February 18, 2014 9:48:55 AM
OXFORD -- When the U.S. economy was imploding in 2008, federal officials decided which car companies, which investment firms would be given infusions of taxpayer cash and which would be allowed to go belly-up. From a few corners, muted voices were heard mumbling whether it was a proper function of any government to pick winners and losers in the private economy.
Well, the question came a bit too late.
In Mississippi, about 80 years too late.
In 1929, Hugh L. White, a lumberman serving as mayor of Columbia, Miss., observed that sawmills were closing because the area had been "timbered out." With jobs vanishing, he started recruiting new employers, even hired a search firm. A deal was struck under which a company that made pajamas would move to Columbia. The town guaranteed $85,000 for a plant. The pajama company promised to hire 300 people.
A "public-private partnership" was formed.
But even that was not new in the American experience. Railroad companies got all kinds of inducements. So did oil drillers.
Anyway, The Great Depression started in 1929, so it was no surprise that White parlayed his local economic development skills into a term as governor. These days, all the history books talk about White's "BAWI" (Balance Agriculture With Industry) incentives that, along with the New Deal programs, saved Mississippians from starvation. The pajama plant was the inspiration for many more public-private partnerships all across the state.
There were legal challenges along the way -- unconstitutional! -- but because lawmakers liked the results, philosophical objections were overruled. The state needed factory jobs to supplant a dwindling number of farm jobs. End of discussion.
BAWI or BAWI-like programs continued in Mississippi in the decades since.
Some, liked the ill-fated Mississippi Beef Processors plant in Yalobusha County (which 10 years ago defaulted on a $55 million taxpayer loan) wound up with people going to prison.
Some, such as the initiative shown by Pontotoc, Union and Lee counties to create a site suitable for a Toyota plant, have worked out very well. Same for the Nissan plant near Canton, where the state actually went to court to try to flex its eminent domain powers and acquire land for the private company.
Some, such as communities that have used taxes paid by local merchants to underwrite costs for "big box" stores to come in and put the locals out of business, seem to defy common sense.
The best measure, though, is not the success or failure of a public-private partnership but the coziness of the deals.
In Jackson now, the Legislature actually raised its collective eyebrow this year at some aspects of recent inducements.
As The Associated Press reported, the Mississippi Development Authority has allocated $155 million in tax credits over the past three years to shopping malls. The MDA oversees a bevy of federal and state grant and loan programs, not always with abundant transparency in the criteria to decide who gets what help from the public purse.
Rep. Rita Martinson, R-Madison, told The AP she doesn't deny that jobs have been created, but it might be time for a pause. "It might be at the point to sit back and see what we've done," she said.
A lot of flash has been added to Mississippi's retail scene by the subsidies. Pearl's Outlets of Mississippi would have cost developers $80 million, but will, with the offsets, cost $56 million. Similarly, Outlet Shops of the Mid-South in Southaven could recover $34 million of its $113 million cost and CBL & Associates could "save" $96 million on a $321 million shopping project in D'Iberville.
Way back in 1929 when Mayor White just wanted to save his town, there was little question that his dealing with the private sector was arms-length. When the federal government was backing private railroad and oil companies, there was scandal -- but no doubt that a tremendous public benefit would result.
These days, however, things are very different. More and more politicians owe their first loyalties to campaign donors. How much does the public, at large, benefit from a new shopping center and how fair is it to retailers who, in years past, paid their own way, to have new competition subsidized by taxpayers?
At the very least, the MDA needs to be completely forthcoming on how funding decisions are made.
If government is going to continue to pick the winners and losers in the private economy -- as it has for a long time -- taxpayers at least need assurance that full disclosure is part of the process.