Mississippi’s recent decision to partially bankroll a large new factory follows a pattern that has become all too familiar.
The deal is kept hush-hush until the last minute. A package of incentives is rushed through the Legislature with few of the members having read the legislation that they overwhelmingly approve. And the main person taking credit for the deal, the incumbent governor, is facing a reelection campaign in the near future.
It can’t be a coincidence that these megadeals are much more likely to occur during a governor’s first term than in the second and final one. Those companies asking for the hundreds of millions of dollars in taxpayer-funded incentives obviously understand that they are more likely to be granted them while a governor can make political hay on the pronouncement.
Ronnie Musgrove ushered the state into the megadeal business when he helped land Mississippi’s first automotive plant, the Nissan factory in Canton. The initial $295 million installment was approved during Musgrove’s first year in office, with a second $68 million added two years later, still in Musgrove’s initial term.
Landing Nissan wasn’t enough to save the Democrat from the juggernaut of Haley Barbour and the Republican tide sweeping Mississippi. Still, Barbour and the two other GOP governors who have come since have all borrowed from the same Musgrove playbook.
In the spring of 2007, Barbour, facing an almost certain reelection that fall, still opened the state’s coffers with $294 million in incentives for the state’s second automotive plant, the Toyota factory in Northeast Mississippi.
Next up was Phil Bryant, who championed the largest and what is considered the most financially questionable megadeal to date, a $600 million handout to Continental Tire. That deal was done in 2016, a year before Bryant’s successful reelection campaign.
Now comes Tate Reeves, who earlier this month rolled out a $247 million deal for an aluminum plant in Columbus, not coincidentally months before he launches his anticipated reelection campaign.
Reeves may need the boost of a splashy economic development triumph more than his two Republican predecessors.
Recent polls have shown the incumbent with low approval ratings, despite his track record of winning five consecutive statewide elections. For months there have been rumors circulating that he is expected to face a stern test in the Republican primary, although one of those potential GOP challengers, House Speaker Philip Gunn, has apparently decided to sit out the 2017 election. Even if Reeves survives the primary, he is not guaranteed a cake walk in the general election, should Brandon Presley, the populist long-serving public service commissioner, enter the race.
There’s nothing like a pending tough reelection to get a supposed disciple of the free market such as Reeves to abandon his principles and give preferential tax treatment to a business that will be competing against all the other companies nearby for their labor.
The deal with Steel Dynamics also has the potential to create some backlash for Reeves if Mississippi’s hospital crisis accelerates and some medical facilities close their doors.
U.S. Rep. Bennie Thompson was the latest to observe the disconnect between Reeves’ enthusiastic support for the Steel Dynamics package and the governor’s unwavering opposition to Medicaid expansion.
Looking at Medicaid expansion from strictly an economic development perspective, it has the potential to be much larger and sweeping in impact than even the loftiest projections for the aluminum plant. Both equate to about a 10% state government match, but Medicaid expansion would produce, by several estimates, about 20 times more jobs than the aluminum plant will.
Even if you are justifiably skeptical about job creation projections, there is little disputing that Medicaid expansion would help “preserve” thousands of existing jobs that are currently at risk if rural hospitals start closing.
Reeves is going to be tagged for every one of those closings, if they occur.
In most communities such as ours, the hospital is one of the largest employers. Not only that, it is a linchpin to economic development. When a community loses its hospital, it becomes much more difficult to recruit and retain companies and residents. Some would argue it becomes impossible.
If Greenwood Leflore Hospital closes in the next year, Reeves may be able to survive the fallout, as this predominantly Democratic community is not one of his bases of support. But if it becomes the first domino to fall, lots of communities, including those outside of the Delta, start getting nervous that theirs could soon follow.
Greenwood has awakened to its hospital crisis. A lot of the rest of the state has not, even with projections that 24 rural hospitals in Mississippi could close in the next two to three years.
If this approaching catastrophe starts to register more broadly, one big aluminum plant will not be nearly enough to calm everyone’s nerves.
- Contact Tim Kalich at 662-581-7243 or tkalich@gwcommonwealth.com.
