At a time when most states are cutting back or eliminating film incentives, Mississippi is pressing forward.

Yesterday, both the House and Senate adopted separate legislation that would reinstate the nonresident payroll portion of the incentives program. This would allow for a 25 percent rebate on payroll paid to cast and crew members who are not Mississippi residents.

It was repealed in 2017, when the Senate did not consider renewing it. It is a different story this year.

If the expired incentive is brought back, it would put Mississippi in the position of expanding film incentives program while other states are putting on the breaks. In the past decade, the number of states with such a program has declined from a peak of 44 to 31 (as of last year).

Why are states moving away from film incentives?  The answer is simple; the math doesn’t add up.

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’re a proponent of these incentives and you’re looking for 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 proving to be a poor investment throughout the country. Numerous studies have been conducted on film incentives. Each of them has produced sobering results for those worried about taxpayer protection. Here is a review of the return per tax dollar given, from 2008 through 2013. In these third-party studies, covering 12 different states, there was no program that returned even 50 cents on the dollar.

Source: John Locke Foundation

Since this chart was published, studies on similar programs in Florida, Virginia, and West Virginia have shown similar results. No program had a positive ROI.

Having a movie filmed in your state is a nice trophy, as is having a movie star dining at a local restaurant. But when it comes to our tax dollars, the burden on the state should be to demonstrate how those dollars are being wisely invested.

Other states appear to be focused on results of film incentives. Mississippi, however, appears to be ignoring the data and heading in the opposite direction.

Right now in Mississippi, the sale of raw cow’s milk for human consumption is prohibited, but a bill in the Mississippi legislature could change that.

The Mississippi On-Farm Sales and Food Freedom Act, authored by state Rep. Dan Eubanks (R-Walls) would allow intrastate sales of agricultural products directly from the producer to consumers and would prevent local governments from restricting those sales.

The bill would also mandate a “buyers beware” label for these goods that would warn of health risks from consuming raw, unprocessed agricultural products.

The bill is up against a deadline, as Tuesday is the deadline for bills to pass out of committee.

According to Eubanks, Mississippians are spending $8.5 billion a year on food and most of that is imported from out of state.

“Ninety percent of our food we import and we’re an ag state,” Eubanks said. “The irony is we’ll commit billions in taxpayer money on incentives and bond issues to bring in economic development and you might get 500, 1,000 jobs.

“All we’ve got to do is make a little change to our law, wouldn’t cost us a dime. If we started buying five percent more locally grown, you’re talking $400 million plus that would stay in our state. If it stays in our state, it would create jobs.”

He says that passage of this bill would allow the birth of a cottage farm industry in the state and help small farms grow into larger operations.

He also says that it’s absurd that the state sells cigarettes with a disclaimer on each box about their health effects, but won’t allow its citizens to buy raw milk. Also, it’s legal in the state for consumers to buy raw goat’s milk.

“We put such an impediment in the way of people trying to live healthier,” Eubanks said. “We’re the unhealthiest state in the country. We consume so much processed, artificial foods and we need to eat more whole, natural foods and yet we want to put a road block in the way to helping further that for some communities.”

As for neighboring states, Alabama and Louisiana prohibit all sales of raw milk for human consumption while Arkansas allows the on-farm sale of up to 500 gallons of raw milk. Tennessee only allows raw milk to be obtained through what is known as a “cow share agreement” where an individual or a group pay a farmer for boarding and milking a cow that they own.

Nationally, 13 states allow sale of raw milk in stores while 17 states allow sales only on the farm where it was produced.

Mississippi had a job growth of 1 percent last year.

According to preliminary data from the Bureau of Labor Statistics, Mississippi added about 11,000 jobs last year. But while Mississippi did experience an increase in job growth, the state lagged behind every neighboring state.

Of the four neighboring states, Alabama had the strongest job growth at 2.13. Tennessee was next at 2 percent, followed by 1.37 percent in Arkansas, and 1.1 percent in Louisiana.

Of the 11,000 jobs Mississippi added last year, about 1,400 were in government. Professional and business services had the strongest growth (5,300), followed by leisure and hospitality (3,600), and manufacturing (2,000).

Education and health services added a modest 300 jobs and construction did not any jobs. Financial activities had a loss of jobs (-100) as did trade, transportation, and utilities (-1,900).

Mississippi’s unemployment rate, which is historically among the highest in the country, sits at 4.7 percent. It’s down slightly from 4.8 percent last December, but still higher than the national average of 3.9.

What can Mississippi do better?

Mississippi has the fifth 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. We need to just look at what similar states have done for economic growth. 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.

Government incentives, often in the name of economic development and being ‘business-friendly,’ attempt to lure businesses to the state through financial benefits, such as site preparation, infrastructure, job training, or special tax breaks. The only reason these incentives are necessary is because of higher taxes or policies that burden businesses.

Instead of special incentives for a few, Mississippi should work to provide a favorable climate for every business. And 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. That’s economic growth.

Being business friendly isn’t based on who can seek the most favors, it is based on how free your state is.

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 3 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 what is needed to prosper. We need to think much bigger than that. 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, and tax rates.

Thanks to a recent change in federal regulations for short-term health insurance policies, Mississippians could have a chance to purchase cheaper policies.

In August, the U.S. Department of Health and Human Services issued a rule that extended the duration of short-term plans from three months to 12, with renewals that could stretch them out for up to three years. The policy went into effect in October.

According to HHS data, the monthly premium for a short-term policy in the fourth quarter of 2016 was $124, compared with $393 for an unsubsidized individual market plan.

Mississippi Insurance Commissioner Mike Chaney said these policies fill what he called a “doughnut hole” in the market place, where they are between jobs and do not have the ability to pay the high cost of temporary health insurance, known as COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985).

He said a few thousand Mississippians at the most would be buying these policies, but having their availability means they have a chance to buy affordable health insurance that was previously unavailable. He also said several insurance companies are already offering the policies in the Magnolia State.

“It fills a very needy void in the market,” Chaney said. “It gives the consumer another choice. You need to be certain your doctor will accept the policies and they need to be certain to what will and won’t be paid. We’ve not had any complaints on them.”

These policies also could be utilized by seniors not eligible for Medicare and young adults who have aged out from their parents’ plans.

According to a report by the Foundation for Government Accountability, yearly premiums for health insurance have skyrocketed from an average of $2,800 in 2013 to $6,000 in 2017 and more than 30 million remain uninsured. The report also says that 56 percent of counties in the U.S. had only one insurer to choose from in the individual market.

The rule change will help 2.5 million gain health insurance, according to the FGA.

Mississippi is one of 17 states with no restrictions in state law that would limit the plans.

These short-term plans are much cheaper for consumers, but lack some of the mandated coverages that are part of the policies sold under the exchanges set up by the Affordable Care Act, also known as Obamacare. This means these plans can be better tailor-fit to a consumer’s need than the several sizes fit-all types offered by the exchanges.

Film incentives are one of the few programs that are largely popular among legislators regardless of party, while they universally provide a poor return on investment for taxpayers.

There was a time when most states had some kind of incentives for the film industry, but that trend has quickly changed. While 44 states had incentives a decade ago, today just 31 do. Others, like Mississippi, have quietly scaled back their program.

For the past two sessions, the Senate has killed attempts from lawmakers in the House to extend the non-resident payroll portion of the incentives program. This previously allowed for a 25 percent rebate on payroll paid to cast and crew members who are not Mississippi residents.

Two incentives remain 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.

House Bill 1128 would bring back the non-resident rebate. Lawmakers should proceed with caution.

A terrible return on investment of taxpayer dollars

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, from 2008 through 2013. In these third-party studies, covering 12 different states, there was not a program that returned even 50 cents on the dollar.

Source: John Locke Foundation

Since this chart was published, studies on similar programs in Florida, Virginia, and West Virginia have shown similar results. No program had a positive ROI.

We have to do it if other people are

One of the commonly prescribed reasons for why need film incentives is it’s “good” for the state to have movies filmed here. As is often the case in government, we focus on the inputs. How many films are made here? What movie star was in Mississippi? That is nice, but the focus should be on outcomes.

The other common argument is that other states are doing it. Throughout the country, producers hold states hostage and threaten to move without incentives. Producers in Mississippi have raised the same point. Again, that is not good reason to essentially throw taxpayer money away.

Simply because another state is wasting money does not mean Mississippi should join them, or continue this practice.

In a comprehensive list of state film production incentives compiled by the National Conference of State Legislatures (NCSL), we see states that do not have incentives for producers but offer tax breaks to everyone, without partiality. For example:

Alaska: No film incentive program. Effective July 1, 2015, the film production incentive program was repealed. Alaska has no state sales or income tax.

Delaware: No film incentive program. However, the state does not levy a sales tax.

Florida: This program sunset on June 30, 2016. It has not been renewed. The state does not levy a state income tax.

New Hampshire: No film incentive program. The state has no sales and use, or broad base personal income taxes.

South Dakota: No film incentive program. There is no corporate or personal income tax in South Dakota.

Our goal should be for Mississippi to have the most competitive business climate in the country. The tax breaks that a few chosen industries or companies receive should be made available to all.

When we do that we will remove the need for taxpayer funded incentives.

The Mississippi House has passed legislation that will allow cottage food operations to expand in the state.

House Bill 702 would help cottage food operators by increasing the maximum annual gross sales to $35,000 and authorize them to advertise online. Both are now headed to the Senate for committee assignment, likely the Senate Agriculture Committee.

Cottage food operators are defined by the Mississippi Department of Health as those who sell non-perishable foods made in their home kitchens such as candy, cookies, pies, cakes, dried fruit, trail mix, jams and jellies and popcorn.

Right now, cottage food operators are limited to $20,000 in gross annual sales. They were removed from state regulations by Senate Bill 2553 in 2013.

HB 702 was authored by state Rep. Casey Eure (R-Saucier) and passed 116-0, with one present vote.

According to a 2018 report by the Center for Health Law and Policy Innovation at Harvard University Law School, Mississippi ranks in the middle tier among states when it comes to cottage food sales.

Mississippi allows direct sales to consumers, but not indirect sales (to restaurants, retail and wholesale).

Twelve states allow both indirect and direct sales to consumers.

Mississippi is in the lower tier at present for annual sales limits and would move up to the next tier (annual sales of $30,001 to $50,000) if Gov. Phil Bryant signs HB 702 into law.

Arizona, Arkansas, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Maine, Massachusetts, Montana, Nebraska, New Mexico, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Dakota, Tennessee, Utah, Virginia, West Virginia and Wyoming don’t have any annual restrictions on cottage food sales.

The bill would also remove the prohibition on advertising their products online, allowing operators to run a website or post pictures on social media.

The other food-related bill of the day, HB 793, would prohibit producers from labelling any food produced or cultured from animal tissue and plant- or insect-based food products as meat.

State Rep. Bill Pigott (R-Tylertown) wrote HB 793 and it also passed 116-0.

Meat grown in a laboratory, according to a July report by the Associated Press, could be on the market by 2021. A Dutch company, Mosa Meat, said it had the funds to get the product — which is made from a small sample of cells taken from a live animal and fed nutrients so they grow into strands of muscle tissue — into stores.

According to the story, the company claims it could make up to 80,000 quarter pounders from a single sample.

School choice advocates rallied on the south steps of the state Capitol Tuesday to celebrate past legislative victories and press the legislature for further expansion.

Both Lt. Gov. Tate Reeves and House Speaker Philip Gunn spoke at the rally, which was attended by school children from around the state.

“This is not about politics, but people,” Reeves said. “It’s about giving parents more options for their kids. I believe that parents know best what’s best for their kid, not some bureaucrat sitting in Jackson.

“It should not matter what a kid’s zip code is or what their mom or dad does for a living. Every kid in our state deserves a chance at success and this is about ensuring that every kid gets that opportunity.”

The Legislature has made key strides in the past seven year in furthering school choice statewide.

Gov. Phil Bryant signed into law a bill in 2012 that created a scholarship for children with dyslexia. The next year, he signed a bill that authorized the creation of charter schools. In 2015, the state’s education scholarship program for children with special needs was signed into law by Bryant.

There are now five charter schools in the state.  Only one — Clarksdale Collegiate Public Charter School — is outside the Jackson metro area.

Reeves said he supports expanded funding for the ESA program, which will expire in 2020. This means the Legislature will need to pass a reauthorizing bill in this session or the next to keep it alive.

Due to funding restraints, the ESA program is open to less than 500 students with special needs, and parents can use an allotted $6,637 on tuition, tutors, books and other educational aids. Many sit on a waiting list.

Cleveland mother Leah Ferretti, who has two sons with dyslexia, spoke at the rally and asked attendees if they knew any program like the ESA one that has a 91 percent parent satisfaction rating in the PEER report.

“The door is closing on our babies in 2020 unless the repealer is removed,” Ferretti said. “Our program needs a new funding mechanism so it can meet the growth and the need we are desperately asking for.

“We’re calling on you legislators to allow every student in Mississippi the opportunity to succeed and not be confined to in an environment that is discriminatory or denies their civil rights.”

Also a recent report by the Joint Legislative Committee on Performance Evaluation and Expenditure Review (PEER) spotlighted several issues with the ESA program that could be helped with action by the Legislature.

Right now, the program’s unused funds don’t roll over from one year to the next and instead go back to the general fund. The program uses a lottery system to decide what families receive the money and PEER recommends adding prioritization for families that have been on the wait list.

Also, PEER said that the Mississippi Department of Education hasn’t administered the program as effectively as possible by prioritizing those with active individualized education program as required under law.

According to PEER, as of June 29, there were 197 students on the waiting list. Since most scholarship recipients from the year previous will continue in the program, there are only a few slots that open up for new enrollees each year. As of August, there were only 47 open slots.

In fiscal 2018, taxpayers disbursed $2,057,815 for the ESA program, with 94 percent being spent on tuition, with the rest spent on education aids such as software or textbooks.

A new national survey shows that Americans continue to support school choice.

As National School Choice Week kicks off, polling from the national polling firm Beck Research on behalf of the American Federation for Children, finds that 63 percent of Americans “giving parents the right to use the tax dollars designated for their child’s education to send their child to the public or private school which best serves their needs.”

While school choice is often considered both partisan and controversial, and certainly receives more negative than positive press, it is supported by 72 percent of Hispanic voters, 66 percent of African American voters, and 61 percent of white voters. Ideologically, 75 percent of Republicans back school choice, as do 62 percent of independents and 54 percent of Democrats.

On specific questions, polling finds:

• 67 percent of Americans support a federal tax credit scholarship;
• 77 percent of Americans support school choice options for active military members;
• 75 percent of Americans support education savings accounts;
• 83 percent of Americans support school choice programs for students with special needs; and
• 72 percent of Americans support public charter schools.

This year, some 40,000 National School Choice Week events are planned throughout the country. The goal is to raise public awareness of all types of education options for children, including traditional public schools, public charter schools, magnet schools, online learning, private schools, and homeschooling.

The largest event in Mississippi will be held at the State Capitol on Tuesday, January 22.

New Census data shows income tax free states as the big winners when it comes to adding residents.

Because of our federalist system, we have 50 states competing with one another for talent, opportunity, and economic resources. Each state is largely free to dictate what they believe is the appropriate level of taxation, regulation, and size of government.

The annual Census estimates help answer the questions of what Americans prefer. With the most recently released data, we once again see low-and-no-income tax states growing.

The two hardest-hit states were New York and Illinois, which lost 48,000 and 45,000 residents, respectively. These states, home to the largest and third largest cities in the country, are both known for burdensome regulations and outsized taxes.

Unfortunately, Mississippi joined New York and Illinois in the group of nine states that lost residents last year. After a small growth last year, Mississippi lost more than 3,000 residents between July 1, 2017 and June 30, 2018. This marks the third time in four years that population has declined.

Nevada, Idaho, Utah, Arizona, Florida, Washington, Colorado, and Texas were the eight fastest growing states, in terms of percentage growth. Each state is known for low taxes and a business-friendly climate. By “business-friendly,” we don’t mean corporate cronyism, monopoly protectionism, and regulatory capture schemes for the companies with the greatest legal and lobbying resources. Instead, we mean states with a predictable and low regulatory and tax hurdle for all shapes and sizes of businesses.

So, do people simply decide they are willing to leave a current high-earning job in a high-tax state to avoid income taxes? Not likely. The truth is taxes aren’t the single driver. Opportunity plays a major role, too. These two factors are incontrovertibly linked.

So, what can Mississippi do to become one of the beneficiaries of American migration? It can focus on fostering a climate that attracts and supports entrepreneurs, whether home-grown or imported, and small business owners. Where entrepreneurs and small businesses thrive, private capital is attracted, in the form of investors, to ideas that improve the lives of citizens.

It has always been true that the pursuit of financial gain, through the private profit and loss system, has been the greatest driver of economic prosperity. When small companies become big companies, the economic benefits to that community are infinitely greater than when government tries to orchestrate them.

Mississippi is a place with gracious people, beautiful surroundings, a temperate climate, and an alluring culture. It’s the kind of place that should thrive when the economy is strong and people are free to flee less hospitable places. Why are we not thriving? Because opportunities have been inadvertently limited by government policies. In short, our preference for federal grants and state-based (public) solutions have thwarted the way a free market economy is designed to work.

We rely on the government for too much. Whether for a grant, a subsidy, an incentive, a contract, or a job, we have far too much public sector involvement in our economy. Indeed, 55 percent of our economy is controlled by the public sector. Such behavior does not lead to sustainable economic growth. In prosperous economies, government plays the important but limited role of protecting liberty, property and enforcing contracts; it does not try to control the allocation of economic resources.

Another significant problem we have, which adversely impacts the opportunities to start and run a small business, is our regulatory environment. Although some progress has been made in the area of new regulatory review, we lack a mechanism to repeal or “sunset” outdated or unnecessary regulations. We need a non-governmental, independent review board with the authority to roll back our excessive regulatory environment, beginning with occupational licensing.

The other driver is our business-related sales and property taxes. In Mississippi, we tax land, buildings, inventory, and equipment at higher rates than all surrounding states. Higher taxes reduce business activity. We make this situation worse when we provide tax exemptions to new companies, shifting even more of the tax burden to existing companies. If we have to offer major tax credits to companies to come here, that proves previous lawmakers created an unfavorable business tax climate. Rather than targeting new companies or industries with tax relief, we should target all companies and industries with a lower business tax climate.

Mississippi can make policy adjustments that maximize our potential to participate more fully in a national economy that is prospering like never before. Every state in the South has benefited from the resulting migration of people escaping high tax states with the exception of Mississippi and Louisiana. If we reduce the cost and burden of government and focus our efforts on creating an economy driven by private entrepreneurs and small business owners, the evidence shows us that economic growth and prosperity will follow.

This column appeared in the Daily Journal on January 20, 2019.