If you went to the Nehsoba County Fair in hopes of hearing candidates for the top offices in the state preach fiscal conservatism or ideas to shrink the size of government, you came away disappointed.

Numerous candidates – both Democrats and Republicans – spent the bulk of their time, as they have spent most of their campaigns, singing from the big government hymnal. And if they get their way next year, we could be looking at a much larger government, a larger budget, and higher taxes for all.  

The most common bi-partisan item was the need to expand Medicaid, though we have also been told there is a “Republican” way of moving more people to government insurance. We like to cite Indiana. After all, Vice President Mike Pence, the Indiana governor at the time, worked on a deal with the Obama administration known as HIP 2.0. In reality, the program is little different than every other state that has expanded Medicaid. Costs have gone up, few – if any – people are contributing, and virtually no one has been dis-enrolled. 

We’ve been told that we should do this because it’s “free money” from the feds. Regardless of a personal disdain for using the word “free” when it comes to healthcare or whatever else politicians are giving out, we know this would come at a cost to state taxpayers. There is still no such thing as a free lunch.

Estimates generally put the  additional cost at roughly $200 million per year. But as other states have shown, Medicaid expansion estimates generally balloon, leading to greater costs to the state. 

Maybe that’s why the Mississippi Republican Party passed a resolution in 2013 opposing Medicaid expansion and supporting the GOP’s attempts to resist expansion. Times have changed I suppose.  

And then there are the needs to spend more on roads and bridges. Ignoring the hundreds of millions of dollars the legislature appropriated in a special session last year or the fact that most of the troubled roads and bridges are locally controlled, there seems to be a never-ending desire to raise gas taxes. “Lots of other states are doing it so we should as well,” say the proponents. According to most of candidates at Neshoba, “It’s the only thing we can do”

Again, support for higher taxes was bi-partisan. It appears very few candidates have learned the art of saying “no.”

The truth is Mississippi doesn’t have a problem with failing to spend government funds. Said more accurately, our government officials have not been stingy when it comes to spending taxpayer money on all sorts of programs. On a per capita basis, we have one of the largest governments in the country. We have a larger government workforce than most. Government controls 55 percent of our state’s GDP. How much higher can that go? When you understand these facts, it makes the pleas for more government “investment” ring hollow.

Despite this evidence,  most candidates running for the top offices in the state don’t think government is large enough. 

To the dismay of numerous business groups, the Mississippi legislature opted, once again, not to raise gas taxes in the state this year.

Mississippi continues to have the third lowest gas tax in the country, at 18.4 cents per gallon (cpg), which is identical to the federal gas tax motorists also pay. Only Alaska (14.66 cpg) and Missouri (17.42 cpg) have lower gas taxes.  

On July 1, motorists in 14 states saw their gas taxes raised, either through new taxes approved by the legislature or due to automated increases. Tennessee is in the final stage of a phased in 6 cent per gallon increase, which included a 1 cent per gallon increase this year. 

Illinois drivers saw the biggest jump – as their taxes went up 19 cents per gallon. Those who purchase gas in California, Connecticut, Indiana, Maryland, Michigan, Montana, Nebraska, Ohio, Rhode Island, South Carolina, Vermont, and parts of Virginia also experienced increases in gas taxes. 

Gas taxes among neighboring states

As a result of the low taxes and other factors that help Mississippians pay the least per gallon in the country, many – not just the business community, but both Democrats and Republicans running for governor – have called to raise the state’s gas tax, with the belief that it will be less painful and that the state desperately needs it. Some advocate for adjusting the tax to inflation annually, thereby preventing legislators from ever having to vote for a tax hike again while ensuring regular increases.

Simply because your taxes happen to be lower than other states does not mean you should raise them to match those states. That is bad policy. Besides, all this would do is simply redirect money from the private sector to government. A government that already controls 55 percent of the state’s economy. 

Taxpayers currently spend over $1 billion annually on the work of the Mississippi Department of Transportation. Some might want more, but the biggest problems with Mississippi roads are not state-maintained roads. Of the 479 bridges that are currently closed, only 11 are state controlled – and they are all being replaced. The rest are maintained by cities and counties.  

And far too many of those localities are simply not keeping up with their roads and bridges and that is evidenced by what they spend. For example, Hinds County has spent an average of only 6.48 percent of its annual expenditures in the last three years on roads and bridges. It has 44 bridges closed, according to the Office of State Aid Roads. Neighboring Rankin and Madison counties spent 31 and 22 percent on roads and bridges, respectively. 

Increasing the gas tax would not help local governments as those taxes go to the state and the Department of Transportation. 

As we often see in government, the first reaction is a tax increase. Before we start looking for more sources to fund infrastructure, we should do everything in our power to ensure taxpayer monies are carefully expended and that suppliers and contractors are producing the most value possible for the dollars they receive. And all of it should be open and transparent. 

Our government officials should be negotiating hard with incumbent contract holders on price and inviting competition at every step to ensure maximum bang for the buck. 

And if we don’t have enough competition amongst existing contractors or those suppliers don’t have enough capacity to handle the work without charging more, we should open up the competition by inviting others to enter the bidding. 

These dollars belong to the taxpayers and they should be respected as such.

In this edition of Unlicensed, the MCPP team talks about how we can improve the state's economy.

We have heard a lot of talk in political circles about an Amazon report that many believed showed Mississippi as being the fastest growing state for small and mid-sized business. It sounds great, but this has been grossly exaggerated.

While we are making some gains in business climate rankings, we continue to lag behind our neighbors in the Southeast and most of our competitors in the nation in many categories. There is some encouraging news, but we should not deceive ourselves about the work we have left to do. What does that work look like?

Government regulators have found their newest target: dogs. Specifically, restaurants that allow dogs on their premise, usually on a courtyard, patio, or some other outdoor area.

After the Clarion Ledger ran a story on pet-friendly restaurants in the Jackson metro area, the Mississippi Department of Health fired back saying that is illegal. And that Mississippi code prohibits pets in restaurants, even outdoor areas.

MDH cites the Food and Drug Administration's Food Code model, which is housed in the U.S. Department of Health and Human Services, for the prohibition. That model recommends prohibiting animals in food service establishments, save for service dogs. 

The state doesn't have to follow the FDA model. Indeed, many states have already legalized dogs in restaurants. 

While it may be somewhat tricky to find a formal statistic, there are at least 12 states that explicitly allow dogs to join their owners in restaurants, according to the Animal Legal & Historical Center at Michigan State University. This started with Florida in 2006, and now includes California, Illinois, Maryland, Michigan, Minnesota, New Hampshire, New Mexico, New York, Ohio, Rhode Island, and Tennessee.

These laws generally do two things. They often allow local governments to enact ordinances if they would like and they allow restaurants to choose whether they would like to welcome dogs on their property. 

And with that, consumers can choose to bring their dog to a pet-friendly establishment, just as those who don’t like dogs can opt to go somewhere else. And the owner of the restaurant can decide what is better for his or her business. 

What path a restaurant chooses isn’t as important as the restaurant having the ability to choose. But prohibiting dogs in restaurants are just one of the more than 117,000 restrictions in the state’s regulatory code.  

The biggest regulator in the state? As you would imagine, the same Department of Health that is going after dogs in restaurants. 

And why does this matter?

Regulatory growth has a detrimental effect on economic growth. We now have a history of empirical data on the relationship between regulations and economic growth. A 2013 study in the Journal of Economic Growth estimates that federal regulations have slowed the U.S. growth rate by 2 percentage points a year, going back to 1949. A recent study by the Mercatus Center estimates that federal regulations have slowed growth by 0.8 percent since 1980. If we had imposed a cap on regulations in 1980, the economy would be $4 trillion larger, or about $13,000 per person. Real numbers, and real money, indeed. 

On the international side, researchers at the World Bank have estimated that countries with a lighter regulatory touch grow 2.3 percentage points faster than countries with the most burdensome regulations. And yet another study, this published by the Quarterly Journal of Economics, found that heavy regulation leads to more corruption, larger unofficial economies, and less competition, with no improvement in public or private goods. 

A prescription for lowering the regulatory burden on a state is the one-in-two-out rule, or a regulatory cap. In 2017, one of President Donald Trump’s first executive orders was to require at least two prior regulations to be identified for elimination for every new regulation issued. This is badly needed. We have gone from 400,000 federal regulations in 1970 to over 1.1 million today. 

Many years ago, British Columbia took on a similar mission. And in less than two decades, their regulatory requirements have decreased by 48 percent. The result has been an economic revival for the Canadian province. 

Whether it’s a sunset provision, where regulations expire and must be reauthorized after a period of time, or one-in-two-out policy, Mississippi should move in the direction toward a smaller regulatory state with more freedom. And if a regulation is truly important to our well-being, let the regulators prove why.

A decision by the state to allow dogs in restaurants won’t change the trajectory of the state’s economy, for better or worse. But a deep dive into the unnecessary and outdated regulations of each agency can go a very long way toward removing unnecessary barriers and inhibitors. 

One of the most important goals we have for Mississippi is to get our small and mid-sized businesses growing more rapidly.

We want to see a day in the not too distant future when our state’s economy is driven more by private sector actions than by the public sector ones. That will require a lot of changes, including reducing the heavy role governments, and government officials and politicians, play in our economy. It will require less restrictions, fewer regulations, a reduction in licensing regimes, the elimination of protectionism, a commitment to robust competition, and a devaluing of the favor-seeking component of business in the Magnolia State.

The hallmark of a strong and durable economy is a high level of competition, a high number of start-ups, and acknowledgement that pursuing customer delight is more valuable than pursuing legislative support.

An integral part of the motivation to change any person, policy, or action is first to recognize a problem exists in the first place. That requires honesty. It also requires humility. Only after the recognition can we actually commit to making the changes required. Once we make the commitment, then all that remains is the courage to change. Mississippi has no shortage of courage, so I’m very confident in the ability of the free market and capitalism to help us drive small and mid-sized business growth.

Nothing can produce long-term economic growth like a commitment to unfettered capitalism – the kind that has produced thousands of examples of unplanned, unpredicted, and unprecedented private sector success. 

However, we are not always honest about our current situation. Too often our elected officials and government employees expend much effort claiming success, cheerleading isolated reports, and denying systemic problems.

A ribbon-cutting or a groundbreaking announcement doesn’t indicate success, unless you work in the Department of Economic Development, it indicates a partnership whereby government has agreed to invest a portion of taxpayer money to a particular company in a particular industry. I’m happy when we convince companies to move to Mississippi or to build a facility here, but I’d rather see us celebrating the unprecedented growth of companies that were born here and managed to grow here without asking the taxpayers for assistance. We can do both, and we should do more of the latter.

A good example of our leaders’ penchant for hyperbolic celebration of economic news is the creative way an Amazon-produced, small business report has been turned into something it is not. If I’ve heard it once, I’ve heard it a thousand times from politicians, business leaders, and media members, “Amazon, the world’s largest company, just ranked Mississippi as the fastest growing state for small and mid-sized business.” That is simply not true.

What Amazon actually did was produce a report focused on its own small and mid-sized business partners in the U.S. (SMBs) that sell products directly through Amazon’s stores. Of the SMBs selling within Amazon’s digital platform, Mississippi was ranked first of the 10 fastest growing states.

While that is certainly good news, it has been grossly exaggerated and used to suggest Mississippi is one of the fastest growing states for small and mid-sized businesses. The data does not support such a statement. 

While we are making some gains in business climate rankings, we continue to lag behind our neighbors in the Southeast and most of our competitors in the nation in many categories. There is some encouraging news but we should not deceive ourselves about the work we have left to do.

Here is a sampling of the most recent business-related rankings.

Documenting civil asset forfeiture in Mississippi once required lots of public record requests and a lot of inside knowledge, since there was no central database cataloging the practice.

Now, two years later, the Mississippi Bureau of Narcotics runs a database that provides some information, but has plenty of gaps. That leaves a lot of holes that require incident reports, which are public records and provide a way for law enforcement agencies to document suspected crimes or complaints.

The Hinds County Sheriff’s Office initially charged the Mississippi Center for Public Policy $450 for 18 incident reports, which adds up to $25 per incident report.

As part of digging deeper into our first two analyses, we’ve submitted public records requests to get more information on seizures from the initial 18 months the civil asset forfeiture database was in operation.

Most agencies were cooperative and shared their incident reports for a reasonable price (agencies have to be rightly compensated for their time searching for the records and to provide copies). Some laudable agencies dedicated to transparency — such as the Richland Police Department — didn’t even charge a fee to provide requested records.

Compared to Hinds, the Biloxi Police Department charged MCPP $78.30 for 19 incident reports and the Southaven Police Department charges $10 per report

State public records law says that governmental bodies can charge what it costs to share records and have to use the lowest-paid employee assigned to record search duties to hold down costs. They also recommend in their model public records rules that copy fees be limited to 15 cents per page.

So we filed a public records complaint with the Mississippi Ethics Commission. When you file one of these complaints, the governmental body has 14 days to reply. After that, the commission can dismiss the complaint, issue a preliminary finding or set a hearing for the complaint.

Once the two weeks had passed, the Hinds County Sheriff’s Office responded and decided to lower the costs to a more reasonable $8.10. 

There is one problem with the records provided. The Hinds County Sheriff’s Office said that incident reports were only available for eight of the 18 forfeiture cases listed in the first 18 months on the civil asset forfeiture database. They said the other records were missing.

The law requires only law enforcement agencies to list the description and value of the item seized, a copy of the notice to intent to forfeit, any petitions by property owners to contest the forfeiture and any judge’s order that would include those that cover final disposition of the seized property.

The biggest question about the new Mississippi Lottery is how much revenue it will generate for state government.

Comparing to lotteries in two states with similar populations, Arkansas and Kansas, show that the Mississippi Lottery Corporation could generate between $75.2 million (three-year average for Arkansas) and $114 million (three-year average for Kansas) for state coffers. 

“I like to tell people if you’re a fan of the lottery, the bad news is we’re the 45th state to enact it,” said Gerard Gibert, who is Vice Chairman of the Mississippi Lottery Corporation board of directors. “The good news, we’ve got 44 other states to draw from as we build out the environment.”

Gibert said he thinks that the lottery will generate about $400 million annually in gross revenue. He also said the board is targeting December 1 as the on-sale date for its first tickets, a date he says is subject to change.

Using the three-year average of percent of transfers to the state treasury from gross revenue ($516,236,822 in 2019)from Arkansas (18.78 percent), $400 million in gross revenues for the Mississippi lottery would add up to about $75.2 million annually. 

Over the last three years, Tennessee’s lottery has sent about 25 percent of its revenue ($1.16 billion in 2018) to the state treasury. If this is the case in Mississippi, that’d be about $100 million in revenue for taxpayers annually.

Kansas has averaged about 28.57 percent of its gross sales ($268,948,805 in 2018) generated as revenue for the state in the past three years and using this model would yield about $114 million annually.

While the law says a minimum of 50 percent of the Mississippi lottery’s revenues will be awarded as prizes, Gibert said that amount might go up to 55 percent. Kansas has averaged 58.18 percent of its revenues going to prizes, while Arkansas has sent about 68 percent of its gross revenues to prize winners. 

Tennessee awarded 63.79 percent ($1.039 billion) of its $1.616 billion in revenues to prize winners.

Gibert said the lottery corporation is primarily a sales organization and that its primary goal to maximize revenue for the state using a carefully crafted lineup of instant and online games.

By law, the lottery is supposed to provide the first $80 million in revenues for the State Highway Fund, with the excess going to the Education Enhancement Fund. Retailers will receive a six percent commission.

Gibert says that Arkansas presents the easiest comparison for Mississippi. In the last three fiscal years, the Arkansas Scholarship Lottery has enjoyed increasing revenues with an average of $91 million being transferred to the state in the form of college scholarships.

In the last three years, 81.5 percent of the lottery’s revenues went to expenses, such as prizes, advertising and commissions for retailers. 

In comparison, the Arkansas lottery awarded 67.7 percent of its gross revenue in the form of prizes in fiscal 2019. Arkansas pays a five percent commission to retailers and has 1,915 retailers selling lottery tickets at present.

Arkansas lottery revenues

Another comparison would be Kansas, which has a similar population and is predominately rural. 

The Kansas lottery was started in 1988 and it has averaged about $78 million per year returned to the state treasury. Net sales for Kansas have averaged between $244 million and $268 million in the last five years.

Kansas pays a five percent commission to retailers.

Kansas lottery revenues

Gibert says one of the goals of the Mississippi state lottery corporation’s board is to have extensive oversight over its finances. The lottery will be subject to audits from both the state auditor’s office and an external CPA firm. The corporation will also hire an internal auditor.

The lottery was authorized by an amendment to the state’s constitution in 1994, but it took until the 2018 special session of the Legislature for the legislation to make it to the governor’s desk for signature. It was part of a multi-million infrastructure improvement package.

The only prohibitions on vending for the lottery is at Mississippi rest areas and for stores exclusively devoted to selling lottery tickets.