The month of May is here. It is getting warmer and summer will be upon us soon. But be warned, you may also see an unregulated, unlicensed lemonade stand along the side of the road. 

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. A state senator in New York has since filed legislation to legalize lemonade stands. That is correct, we need new laws to clarify that a seven-year-old can run a lemonade stand with the government’s blessing.

For those who may read this and believe the world has gone crazy, we do have a story in Missouri that ended on a good note – though there is plenty of crazy in this story. An eight-year-old boy was being heckled by neighbors inquiring about his permit. If those potential customers got sick, they wanted to know “who we should go to.” The neighbors then proceeded to yell at the boy’s mom after the boy went inside. Fortunately for the boy, the local police department heard about the incident and came by the boy’s lemonade stand to show their support, and to provide their stamp of approval.

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.

Hinds county, home to Mississippi’s capital city, saw its population decrease by nearly 3,000 residents last year. 

According to new data of population estimates from July 1, 2017 through June 30, 2018 released by the U.S. Census Bureau, Hinds county is down to 237,085 residents. The county’s population was 240,033 last year. This marks the sixth consecutive year of a population decrease in Hinds county after a small gain to 248,643 in 2012. The population is down 3.5 percent during that time. 

Hinds county’s population decline was in line with the state’s population decrease of 3,133 during the same time period.

For the second straight year, Desoto county had the largest growth, in terms of number and percentage. The Memphis suburb added 3,087 residents last year for a growth of 1.7 percent. Lamar, George, Lafayette, and Madison counties round out the top five for percentage growth over the past year. They were the only counties to grow by 1 percent or more. 

Harrison county had the second largest gain in terms of population growth, adding 1,717 residents (or 0.8 percent) last year. 

Hancock, Jackson, Pontotoc, Rankin, Stone, and Union counties all posted gains of at least 0.5 percent. No one else did. 

Fifty-seven of the state’s 82 counties saw population decreases last year. The biggest losers, in terms of percentage, were Quitman, Washington, Issaquena, Coahoma, and Carroll counties. 

Outside of small pockets in the Jackson metro area, on the Coast, near Tupelo, and the Memphis suburbs, population is stagnant at best. 

The NCAA Tournament provided a big boost to Mississippi casinos in March as revenues from sports gambling nearly doubled February during an otherwise quiet time of the year. 

In March, total taxable revenue was $4.9 million versus $2.8 million in February. 

But while Mississippi was the first state in the Southeastern Conference blueprint to have legalized sports gambling after the Supreme Court overturned the federal ban, more players are entering the field and making it easier to wager on sports.

To place a bet on sports in Mississippi, you have to do it at a casino. That 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.

Meanwhile to the north, Tennessee is on the cusp of legalizing online sports gambling. While the Volunteer State does not have casinos, those interested in betting on a sporting event will be able to do so from their smartphone or computer. Obviously making it much easier, and more convenient to place a bet. 

This would likely have the biggest impact on the already declining revenue of Tunica casinos. Another casino is closing this summer, leaving the county with just six remaining casinos, a far cry from the boom of the 1990s when those six  were the only casino destinations for hundreds of miles. Gaming payrolls peaked at 13,000 in Tunica in 2001, but they are down to less than 5,000 today. 

Today, it’s much easier to find a casino near your house, including one in West Memphis, Arkansas. 

So while the Mississippi legislature had the vision to approve sports gambling when it was still illegal, pending the Supreme Court decision that gave authority back to the states, the limitations on where the consumer can bet will likely hurt the state as sports gambling becomes more common place across the country. 

Gov. Phil Bryant has changed his mind on film incentives after signing into law earlier this month a bill that brought back some subsidies that expired in 2017.

Senate Bill 2603 allows Mississippi-based motion picture production companies to receive up to $5 million for payroll and fringe benefits paid to out of state, non-resident employees. The bill, as originally written, would’ve provided to out-of-state production companies up to $10 million for payroll and fringe benefits for out of state employees. 

This was reduced in conference to $5 million and restricted to production companies that have been certified by the Mississippi Development Authority to have filed income taxes in the state in the past three years and filmed at least two motion pictures in the state in the past 10 years. 

The law went into effect immediately and there isn’t a repealer, which means there’s no expiration date on the incentives.

The bill signing marked a major shift in Bryant’s opinion on the motion picture production subsidies, which are being curtailed or eliminated in several other states.

The governor urged the legislature in his FY2018 budget recommendation to allow the Motion Picture Incentive Rebate Program to expire, citing a 2015 report by the Joint Legislative Committee on Performance Evaluation and Expenditure (PEER) as one of the reasons.

“While I support the jobs and attention that films bring to Mississippi, taxpayers should no longer subsidize the motion picture industry at a loss,” Bryant said in his budget recommendation. “The motion picture incentive rebate has cost approximately $25 million since 2011. 

“Allowing the motion picture incentive rebate to expire could save a similar amount over the next five years.”

The study showed that the state lost 51 cents on every dollar invested in the program since the program’s enactment in 2004.

Since 2009, according to the National Conference of State Legislatures, 13 states have ended their incentive programs.

There’s plenty of evidence that’s pointing policymakers toward eliminating these subsidies. Indeed, Mississippi’s failure to make a profit on film incentives isn’t surprising. Nor is it out of the ordinary. It’s in line with every other report on incentives, as shown in the graphic below. Film production companies win and taxpayers lose. 

A 2016 study by Michael Thom — an assistant professor at the University of Southern California Price School of Public Policy — found that motion picture incentive programs had little to no effect on the economies of the states with the incentives.

Sales and lodging tax waivers had no effect on four different economic indicators, while transferable tax credits — such as the ones in Louisiana — had a small, sustained effect on industry employment levels but no effect on wages. 

Refundable tax credits had no employment effect and only a temporary effect on wages.

Mississippi has cash rebate program on eligible expenditures and payroll and provides sales and use tax reductions on eligible purchases and rentals. Rebates are capped at $10 million and the annual rebates provided are capped at $20 million. At least 20 percent of production crew of an eligible production must be Mississippi residents.

Did you know that Mississippi has a law on the books that allows licensing boards to suspend or revoke your professional license if you default on your student loans?

Well, until June 30 at least. This year, as part of a larger occupational license reform bill that will make it easier for ex-offenders to receive a license, the legislature adopted new language that will prohibit the state from pulling your license just because you couldn’t make a payment on your student loans. 

The old law, and others like it, were meant to limit defaults and to keep borrowers from choosing not to pay back their loans. A “tough love” law, if you will. The U.S. Department of Education even previously urged states to “deny professional licenses to defaulters until they take steps to repayment.”

Mississippi certainly wasn’t alone. Prior to the repeal, the Magnolia State was one of 15 states - both red and blue - that had such a law in place. But the repeal movement has been steadily growing, with five other states scrapping their laws in the last two years.   

The reasons for the sudden changes of heart are obvious. Some 44 million Americans owe a collective $1.5 trillion in student loan debt nationwide, with 8.5 million federal borrowers in default as of last year. At a time when more and more individuals are saddled with student loan debt, it makes little sense to attack their ability to earn a living in their professional field. The fastest way, and for most people the only way, to pay off debt is to generate monthly income above the basic cost of living.

When young people lose their income, they lose their ability to pay back loans in any meaningful way. At that point, borrowers are stuck in an endless cycle with no way out and few good options. Such individuals are likely to take on credit card debt or other forms of debt just to stay afloat. Continuing this process keeps a debtor spinning like a hamster in a wheel. 

As the student loan crisis is growing, more Americans than ever, and more Mississippians, also need a license to obtain employment. We would call it ironic if it wasn’t so dumb and cruel.

Nearly one-in-five Mississippians need a license to work. This is a change from under five percent just a few decades prior. That is because while licensure was once limited to occupations such as medical professionals, lawyers, or teachers, it now extends to everything from an auctioneer to a shampooer. All totaled, Mississippi licenses 66 lower income occupations. 

Naturally, those lower income occupations are more likely to default on student loans. 

Consider cosmetologists, who are licensed in all 50 states. In Mississippi, you must clock 1,500 hours, which is more-or-less in line with other states. And you need all this for a job that has a median national wage of $25,000 per year. Not surprisingly, cosmetologists had a national default rate of over 17 percent in 2012, significantly higher than the national average. If a cosmetologist defaults, and he/she loses his/her license, what should they then do? The same could be asked of any licensed professional. 

In the long run, we need to reform occupational licensing to make it easier for people to earn a living without spending a year or two in the classroom, often accruing debt. Many of the occupational licenses the state requires are onerous and serve little purpose but to protect established interests. Most occupational licenses can be replaced with less restrictive alternatives such as certification, bonding, insurance, inspections, or registration. 

In the meantime, preventing licensing boards from attacking licenses because of student loan default is a good first step toward liberty and toward encouraging a defaulter to take the personal responsibility to pay off debts by exercising their right to earn a living in Mississippi. 

This column appeared in the Vicksburg Post on April 24, 2019.

Gov. Phil Bryant has signed the Fresh Start Act, protecting the 14th Amendment right of ex-offenders to obtain gainful employment.

Senate Bill 2781, authored by Sen. John Polk (R-Hattiesburg) and Mark Baker (R-Brandon), prohibits occupational licensing boards from using bureaucratic rules to prevent ex-offenders from working. The law requires occupational licensing boards to eliminate blanket bans and “good character” clauses used to block qualified and rehabilitated individuals from working in their chosen profession. 

“Both federal and state courts clearly affirm that occupational licensing boards must provide an objective and legitimate reason to deny an ex-offender a license to work,” said Dr. Jameson Taylor, Vice President for Policy at Mississippi Center for Public Policy. “According to the Mississippi Supreme Court, the freedom to engage in a profession is a ‘God-given, constitutional liberty.’ Mississippi licensing boards need to clean up their rules so they don’t run afoul of the Equal Protection Clause of the 14th Amendment. Fresh Start requires them to do so while leaving every licensing board free to set high standards for their specific profession.” 

Under the Fresh Start Act, licensing boards must adopt a “clear and convincing standard of proof” in determining whether a criminal conviction is cause to deny a license. This includes the nature and seriousness of the crime, the passage of time since the conviction, the relationship of the crime to the responsibilities of the position and evidence of rehabilitation. The law also creates a preapproval process that allows ex-offenders to determine if they may obtain a particular license before undertaking the time and expense of training, education and testing. In addition, the law protects licensed individuals who fall behind on their student loans from losing their occupational license. 

“We have thousands of open positions available in Mississippi,” said Taylor. “We need skilled labor. We also have one of the highest ex-offender populations in the country. We shouldn’t let red tape prevent people from pursuing their dreams and supporting their families.”

According to a study published by Arizona State University, states with heavier occupational licensing burdens have much higher 3-year recidivism rates. More than 10 states have codified the protections contained in Fresh Start, including Tennessee and Georgia.

“Fresh Start leaves every occupational licensing board free to protect consumer health and safety by maintaining rigorous standards for licensure,” concluded Taylor. “But it also directs licensing boards to follow the Constitution by outlining legitimate reasons to deny someone a license. In the past, broad licensing restrictions have been used to keep “certain kinds of people” from working. Thanks to the leadership of Gov. Phil Bryant, Lt. Gov. Tate Reeves and Speaker Philip Gunn, Mississippi is cutting red tape so that people who want to work can obtain good-paying jobs.”

Payrolls in Mississippi dipped in the first quarter of 2019 as the state lost 2,900 jobs from December 2018 through March 2019.

In December, nonfarm payrolls in Mississippi reached 1,162,600. But after three months of decreases, payrolls were down to 1,159,700 in March. Preliminary estimates from February initially showed a slight increase to 1,161,900, but those numbers were revised down to 1,160,600. 

This is a reversal of 2018 when Mississippi added about 11,000 jobs for a modest job growth rate of one percent. 

Over the past month, Mississippi saw employment gains in construction (+500), financial activities (+100), and leisure and hospitality (+100). However, the state experienced reductions in manufacturing (-500), trade, transportation, and utilities (-400), professional and business services (-400), education and health services (-100), and government (-100). 

What is happening nationwide?

Nationally, the country has added around 540,000 jobs over the first three months of the year. Mississippi’s job growth rate of -0.25 percent came in 44th among the 50 states. Among Mississippi’s neighbors, Alabama was the top performer, growing at a rate of 0.47 percent. 

For Mississippi’s neighbor to the east, this is a continuing trend of strong numbers. In 2018, Alabama had a job growth rate of 2.13 percent. 

Idaho had the greatest percentage change in employment during the first quarter at 1.19 percent, followed by West Virginia (1.05%), North Carolina (.91%), Oregon (.90%), and Maine (.78%). 

What can Mississippi do better?

Mississippi has the fourth largest government share of state economic activity, and that is due to state and local spending, not federal funds. While there is a large contingent who would want to see the government spend more, it would actually be pretty difficult.

When the government grows, the state has increased ownership and the private sector shrinks. And economic freedom, which is based on free markets and voluntary exchange, individual liberty, and personal responsibility, wanes.

According to the most recent Fraser Institute Economic Freedom of North America report, which measures government spending, taxes, and labor market freedom, Mississippi was ranked 45th among the 50 states. Similarly, Cato Institute’s Freedom in the Fifty States, which measures economic and personal freedom, placed Mississippi 40th in their most recent rankings.

What is the correlation between economic freedom and prosperity? The freer states are more prosperous, have higher per capita incomes, more entrepreneurial activity, and lower poverty rates. We have the model. Similar  states have experienced  economic growth by adopting freedom-based policies. And it is important to know the difference between the reality of economic growth and the practice of economic development; those can be very different things. There is a role for corporate recruitment and economic development, but that can’t be the main driver of sustainable economic growth. 

Government incentives, often in the name of economic development and being ‘business-friendly,’ attempt  to recruit businesses to the state through financial benefits, such as site preparation, infrastructure, job training, or special tax breaks. In most cases, the  reason incentives are necessary is because of higher taxes or policies that burden businesses. In some cases, incentives are necessary because corporations take advantage of a highly competitive economic development and play the states against one another. There is a better way for us to play this game.

Instead of special incentives for a few, Mississippi should work to provide a favorable climate for every business. Let the market decide where a business locates or expands. An economic development officer can sell low taxes and low regulatory burdens to a company looking for a great location like Mississippi. What’s more, the data shows us that such policies allow existing businesses, already in our state, to expand and grow from a small employer to a large employer without getting any incentives from the taxpayers. Those are the best jobs. That’s sustainable economic growth.

To their credit, state leaders have attempted to improve the economic climate of Mississippi, most notably through tax and regulatory reform. In 2017, the legislature adopted a new law that will require all new licensing regulations to be approved before they take effect, ensuring new attempts to stifle competition will be reviewed before they are finalized.

And the Taxpayer Pay Raise Act in 2016 will eliminate the three percent income tax bracket, allow self-employed individuals to deduct half of their federal self-employment taxes, and remove the franchise tax on property and capital when fully implemented. Even though Mississippi’s overall tax burden is still above the national average, this will move Mississippi closer to a flatter income tax and make our business climate more competitive.

These reforms weren’t easy, but showed forward thinking to align us closer with neighboring states. Making the case for spending more money on your favorite government program is not a path to  prosperity. We need to think much bigger and much smarter. If we want to do better than the bottom ten in categories like per capita income, it starts with doing better in categories like business friendliness, regulatory practices, entrepreneurial environment, private capital encouragement, and tax rates. 

It’s common knowledge that Mississippi receives plenty of negative coverage in the news. Whether it's fair or not, Janelle Hederman and her brother, Will, are working to change that. 

They view their Airbnb property as a place that provides a positive, engaging, Southern experience for those visiting; a counter to the less than favorable image some have of the state. That’s a good thing.

Janelle and Will have been hosting for five years now. They split the work of the Airbnb half and half. Will, who resides in Texas, handles the online element and bookings, while Janelle restocks the property with necessities and takes care of the things that can’t be done via computer. 

The property sits up against the reservoir in Rankin county. Wood paneling lines the walls of the house of this house with a very 60s feel about it. The Hedermans bought the property, which had been in the family, from their cousins six years ago. They knew that such a peaceful location shouldn’t be wasted, but at the time, neither lived in the state. The Hedermans did not want a long-term renter and the property was already furnished so it seemed more economical and efficient to sign on with the then-up and coming Airbnb. 

The big question was who would vacation in Rankin county. Over 150 bookings, 600 people, and five years later, that question has been answered. 

Guests have ranged from in-state, California, Nebraska, Minnesota, and Kansas, to the United Kingdom and France. They even come from minutes away as in the case of two medical students who initially came for a month to study. They ended up staying for two. The Hedermans have also hosted students and their parents, bass fishermen, softball and soccer teams, family reunions, and wedding rehearsal dinners. They’ve even had people come film music videos and documentaries on the property.

When asked what the draw is about Airbnb, Janelle thinks that it comes down to how economical it is. The Hedermans property has bedding for 12 people, however, it can accommodate more. The sports teams have brought the most in, consisting of 15 or 16 people. In addition to the economy of Airbnb, entertainment is provided. The Hedermans have fishing poles, john boats, and canoes all ready to be taken out on the reservoir, along with plenty of space for kids to run around the yard. It’s all part of the welcoming experience.      

While the city of Jackson considers regulations that would drive most Airbnb operators out of town, the Hedermans have already had to fight for theirs. Two years ago, Pearl River Valley Water Supply tried to put an end to Airbnb in the area. In the end, PRV did not succeed in eliminating Airbnb properties, but the issue did bring up concern regarding property rights. Janelle says many neighborhoods already have covenants that address whether residents can rent their property out or not and thinks it should be left that way. 

There’s no need for any overhead government or government agency to come in and tell neighborhood residents what they can or can’t do. 

According to Janelle, Airbnb is in the middle of a Southern clash; on one hand, Mississippians are friendly and want the comfort of knowing everyone in their neighborhood without strangers coming and going. On the other hand, companies like Airbnb can have a significant impact on economies, which Mississippi needs.

As a resident of Belhaven, Janelle believes Jackson’s economy itself could use a facelift. As to concerns about strangers coming and going, Janelle says Airbnb is based on the premise of the Golden Rule. The company has a system in place to hold everyone accountable. Just like guests have the ability to rate a property and leave a review, hosts can do the same for guests. Once you have a bad review as a renter, there’s little chance a host will be willing to take you on again. 

In Janelle’s experience, the majority of Airbnb users are good, honest, hardworking people looking to have a good time and a good experience in a quiet place. Ultimately, Janelle is convinced that the concern of not knowing one’s neighbors should give way to the economic factor.

Janelle is confident that having Airbnb makes people more comfortable in coming to the state, and once they are here, an opportunity to show them all the good happening throughout the state, opens up. 

Possibly changing negative minds about Mississippi. 

Gov. Phil Bryant has signed legislation that creates a first-in-the-nation tax credit for targeted investments in Mississippi’s foster care system. 

Sponsored by Rep. Mark Baker (R-Brandon), The Children’s Promise Act (HB 1613) will provide concrete assistance to nonprofit organizations working on diverse problems around the state, including human trafficking, opioid addiction, and autism.

Dr. Jameson Taylor, Vice President for Policy with the Mississippi Center for Public Policy explains why this legislation is so important: “No one person or entity has all the answers when it comes to foster care. This tax credit will crowdsource the solutions by inviting new donors to support the development of much-needed services to children and families in crisis.”

According to the National Council of Nonprofits, tax incentives for charitable giving generate as much as a 5 to 1 return. Some of the Mississippi nonprofits eligible for this credit receive no government money, meaning that every child they divert from foster care saves money for the state. 

One of these is Baptist Children’s Village. Others, like Canopy Children’s Solutions, are leveraging modest grants into multimillion dollar savings for the state. In addition, these nonprofits are generating significant long-term savings by helping to break cycles of abuse, poverty and welfare dependency.

“Due to changes in federal funding, foster care providers are being forced to reorient their services,” said Taylor. “Some of them are closing certain facilities, others are facing closure altogether. The Children’s Promise Act creates an innovative funding model that will help foster care nonprofits proactively work with the Department of Child Protection Services (CPS) to continue to address the challenges raised by the Olivia Y lawsuit.”

In 2018, the legislature passed a $1 million tax credit for individual donations made to nonprofits working with foster care kids, disabled children, and low-income families. This program was based on a successful model in Arizona. HB 1613 expands this individual credit to $3 million. The Children’s Promise Act also creates a $5 million business tax credit targeted toward nonprofits working directly with CPS. Mississippi is the first state in the country to enact a business tax credit for donations to foster care providers. 

“This new law will encourage game-changing investments in foster care,” concluded Taylor. “Mississippi is continuing to lead the way in transforming lives and communities by passing best-in-the-nation welfare reform and, then, empowering the private sector to work alongside government in addressing generational poverty.”

The Children’s Promise Act is endorsed by the Mississippi Center for Public Policy, the Mississippi Association of Child Care Agencies, and the Governor’s Faith Advisory Council.