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.
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.
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.
New emergency telemedicine regulations are good for healthcare, they are good for competition, and they are good for consumers.
Millionaire country music stars like to pretend they spend their weekdays driving a tractor and their weekends driving pretty girls down dirt roads in their pickup truck. While they can only dream, many Mississippians live the true country life in all its glory. It is a good life, but not as simple as the performers portray it to be. Living far away from population centers can mean reduced access to many essential services, like healthcare. Maintaining access to rural emergency medicine could be the difference between life and death for many Mississippians.
In Mississippi, there are 64.4 primary care physicians for every 100,000 residents, far below the national median of 90.8. Half of the Mississippi’s rural hospitals are in financial risk. Some have closed down completely, or shuttered critical services such as emergency rooms.
Rural emergency rooms are difficult to maintain. They must stay open 24 hours a day, seven days a week. The hospital has to hire several emergency room physicians to take turns covering those shifts. If those staff physicians cannot cover a shift, the hospital has to bring in a temporary physician – often from out of state. Not only is it expensive to staff an emergency room, it can be hard to recruit multiple emergency medicine physicians to live and work in a small town. Moreover, if a rural hospital does succeed in staffing an emergency department, it will see relatively few patients. Rather than bringing additional income to the hospital, it will likely cost the hospital money to operate.
Emergency telemedicine allows some small hospitals to keep their emergency rooms open, by staffing them with physician assistants and advanced practice registered nurses. When a patient arrives, an emergency medicine physician in another location – often a larger hospital – uses audio/visual technology and remote diagnostic tools to see the patient, and to instruct the nurse or physician’s assistant on the care that is needed. Some small hospitals choose to keep a physician in the emergency room, but use emergency telemedicine to provide an additional layer of expertise and consultation for their emergency department patients.
Despite the clear benefits of emergency telemedicine, its use in Mississippi has been limited. Current regulations prohibit physicians from providing emergency telemedicine services to small hospitals unless they worked at a Level One Hospital Trauma Center with helicopter support. Mississippi only has one Level One hospital in the state, so there has been no competition for this service. However, any physician who is board certified in emergency medicine is capable of providing emergency telemedicine services, and is able to transfer a patient by helicopter, regardless of the type of hospital the physician works for.
In short, the current regulations do not make sense, and prevent new providers from offering more options for emergency telemedicine. They are also vulnerable to a legal challenge, as they likely violate the due process and equal protection guarantees of the Mississippi and U.S. constitutions, and may violate federal antitrust laws.
One telemedicine provider that has been locked out of the emergency care market is T1 Telehealth located in Canton, Mississippi. T1 Telehealth was the state’s first private telemedicine company, and it developed a new model for emergency telemedicine that it believed would provide a better service for rural hospitals and patients. But it could not offer that new model due to the regulatory restrictions.
T1 Telehealth retained the Mississippi Justice Institute – a nonprofit constitutional litigation center that I work for – to challenge the emergency telemedicine regulations. After months of input and discussions with T1 Telehealth and other stakeholders, the Mississippi State Board of Medical Licensure has taken the right approach to make the regulations fair and to increase access to healthcare. New proposed regulations have been adopted that will allow any licensed emergency medicine physician to offer emergency telemedicine services in Mississippi.
The new proposed regulations will be reviewed by the Occupational Licensing Review Commission before becoming final. Approval by the commission seems assured, as it is chaired by Gov. Phil Bryant, who has been a tireless champion of expanding telemedicine in Mississippi and a strong supporter of efforts to reform the state’s anticompetitive emergency telemedicine regulations.
The new regulations will be a great development, not just for T1 Telehealth, but for all telemedicine providers, for small rural hospitals that rely on telemedicine, and for patients across Mississippi. Competition encourages innovation, more options, better services, and lower prices. All things that will make rural healthcare and Mississippi country living that much better.
This column appeared in the Clarion Ledger on May 29, 2019.
Payrolls in Mississippi jumped by 3,000 in April, erasing the slow start to the year.
The number of employees in Mississippi rose to 1,164,200, according to preliminary estimates from the Bureau of Labor Statistics. And March’s numbers were revised upward from 1,159,700 to 1,161,200.
After posting a decline in the number of jobs over the first three months of the year, Mississippi posted a solid job growth rate of .26 percent last month. And over the past year, Mississippi has added a little more than 11,000 jobs.
Only Tennessee, which added 5,000 jobs last month, had better job gains among neighboring states though there .16 percent growth rate was lower than Mississippi’s. Alabama added 1,100 jobs while Arkansas added 200 jobs. Louisiana lost 1,100 jobs last month.
Construction (+300), manufacturing (+1,000), trade, transportation, and utilities (+1,500), financial activities (+200), education and health services (+100), leisure and hospitality (+100), and government (+600) all added jobs last month. Professional and business services (-600) was the only sector to see job losses last month.
Encouraging numbers, but problems exist
While this is good news on the whole, particularly as it compares to our neighbors, and we should celebrate job growth, there are two areas of concern that should be noted.
We added 600 jobs through government. When our population and in-migration rates stay flat (or decrease) but our government jobs increase, that’s a sign of a dependence on government for economic growth. That’s not a good free-market policy and usually indicates a lack of reliance of the private sector. Mississippi already produces approximately 56% of its economic output from the public sector, putting it fourth worst in the nation for reliance on government.
Professional and Business Services dropped by 600 jobs. This is not a trend we hope to see continue. To grow our economy from the private sector, we need more entrepreneurs, start-ups, and professionals. These jobs tend to focus on creativity and serving customers in innovative ways that create meaningful and long-lasting value. Such businesses also can create more jobs, more companies, and even generate significant wealth for founders, who often turn around and invest in new companies or donate generously through charitable giving and philanthropy.
We applaud the improved job growth numbers, but we want to see improvements in these two areas so that our economy can generate more sustainable, long-term growth.
With the statewide political campaigns gearing up, we are sure to hear often this year from candidates who say they want to stop government overreach from stifling small businesses, innovative startup companies, and job creation in Mississippi. This is a worthy goal.
But some may wonder, exactly what does this kind of government overreach look like? Where do we draw the line between the proper role of government and unnecessary government interference?
To find the answer, we need only look to the travails of an innovative technology startup out of Madison named Vizaline. Two Mississippi businessmen put their experience and ideas together to offer something new. Brent Melton had worked in community banks for 42 years and knew they needed a way to understand the boundary lines of smaller properties they financed. For these smaller loans, surveys were neither required nor financially feasible. Scott Dow had spent two decades working with geospatial remote sensing and 3D computer modeling and he knew how to make this idea a reality.
Together, they created software that could take a properties’ publicly available legal description – which is just cryptic words on paper generated by professionally licensed surveyors – and turn it into something anyone can understand: a drawing of the described property lines on a map.
Vizaline does not conduct surveys. It does not hold itself out as a professional surveyor. It simply takes information already generated by surveyors and puts it into a more user-friendly format. Vizaline only sells its services to small community banks who need and want a more cost-effective and user-friendly way to understand the properties they are financing. These are sophisticated customers. They know exactly what they are getting. And they want it. Nobody is getting duped.
Nevertheless, the government decided it needed to stop these transactions between a willing seller and willing, satisfied customers. The Mississippi Board of Licensure for Professional Engineers and Surveyors sued Vizaline. The government board claimed Vizaline was engaged in “unlicensed surveying.” It asked the court to shut down Vizaline, and to force them to hand over all the money they have ever earned.
Vizaline fought back. It obtained legal representation from the Institute for Justice and filed its own lawsuit, arguing that the government’s actions were unconstitutional. Everyone in America has the right to free speech, including the right to take existing, publicly available information, and create a new representation of that same information. Moreover, the government board – which is composed entirely of licensed surveyors and engineers – is not trying to protect the public. It is trying to protect its own industry from competition. Unfortunately, for the board, that is not a constitutionally valid function of government.
While Vizaline’s lawsuit was still ongoing, the Mississippi legislature had an opportunity to stop this government overreach. A bill introduced last session would have clarified that the Mississippi Board of Licensure for Professional Engineers and Surveyors does not have the authority to stop companies like Vizaline from doing business in our state. The legislature missed that opportunity, which is disappointing, given how many of our elected officials campaigned on stopping exactly this type of government overreach.
Vizaline is currently appealing its case in federal court. The Mississippi Justice Institute joined the Cato Institute and the Pelican Institute to file a legal brief supporting Vizaline’s case, and urging the court to uphold all Mississippians’ right to disseminate public information, and to do business free from unnecessary government interference.
So where is the line between proper exercises of government power and government overreach? While the government tries to stop it from drawing lines on paper, Vizaline has drawn a new line in the sand against government overreach. Broadly enforcing vague laws simply to protect industry insiders from competition with new, innovative competitors is not a valid function of government. The Mississippi Justice Institute is proud to stand with Vizaline, and would be proud to stand with any Mississippian facing similar government overreach.
This column appeared in the Meridian Star on May 17, 2019.
When Rachel Sugg first heard about Airbnb doing well in Jackson, she was skeptical.
She, like many others, associated Airbnb with young people and vacation destinations. However, since she and her husband incorporated Airbnb into their real estate business two years ago along with their long-term rentals, her view of who Airbnb serves has changed.
The Sugg’s placed their first short term rental unit on Airbnb in April of 2017. From then on, it had been booked, and kept booked.
Two years, three units and 500 people later, Airbnb has turned out to be more profitable for the Suggs then their numerous long-term rentals. And Rachel’s view of Airbnb’s main consumer is different than before.
The majority of those staying in the Sugg’s locations, Rachel has noticed, have turned out to be working class, blue-color individuals, who are, for the most part, coming to Jackson for work related reasons, or college students and their parents.
Rachel believes that an important draw to Airbnb is not only the price, but the fact that visitors can have a one-on-one experience with their host. With Airbnb, there is always someone local to call who is familiar enough with the area to give an expert recommendation. Having someone so close at hand to act as a personal ambassador to Jackson, changes the whole experience of coming here, into something personal.
Not only does the personal experience Airbnb hosts provide change negative views of Jackson, but it brings people to the city as well. In her experience, Rachel has had guests change their stays from one night in Jackson, to two days, or more after having a great experience that first evening. Or, in some cases, people who have come to the area for an appointment in Madison have stayed in Jackson at one of the Sugg’s three Airbnbs, because they there was no Airbnb available in Madison.
Airbnb travelers generally have a different idea of traveling than others might, even if they are traveling for work. Rachel says they tend to be more laid back. They want to get a real feel for the area, not just the touristy version. They want to experience the culture. They want to get to know where they are, not just travel through, staying one night at a hotel then leaving the next morning.
Rachel has found that the benefits Airbnb provides to the Jackson community are numerous; it draws people in, changes minds about Jackson and Mississippi, incentivizes the upkeep of property, brings money into Jackson and the surrounding area, and not only exposes visitors to Jackson but exposes Jackson residents and their neighbors to completely new people.
It is an experience. And, according to Rachel, it’s good for Jackson.
According to a recent study, it would take more than 13 weeks to wade through the 9.3 million words and 117,558 restrictions in Mississippi’s regulatory code. Yet we know little about many of those regulations, such as if they are even necessary today.
The Mercatus Center at George Mason University’s James Broughel and Jonathan Nelson wrote a policy snapshot of Mississippi’s regulatory state as part of a national project to analyze regulatory burdens nationwide.
These regulations can impose huge costs as businesses are forced to comply with them and can also become anticompetitive devices, since many of them are written by the industries that are being regulated.
Mississippi is roughly mid-pack in the amount of its regulatory framework. But the one consistent among most states is that the number of regulations are only increasing.
That changed in a big way in one state.
Idaho has a somewhat unique regulatory process. Each year, the state’s regulatory code expires unless reauthorized by the legislature. While this does provide a check that is missing in places like Mississippi, it is normally a formality. But not this year.
Now, Idaho Gov. Brad Little is tasked with implementing an emergency regulation on any rule he would like to keep. The legislature will consider them next year. And there are certainly needed regulations, just as there are unnecessary or outdated regulations that serve little purpose.
But, as Broughel has pointed out, 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.
To reduce red tape, Mississippi could move toward a sunset provision similar to Idaho or introduce a regulatory cap that orders the removal of two old rules each time a new one is added. A thriving economy is one with fewer regulations, a lighter government touch, and more freedom for small and mid-sized businesses.
If a regulation is so important, prove it.