democrats said they also were economic development issues.

Derrick Simmons of Greenville, the Senate Democratic leader, said expanding Medicaid, by accepting more than $1 billion annually in federal funds for health care would provide more economic development for the state than the aluminum plant.

The closing of the hospitals in Greenville and Greenwood would result in greater job losses than the aluminum would produce.

“Apparently, only new jobs constitute an emergency meeting of the Legislature,” Simmons said. “The jobs that hardworking Mississippians continue to lose as hospitals close do not. That logic doesn’t add up.”

On social media, state Rep. Zakiya Summers, D-Jackson, said, “Mississippi needs economic development. Yet we are not having a special session on the water crisis or hospitals closures happening across the state. Mississippi needs those basic services as well.”

Johnson said the economic development package could have been passed in the regular session, beginning in January. Instead, he called the special session “a campaign event — a political pep rally” for the governor.

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