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The Mississippi legislature this year reauthorized part of the Mississippi film incentive program that they let expire just a couple years ago. 

Senate Bill 2603, which Gov. Phil Bryant signed in April, will bring back the non-resident payroll portion of the incentives program. This allows for a 25 percent rebate on payroll paid to cast and crew members who are not Mississippi residents. It expired in 2017 and the Senate had refused to consider it. Until this year. 

Two other incentive programs have remained on the books. One is the Mississippi Investment Rebate, which offers a 25 percent rebate on purchases from state vendors and companies. The other is the Resident Payroll Rebate, which offers a 30 percent cash rebate on payroll paid to resident cast and crew members.

Film production companies, naturally, are excited. After all, they are the only winners in the race to the bottom known as film incentives. 

“That bill effectively makes Mississippi as competitive as virtually any other Southern state from a production perspective in terms of movie producers trying to find places that they can most affordably come to make movies,” said Thor Juell, vice president of Village Studios and Dunleith Studios. “That is a big deal in terms of our ability to drive the economy of production and movie film making to Mississippi, and more specifically to Natchez. That is a big deal and that is effectively why I am here.

“I had previously been working in Louisiana,” Juell added, “and Louisiana has obviously had a long history of tax incentives there that have made them extremely competitive, and they’ve seen massive spikes in jobs and just the general outlying economic activity related to all the impending pieces. Mississippi, in my opinion, is even better.”

Better for some people, but not taxpayers

A 2015 PEER report shows taxpayers receive just 49 cents for every dollar invested in the program. That means that for every dollar the state gives to production companies, we see just 49 cents in return. If you or I were receiving that return on our personal investments, we would fire our financial advisor. Of course, no one spends his or her own money as carefully as the person to whom that money belongs.

For those looking at a bright side, we are actually “doing better” than many other states. This includes our neighbors in Louisiana, who recover only 14 cents on the dollar. They also have one of the most generous programs in the country; it was unlimited until lawmakers capped it a couple years ago. (Other reports show the Pelican State recovering 23 cents on the dollar, but either way it’s a terrible investment.)

Beyond Mississippi and Louisiana, film incentives are a poor investment throughout the country. Numerous studies have been conducted on film incentives. All sobering for those worried about taxpayer protection. Here is a review of the return per tax dollar given, courtesy of the PEER report. 

That is why the number of states offering film incentives is diminishing. Not in Mississippi though. 

No one can blame Juell or anyone else in the film industry for wanting or taking advantage of incentives. They are in business to make money. Yet, the state shouldn’t allow them to do so at the expense of taxpayers. Rather, the state should be working to reduce the tax burden on all companies, regardless of whether or not they have lobbyists in Jackson.

When Mississippi State and Ole Miss play in the Super Regional round in the NCAA baseball tournament this weekend, the majority of players in the dugouts and on the field will likely be paying some or most of their tuition and other costs.

The reason is college baseball’s nonsensical scholarship limit. Right now, Division I schools can only offer 11.7 scholarships that can be divided up among 27 players. 

Most players don’t receive a full scholarship and the minimum that can be awarded is 25 percent. Try to do that math in your head for kicks.

The National Association of Intercollegiate Athletics, which is an organization for smaller college athletic programs, offers an even 12 scholarships in baseball. 

NCAA Football Championship Subdivision (once known as Division I) football, in comparison, offers 85 scholarships. The difference is that football generates lots of revenue and most college baseball programs lose money. Lots of money.

According to the most recent NCAA’s revenue and expenses report from fiscal 2016, 114 Division I schools played baseball and the average program had a $658,000 loss. 

At the next highest level, the Football Championship Subdivision, the average program lost $93,000. This level can offer only nine scholarships per year.

Ole Miss completed a $20 million renovation of player amenities in 2018.

In addition to the revenue issue, any additional scholarships for baseball would have to be offset under Title IX with additional ones for women’s sports. Considering that baseball is a money loser for most schools like most women’s sports, the scholarship number will likely remain where it is.

College football became a revenue monster because of TV contracts with the various conferences, which have revenue-sharing agreements that allow even the also-ran teams on the field to enjoy the largesse.

College baseball is a regional, warm weather game with little interest outside the Southeast and Pacific coast. Even with the rise of conference networks, there is only a smattering of college baseball games broadcast during the regular season. 

For example, one team from the Midwest, Michigan, advanced to the 16-team Super Regional round. That means potentially lucrative TV markets (and the resultant advertisers) in the Midwest and Northeast are shut out with little interest by viewers.

Even the biggest winners on the diamond are struggling financially.

The Southeastern Conference is the 900-pound goliath of college baseball, with six of its teams advancing to the Super Regional round. Despite the success, most of its individual programs aren’t making money.

According to a 2017 story in the Baton Rouge Advocate, only four SEC baseball teams made a profit or even broke even in 2016. Ole Miss barely made a profit (more than $28,000), while LSU made $1.5 million.

Mississippi State opened the new $68 million Dudy Noble Field in 2018.

The rest, which includes Mississippi State, lost money on baseball that year. This was before State’s new Dudy Noble Field opened for business in 2018, with its array of luxury suites and other revenue-enhancing features. 

For college baseball to get more scholarships, increasing revenue like Mississippi State did with its state-of-the-art stadium is going to be the rule. Some schools in the Snow Belt, such as Buffalo University, will decide to phase out baseball. 

Getting a national TV contract for the stronger conferences would probably help grow the sport and its fanbase.

Even if those things come to fruition, just getting the sport to a nice, even 12 scholarships might be a tough battle. 

Eliminating the math headaches for college baseball coaches trying to divvy up their precious few scholarships might make that a worthy effort.

It would take the average person more than 13 weeks to wade through the 9.3 million words and 117,558 restrictions in Mississippi’s regulatory code. 

This is according to an analysis from James Broughel and Jonathan Nelson at the Mercatus Center at George Mason University. They have taken a deep dive into the regulatory burdens of each state, including Mississippi. 

What do regulations look like in Mississippi? In terms of government subdivisions, the biggest regulator, by far, is the Department of Health, with more than 20,000 regulations. That is followed by the Department of Human Services with over 12,000 regulations, and 10,000 plus regulations for state boards, commissions, and examiners. The most regulated industries were ambulatory healthcare services, administrative and support services, and mining (except oil and gas). 

Overall, Mississippi was middle of the pack when it came to administrative regulations. It would take 31 weeks to read all 22.5 million words in the New York Codes, Rules and Regulations, which has 307,636 restrictions. But regardless of the state, there is generally one consistent – the number of regulations are only increasing. 

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. 

And one state has the unique ability to rewrite their book on regulations. This year, the state of Idaho essentially repealed their entire state code book when the legislature adjourned without renewing the regulations, something they are required to do each session because the state has an automatic sunset provision.  

Now, the governor of Idaho is tasked with implementing an emergency regulation on any rule that should remain. The legislature will consider them next year. There are certainly needed regulations, just as there are unnecessary or outdated regulations that serve little purpose. But, the difference is, the burden on regulations now switches from the governor or legislature needing to justify why a regulation should to be removed to justifying why we need to keep a regulation. 

Whether it’s a sunset provision 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. In a state in need of economic growth, let’s find a way to remove unnecessary barriers and inhibitors. 

This column appeared in the Starkville Daily News on June 6, 2019.

Mississippi is the nation’s most dependent state on federal funds and, if Louisiana is any guide, the addiction to federal money would only worsen if Medicaid was expanded.

Federal funds for Louisiana increased 41.63 percent between 2016, before Medicaid was expanded, and 2019.

In Mississippi’s newest $21 billion budget which goes into effect on July 1, 44.5 percent of revenue comes from federal sources. Only 27.26 percent came from the state general fund (state taxes such as income and sales) and 25.32 percent sourced from other funds, such as user fees.

Medicaid ($4.94 billion in federal matching funds) represented 52.63 percent of all federal funds appropriated for Mississippi. 

Medicaid covers 674,544 enrollees in Mississippi or about 22.6 percent of the state’s population.

Adding other social welfare programs, such as Temporary Aid to Needy Families (TANF) and Supplemental Nutritional Assistance Program (SNAP), bring that social welfare’s share to 68.57 percent of federal outlays for the state.

The percentage has changed little in the past four years, with an average of 44.37 percent of the state’s revenues coming from federal sources. Also not budging was the percentage represented by social welfare spending, which averaged 67.72 percent of federal money appropriated for Mississippi.

The Tax Foundation ranked Mississippi as the state most dependent on federal funds as a percentage of its revenues, with Louisiana second.

Expanding Medicaid as Louisiana did in 2016 would only worsen this dependence compared with the rest of the nation. 

So far, 36 states have expanded Medicaid under the Affordable Care Act, which is more commonly known as Obamacare. The ACA dictates that the federal government cover 90 percent of the costs for expanding eligibility to all individuals earning less than 138 percent of the federal poverty level.

In Republican Gov. Bobby Jindal’s final $28.2 billion budget in fiscal 2016, the Pelican State received 34.98 percent of its budget from federal funds. More than 62 percent of that was for Medicaid ($5.87 billion in federal funds alone).

By 2019, the state’s budget ballooned to $33.99 billion under Democrat Gov. John Bel Edwards, with 41.53 percent of all revenue coming from federal sources.

Medicaid spending ($9.81 billion in federal match) accounted for 69.51 percent of all federal revenue appropriated for Louisiana.

According to the Louisiana Department of Health, 465,871 adults had enrolled in Medicaid expansion as of May 8, 2019, which was a decrease from 505,503 as of April. The state could have as many as 1.7 million people or 37 percent of the state’s population enrolled in Medicaid.

According to a report by the Louisiana-based Pelican Institute, state officials expected 306,000 new enrollees when it expanded Medicaid eligibility.

A non-profit organization that deals with healthcare and education programs in the Delta is in the process of paying back $1 million from a federal grant to taxpayers for spending disallowed by federal rules.

According to a 2015 decision by the U.S. Department of Health and Human Services, the Delta Health Alliance — a 501(c)(3) non-profit organization that receives most of its money from taxpayers in the form of federal and state grants — had to pay back $1 million out of more than $34 million in grants for healthcare and educational programs in the impoverished Delta region. 

According to the organization’s 2017 audit, the organization will pay back the $1 million over a period of 10 years, interest free, with payments of $100,000 paid annually in a deal it reached with the U.S. Health Resources and Services Administration in 2017.

Some of these costs disallowed in the HHS decision included new furniture for the DHA’s offices in Ridgeland and costs related to a gala at the B.B. King Museum to celebrate the one-year anniversary of one of the programs covered under the grant.

The Health Resources and Services Administration, which is an agency of the HHS, determined that the alliance spent more than $1 million on disallowable items in 2014. The DHA appealed the determination before the Departmental Appeals Board, which issued the final decision on March 12, 2015.

When a federal agency supplies a grant, the money comes with restrictions on how it could be spent. The U.S. HHS disallowed some of the spending by the DHA from 2009 to 2011 under the grant. Some of these included:

According to the audit, 70.84 of the DHA’s 33.12 percent of the DHA’s funding in 2017 came from the U.S. Department of Education and 37.72 percent came from the U.S. Department of Health and Human Services.

The organization has received $10.6 million over the past four years from state taxpayers for a technology-based program to help providers reduce preterm births and conditions that can lead to type II diabetes among the Medicaid population in a 10-county area in the Delta.

The legislature appropriated $4,161,095 in the recent session for the project in Medicaid Division’s appropriation bill that was signed into law by Gov. Phil Bryant and goes into effect on July 1.

Revenue from sports betting dropped considerably in April after March Madness provided a boost last month. 

Taxable revenue was just over $2 million in April as we enter a slow season for sports betting before football returns this fall. In March, revenues were just under $4.9 million, a far outlier from recent trends, thanks to the college basketball tournament. January and February hovered between $2.7 and $2.8 million. 

Mississippi was the first state in the Southeastern Conference footprint to have legal sports betting after the Supreme Court overturned the federal ban, but neighbors are beginning to enter the sports betting world as well. 

Louisiana is debating an on-again, off-again, and for right now, back on-again, sports betting legalization in casinos. While it’s a far ways from becoming law, this would have the biggest impact on Gulf Coast casinos, which provide a little more than half of the revenue for sports betting in Mississippi. For Mississippi’s Gulf Coast boosters, they have to be hoping this bill doesn’t make it across the finish line. 

But the future of sports betting, if states want to increase tax revenue, appears to be online according to a new report from the Tax Policy Center, which has analyzed the first year of legal sports betting in the United States.

“As New Jersey demonstrated, allowing mobile sports betting in addition to in-person betting can exponentially increase tax revenue from sports gambling. Nevada and New Jersey were the only states to collect over $20 million in tax revenue over the past year from sports betting, and they are also the only states that offered online wagering throughout their states,” the Tax Policy Center writes.

Our neighbor to the north, Tennessee, has taken that approach by legalizing online sports betting. Unlike Mississippi and Louisiana, the Volunteer State does not have casinos. Therefore, those interested in betting on a sporting event will be able to do so from their smartphone or computer. 

Betting in a casino may be attractive for a destination event such as the Super Bowl or a major boxing match, but it’s likely not going to happen for an average basketball or baseball wager on a Tuesday night. That person will continue to use an illegal, offshore website, which costs the state revenue it would otherwise receive. 

And until Mississippi permits online betting, it will continue to lose that revenue. 

A Mississippi shipyard that is receiving a $745 million contract from the federal government for a new class of three U.S. Coast Guard heavy icebreakers will be receiving $14 million in state incentives.

VT Halter Marine in Pascagoula will receive $12.5 million for a new drydock and $1.5 million for workforce training, according to the Mississippi Development Authority. The company says it’ll add about 900 workers and that adds up to about $15,555 per job.

The contract for engineering and design costs of the new icebreakers, along with long-lead time materials and construction costs was awarded on April 23. Construction on the first of three heavy icebreakers is scheduled to begin in 2021, with delivery on the first ship planned for 2024. If all of the options in the contract are realized, it could add up to $1.9 billion.

The icebreakers are desperately needed, as the Coast Guard’s lone remaining heavy icebreaker, the USCGC Polar Star, is overdue for replacement and is dealing with serious mechanical difficulties. The Coast Guard also has a medium icebreaker, the USCG Healy, that isn’t as capable an icebreaker as the Polar Star.

VT Halter has built most of the National Oceanic and Atmospheric Administration’s fleet of research ships, missile boats for the Egyptian Navy, towed sonar array ships and accommodation barges for the U.S. Navy and landing ships for the U.S. Army.

VT Halter isn’t the only Mississippi shipyard receiving a handout from taxpayers despite lucrative U.S. Navy and Coast Guard contracts. 

Since 2004, Huntington Ingalls Industries has received $307 million from state bonds to help fund improvements at its Pascagoula shipyard, which is one of the state’s largest employers with 11,000 workers and a construction contract backlog with the U.S. Navy and Coast Guard of $12.37 billion.

The company will receive another $45 million after the Legislature approved a payment in this year’s session.

The company received $45 million in 2017, $45 million in 2016 from state taxpayers, $20 million in 2015, $56 million in 2008, $56 million in 2005 and $40 million in 2004. 

The Pascagoula yard builds the America and San Antonio classes of amphibious warfare ships, the Arleigh Burke class destroyers and the Coast Guard’s National Security Cutter, the Bertholf class. 

Mississippi State University has been making headlines in recent weeks not only for their outstanding performance on the baseball diamond, but for the actions of one of their professors who some claim pushed blatantly leftist views on graded assignments.  

Professor Michael Clifford was identified by academic watchdog group Campus Reform for providing questions on a Business Ethics exam which asserted moral judgements regarding CEO pay and suggested that Chick-Fil-A and Hobby Lobby practiced employment discrimination against LGBT applicants, without providing evidence to support the suggestion. 

Clifford is also accused of ideological favoritism with the distribution of lower marks to those who disagreed with the premise of affirmative action or the data supporting the wage gap theory.  One of Clifford’s former students told Campus Reform that he felt afraid to offer an opposing viewpoint in his classroom. “Shortly after I started the course in January, I heard from other students that he was very liberal and graded people based on whether they agreed with him or not,” Mississippi State student Adam Sabes, who is also a Campus Reform correspondent, said. 

“Personally, this discouraged me from answering a question based on how I really feel and led me to answer tests or discussion board questions based on what the professor would like best as I needed a good grade in this class,” Sabes added.

This professorial behavior, while appearing unethical (which is rather ironic in a class on ethics), may not seem shocking to the average American if we were talking about Boulder or Berkeley. But this is a largely conservative university in an overwhelmingly conservative state, showing that the problems of bias in academia are not isolated to our nation’s coastal communities or famously liberal college towns. 

Academia has become a complex game of inside baseball in recent decades where groups of ideologically aligned and motivated academics provide cover for one another as they actively pursue leftist or progressive viewpoints.   

The evidence for this bias comes from Clifford himself. In response to Campus Reform’s reporting, he said that while he included the aforementioned questions that he also included others to choose from. This assertion isn’t a denial. It’s a premeditated cop out for any criticism of his bias.   

Could you imagine what news outlets like CNN or MSNBC would say about a conservative professor who made statements offensive to  the sensibility of the progressive academic class? Safe to say that they would be looking at some very tough days in the university faculty lounge.   

It has unfortunately become the norm that we accept the liberal doctrine in our nation’s universities. Until we start calling out the bias, we’re going to continue to see colleges and universities remain the academic left’s own Animal House – without Dean Wormer to shut down their party.

In the meantime, I’m going to enjoy a delicious chicken sandwich from Chick-Fil-A, while there is still time

Lemonade Day 2019 is coming to the Golden Triangle. It’s a celebration that helps today’s youth become tomorrow’s entrepreneurs. 

For generations, a summer tradition for boys and girls has been to make lemonade, set up a stand in front of their house or near a busy road, and earn money for that special toy they have been wanting, or maybe just to save for a future purchase. For a moment in time, children turn into entrepreneurs, even though they probably couldn’t tell you what the word means.

But lemonade stand entrepreneurs have met a force that strikes fear in the hearts of even the most seasoned professionals: the government regulator.

By now you have probably heard the stories, but they bear repeating because of the sheer lunacy of feeling the need to shut down a lemonade stand, and because they highlight the overcriminalization of our society thanks to laws we have adopted to fix every supposed issue or problem.

In California, the family a five-year-old girl received a letter from their city’s Finance Department saying that she needed a business license for her lemonade stand after a neighbor complained to the city. The girl received the letter four months after the sale, after she had already purchased a new bike with her lemonade stand money. The young girl wanted the bike to ride around her new neighborhood as her family had just moved.

In Colorado, three young boys, ages two to six, had their lemonade stand shut down by Denver police for operating without a proper permit. The boys were selling lemonade in hopes of raising money for Compassion International, an international child-advocacy ministry. But local vendors at a nearby festival didn’t like the competition and called the police to complain. When word of this interaction made news, the local Chick-Fil-A stepped up as you would expect from Chick-Fil-A. They allowed the boys to sell lemonade inside their restaurant, plus they donated 10 percent of their own lemonade profits that day to Compassion International.

In New York, the state Health Department shut down a lemonade stand run by a seven-year-old after vendors from a nearby county fair complained. Once again, they were threatened by a little boy undercutting their profits. 

In response to these stories, the states of Utah and Texas have passed laws that allow children to operate occasional businesses, such as a lemonade stand, without a permit or license. Every other state, including Mississippi, should follow suit whether they have made the news or not. 

As parents and as a society, we should be encouraging entrepreneurship. We should celebrate young boys and girls who want to make money, whether it’s for a new bike or to give to a ministry. When children have the right heart and the right ideas and are willing to take actions, we shouldn’t discourage it. The lessons are valuable. They learn that money comes from work, that you have to plan, and then produce a stand, signs, and lemonade. Introducing kids to the concepts of marketing, costs, customer service, and the profit motive is a good thing.

And why it has always been celebrated in our society for a long time.

Until today. But I suppose these interactions also provide these young children with another valuable but unfortunate lesson: beware of government and crony capitalism. Vendors who don’t like competition use the law to eliminate competition. And government, however good the intentions may have been, created the laws that actually work against the development of entrepreneurial values by regulating lemonade stands.

As often happens when government steps in to solve a problem, there are unintended consequences few are willing to acknowledge.

Hopefully, the absurdity of these stories has raised more than a few eyebrows. Perhaps they will cause people to recognize the downside of our regulatory burden and maybe even cause legislators to review more than a few of the laws, rules, and licensing regimes that are stifling growth, innovation, and capitalism. If we want a thriving and growing economy, we’ve got to have more entrepreneurs – including those future ones who sell lemonade in their neighborhoods today.

This column appeared in the Starkville Daily News on May 30, 2019.

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