While just a handful of the 19,000 jobs added in Mississippi over the past year have been in government, it still accounts for an unusually high percentage of all jobs in the state. 

According to the July data from the Bureau of Labor Statistics of nonfarm payrolls, government accounted for 20.5 percent of all jobs in the state. Or more simply, one out of every five jobs are in government. 

How does this compare to other states?

Well, we’re doing worse than most, especially the states with the strongest economic engines. Among neighboring states, government accounted for 18.6 percent of jobs in Alabama, 16.6 percent in Arkansas, 16.4 percent in Louisiana, and 14.1 percent in Tennessee. 

Mississippi’s numbers are down slightly from July 2018 when government accounted for 20.9 percent of jobs. 

There isn’t a clear distinction between the political leanings of a state, nor is size the deciding factor. But this is part of a trend among the poorest states in the country. In West Virginia, 20.3 of all payrolls were in government. In New Mexico, it’s 22.1 percent. Alaska also had a high number – almost a quarter – but it’s in a unique position. 

Does this really matter?

So, while we are constantly debating and entire campaigns are run on the premise of making government larger, we can simply look at other states and see that is not the path to economic prosperity. 

All government can do is redistribute wealth from one person to another as it chooses, whether that’s a social welfare program or a corporate welfare one. Government only moves money around. It doesn’t create new wealth or build a bigger pie. 

Only the private sector can do that. Individual initiative is the most powerful economic engine we have. Wealth is generated when individuals risk their own resources in hopes of meeting a need in the lives of other people or businesses, and do so in a manner that earns them a profit. That need might take the form of a new product, a more efficient service, or fresh, capital needed by a business to start or expand its operations.

It’s very easy, and very tempting, for any government official to give out tax dollars, get their picture taken, and talk about how much they are doing for you and me because of that new government initiative. 

You don’t get a shovel for reducing regulations, freeing up the healthcare industry, or reforming occupational licensing. But the most helpful thing an elected official can do is be serious about pursuing policies that will make it easier for free enterprise. We’ve seen the results of our elected officials trying to manipulate, organize, and orchestrate the economy.

At the end of the day, to generate sustainable, long-term growth, the only option is to grow the private sector through lower taxes and a lighter regulatory burden. It doesn’t make for a sexy campaign slogan and many people who work in government or depend on government for jobs and contracts won’t like to hear it.

Democratic gubernatorial candidate and state Attorney General Jim Hood has an expensive wish list for K-12 education that could hit taxpayers right in the wallet.

Hood told the Associated Press that he not only wants state-funded pre-kindergarten, but also at least a $3,000 teacher pay hike and full funding for the state’s education funding formula.

Total cost of just those three items could total at least $574.2 million annually and this revenue would either have to come from cuts to other state agencies, tax increases or both.

According to the MDE’s budget request for fiscal 2021, full funding for K-12 education represents about $2.554 billion in general fund revenues. Last year, the legislature appropriated $2.245 billion for K-12 from the general fund, a difference of $332 million. 

Each year, the Mississippi Department of Education uses the MAEP to calculate how much of an appropriation it needs from taxpayers to distribute to local school districts. Fully funding the Mississippi Adequate Education Program funding formula would represent a 23 percent increase in general fund appropriations. 

Hood said that he wanted not only a $3,000 pay increase for teachers phased in over two years, but also percentage increases to the salary raises that most teachers receive every year. 

The legislature passed a $1,500 pay hike in the last session that will cost $76.9 million per year and will have to be fully funded with a deficit appropriation when the legislature returns to session in January. 

A $4,500 pay hike, which includes what the legislature approved last year and Hood is proposing, would cost taxpayers an additional $230.7 million per year once it was completely implemented. 

Pre-Kindergarten, according to Hood, for around 23,000 4-year-olds would cost about $45 million over four years. Several studies have shown that massive spending on pre-K doesn’t guarantee better outcomes for elementary students as compared with those who don’t attend pre-K.

The MAEP amount isn’t legally binding for appropriators, thanks to a 2017 state Supreme Court decision, and it’s only been fully funded twice in the last 20 years. 

The formula consists of average daily attendance times base student cost, plus at-risk component minus local contribution plus 8 percent guarantee. Then, only after add-on programs — transportation, special education, gifted education, vocational education and alternative education — are added to the formula allocation, is the final MAEP funding request calculated.

Put another way, just the increase in K-12 funding alone would exceed the appropriations for:

• Debt service — $385.2 million.
• Corrections — $316.5 million.
• Department of Mental Health — $213.7 million.
• Military, Police and Veterans’ affairs — $120.7 million.

Having one of the nation’s highest gasoline taxes won’t buy taxpayers the best-rated highway system. 

That is according to an analysis that compared gasoline taxes by state and rankings from the Reason Foundation’s recently released annual Highway Report.

None of the top 10 states scored for highway efficiency and cost effectiveness were among the top 10 in the amount of gasoline tax levied on consumers. The top 10 states averaged 25.25 cents in taxes per gallon, just slightly above 24.85 cent per gallon nationwide average from the American Petroleum Institute.

Mississippi has the third lowest gasoline tax nationally (18.79 cents per gallon) and yet its highway efficiency and cost effectiveness was ranked 25th by Reason. 

Out of the five states with the lowest gasoline taxes, only Alaska (49th overall) and Oklahoma (41st overall) were near the bottom.

Conversely, none of the states with the highest gasoline tax scored higher than Mississippi in the overall score, the best being Illinois at 28th. The Land of Lincoln hits motorists with a 54.98 cent tax on every gallon of gasoline.

California has the nation’s highest gasoline tax at 61.20 cents per gallon, yet it only ranked 43rd overall in the Reason Foundation report. Pennsylvania (35th in the report) has the next highest gasoline tax nationally at 58.7 cents per gallon. 

Missouri was ranked third overall and its gasoline tax (17.42 cents per gallon), yet its rural interstate pavement condition was 17th best and it also scored highly for capital and bridge disbursements per mile (second) despite having the seventh-largest state-controlled highway system nationally.

Mississippi was ranked 25th by the Reason Foundation overall, with its score bolstered by high marks for high maintenance disbursements per mile and low urban congestion. 

The Magnolia State’s ranking was dragged down 14 places from last year’s report because of worsening rural interstate pavement condition and a larger number of structurally deficient bridges.

The legislature hasn’t sat on the sidelines, passing the Mississippi Infrastructure Modernization Act of 2018 in last summer’s special session. The bill will send 35 percent of use tax revenues by next year to cities and counties to assist with infrastructure. 

The bill will additionally authorize $300 million in borrowing, with $250 million for the Mississippi Department of Transportation and $50 million for local infrastructure not administered by MDOT.

The other part of the package was the creation of a lottery, the first $80 million in tax revenue annually going to the state highway fund until 2028 and the rest put into the Education Enhancement Fund. Just the highway fund portion alone could add up to $720 million. 

State gasoline taxes are levied in addition to the federal tax of 18.4 cents, which hasn’t been increasedsince 1993.

Mississippi Center for Public Policy joined the National Taxpayers Union and numerous other state, local, and federal organizations in opposing an increase to the Passenger Facility Charge.

The letter reads:

While we are open to solutions to address needs relating to infrastructure, we believe that placing additional financial burdens on the traveling public, without corresponding reductions to other government charges on airfares or reforms to how those charges are levied, would be shortsighted and ill-advised. There are more accountable and better-calibrated options for the future of aviation investment than a massive PFC hike.  

As you know, per limits established by Congress, airports are unable to charge consumers a PFC above $4.50 per enplanement, or $18 per round trip ticket. For a family of four, the collective PFC cost can total more than $70, a significant expense added onto an already expensive ticket price. Government mandated taxes and fees can already account for more than a fifth of a “bargain” domestic ticket price, giving air travel the dubious distinction of being one of the highest-taxed activities in the economy. In fact, it is not unusual for a middle-class American to pay a higher tax burden (over 20 percent) on an airline ticket than on a 1040 tax return. 

Some justify their support for a higher PFC due to inflation, which has eroded its purchasing power. However, according to financial reports from the FAA, consumers paid more than $3.5 billion solely in PFCs, more than double what they paid in 2000, and increased nearly 50 percent faster than inflation. Meanwhile, PFC revenue has climbed each year since 2000, save the two years during the great recession. 

Others argue that despite record amounts of cash on hand at airports, and a recent billion-dollar increase in federal Airport Improvement Grants, a higher PFC will offer flexibility to build more gates and other features that will help smaller carriers to compete with legacy airlines. Yet, the head of the association representing ultra low cost carriers (ULCCs) told the House Transportation and Infrastructure Committee that “[i]ncreasing travel costs by raising the PFC is much more of a threat to passengers’ access to air travel than gate availability at airports across the country. Raising the PFC will drive highly price-sensitive customers away, which is the ULCCs primary market.”

Modernization of the American air transportation system can be done in a fiscally-responsible and free-market fashion that does not result in higher ticket prices on consumers. Congress has many options to achieve such a goal, such as reforms to the Air Traffic Control system and the Anti-Head Tax Act of 1973 to make the PFC a truly accountable user fee collected directly by airports. At the same time, public officials should examine remaining impediments to private management of airports; for example, long-term leasing arrangements to private entities are more prevalent in Europe.

Instead of pursuing avenues to squeeze travelers, lawmakers should be doing everything in their power to limit consumer burdens. We stand ready to help deliver reforms that will strengthen passenger air travel, and with it the entire American economy.

Sincerely,

Expanding Medicaid bears a large fiscal cost, as evidenced by the experience of Indiana.

Indiana’s general fund budget grew overall by 13.33 percent or about two billion dollars from 2014 to 2021. 

The biggest driver in the increase was the expansion of Medicaid in 2015 in Indiana under the Affordable Care Act, better known as Obamacare, for able-bodied working adults up to 138 percent of the poverty level.

General fund spending on Medicaid in the Hoosier State increased by 26.9 percent, growing from $1.98 billion in 2014 to $2.7 billion in the 2021 budget. 

Medicaid went from 13.7 percent of the state’s general fund budget in the 2014 and 2014 budget cycles to 14.8 percent in the 2020 and 2021 budgets.

In 2013, the Hoosier State had 1,120,674 enrolled in Medicaid and CHIP. By July 2019, that number swelled to 1,421,594, an increase of 26.85 percent or a difference of more than 300,000.

Indiana taxpayers will spend more than $5.2 billion combined in general fund revenue and nearly $3.7 billion in dedicated (non-general) funds on Medicaid for the 2019 and 2020 budgets. Federal taxpayers will add more than $21.4 billion.

In 2014 and 2015, Hoosier State taxpayers spent $4.13 billion in combined general fund revenue and $1.34 billion in dedicated funds on Medicaid. Federal funds added up to $12.9 billion pre-expansion. 

Indiana’s legislature, the General Assembly, passes a biennial, consolidated budget, one of 15 states with an annual legislative session and a biennial budgetary process.

K-12 education, the biggest line item in general fund revenues for Indiana, increased nearly 13 percent during that same period while its share of the biennial budget decreased from 45.5 percent to 44.8 percent. 

Medicaid spending in Mississippi will add up to more than $931 million from state taxpayers and nearly $4.94 billion in federal funds for a total of $6.3 billion for fiscal 2020, which started on July 1. 

Increasing general fund spending on Medicaid by the same percentage as Indiana (26.9 percent) would add up to $1.18 billion, an increase of more than $250 million. 

That’s more than the spending for the state Department of Mental Health ($213 million), public safety, military and veterans’ affairs ($114 million) or agriculture and economic development (more than $111 million).

Eight of the 31 states that have expanded Medicaid have received waivers to modify the terms of their expansion that can include a work requirement, small premiums or tobacco cessation provisions. 

Indiana also requires some cost-sharing in the form of small premiums based on a recipient’s income level. If a Medicaid recipient doesn’t pay their premiums after a 60-day grace period, they’re removed from the program and have to wait six months to re-enroll.

In 2017, Indiana received a waiver from the Trump administration for a work requirement program for Medicaid recipients that would require them to either work, attend job training or other schooling or volunteer. 

As part of their waiver, the Hoosier State also added a tobacco cessation program that requires participation for tobacco users on Medicaid. Those tobacco-using Medicaid recipients who don’t participate are hit with a premium surcharge.

According to an analysis of data by the Mississippi Center for Public Policy, the special sales tax that supports the Jackson Convention Center has raised more than $23 million over the past five years.

Yet the convention center has lost more than $4.9 million during the same timeframe, according to annual reports issued by the center and needs more money to keep the lights on and employees working.

Tuesday, the Jackson City Council tabled until their next meeting a proposal that would’ve given the struggling facility $131,000 from the city’s general funds to cover the facility’s bills until September 30. The next city council meeting is September 17.

The city’s tourism promotion agency, Visit Jackson, has already contributed $450,000 to the convention center’s operating funds this year. Visit Jackson is supported by a 1 percent tax on food in the city limits.

“We need to assure that the doors aren’t closed and that those who have already booked the convention center have a functioning staff, willing, ready and able to support their events,” Jackson Mayor Antar Lumumba said at the council meeting. 

The center’s website lists nine events through October.

He also proposed that the city do a new request for proposals from management companies to see if another group can get the convention center’s bottom line out of the red. At present, the center is managed by SMG.

The idea of spending city funds to bail out what was supposed to be a $66 million economic engine annually for the city didn’t sit well with some on the council.

“I don’t think we should have to make an emergency decision to dispense $130,000 without a presentation from the people asking for the money, talking about their business model and why there’s a shortfall of $130,000 so we can understand and get a sense of whether there are issues with the organization itself,” said City Councilman Ashby Foote, who represents Ward 1. 

“We can’t sit here and be an ATM for people coming in and saying ‘I need another $130,000.’”

According to the 2017 report, the center’s number of events and attendance fell from 2016. There were 207 event days in 2017, versus 293 in 2017. The number of visitors declined by 182,124 in 2016 to 131,910 in 2016.

SMG also manages the New Orleans Ernest N. Morial Convention Center and Lumumba said their approach might not fit Jackson’s needs.

“If we were confident that their (SMG) business model was the best business model, we wouldn’t be doing that (issuing an RFP),” Lumumba said. “They’re not profitable, but you do this to assure heads and beds in your hotels. Most convention centers break even.”

The Morial Convention Center lost $36,275 in operating revenues in 2018, $31,450 in 2017 and $29,925 in 2016, but it attracted 739,161 visitors in 2017 and generated an economic impact of $2.3 billion.

Jackson’s convention center was credited for $18.7 million in direct and indirect spending in 2017, a far cry from the $66 million in economic impact that supporters of building the convention center cited as a reason to spend taxpayer dollars on the facility, which still doesn’t have an attached hotel.

The sales tax for the convention center is one of three levied in the Jackson city limits. The convention center levy is a one percent tax on restaurants, a three percent tax on sales of hotels and a $2 tax on every rental car.

The sales tax to fund construction and operation of the $65 million convention center was authorized by House Bill 1832, which was passed in the 2004 session. The convention center opened in 2009.

Passenger trains tie us to our nation’s history and they remind us of far-away destinations and adventures. But we should not allow our nostalgia to cloud our rational thoughts about good public policy. Especially when it involves taxpayer dollars. 

The plan to restart passenger service from Mobile to New Orleans, with stops along the Mississippi Gulf Coast, is a great example of letting pleasant sounding promises overpower railroad cars full of empirical evidence and common sense. Mississippi leaders have committed $15 million of taxpayer money to the initial infrastructure costs to restart the Gulf Coast line. The project has also received $33 million in federal grants.

Even though this line of passenger travel, which runs on railroad lines owned by CSX, was discontinued in 2005 due to declining interest, we’re being told this attempt will be different. Has the mindset of travelers along the Coast changed that much?

Most of the political leaders are on board, claiming it will create jobs, grow the economy, and increase our quality of life.But are new people actually coming to the Coast because of a train, or is it just visitors who previously traveled by car? And can we objectively evaluate how this impacts our quality of life? 

To be fair, there was an economic impact study produced by the Trent Lott National Center for Excellence in Economic Development and Entrepreneurship at the University of Southern Mississippithat claimed a potential creation of somewhere between 1,600 and 16,000 jobs annually. That study also estimated the potential economic impact of over $1 billion. Having been deeply involved in feasibility studies and economic impact modeling in support of municipal funding in my earlier life, I wouldn’t bet the mortgage payment on the likelihood of actual results ever crossing paths with these estimates. Call me cynical.

There are some less promising estimates than those from the Trent Lott Center. Amtrak’s own study admits that this new line would attract just 26 riders per train and require a $6 million annual subsidy to stay afloat. 

The Amtrak passenger rail boondoggle isn’t just on the Coast. To date, Amtrak has yet to produce a profit while operating a monopoly with almost zero competition from private market participants. For 48 consecutive years, going back to passage of the National Railroad Passenger Corporation in 1970, Amtrak has lost money. It produces those losses even though it receives nearly $1 billion in federal and state subsidies every year. 

Amtrak has tried to change course. They have begun to reduce their operating losses thanks to a focus on shorter routes in the highly congested areas of the Northeast that largely take people from their homes to work. Can you think of an area less like the Northeast than the Gulf Coast communities in Mississippi?

Another factor that complicates the establishment of the service is the need for CSX, which owns the 136 miles of track that Amtrak wants to use, to agree to the terms of a use agreement. CSX moves freight on the line for 250 customers, operating approximately 20 trains each day. There are potential conflicts of service delivery to work through and both sides have agreed to a third party analysis and report. 

The state of Louisiana has already agreed to $10 million in initial funding. Through the Mississippi Department of Transportation, Mississippians will be funding $15 million to the project. Alabama has thus far declined to commit to funding its portion of $3 million. The Gulf Coast line is projected to cost a total of $65.9 million. Though we know long-term operational and maintenance costs are likely to be much greater.

Taxpayers in Mississippi should not have to fund pet projects that residents are not willing to pay for. If the passenger train demand is so strong in the region, we should invite private operators to put forward their plans. If profits can be generated from such a service, you can rest assured the private providers will do it much better than the public ones. 

For example, Fortress Investment Group owns and operates a passenger train service in Florida under the Virgin Trains USA brand. It takes passengers from Palm Beach to Miami. They just announced adding Orlando service. Surely they can get folks from Mobile to New Orleans, too. 

When Fortress completes the expansion to Orlando in 2022, they will be the only high speed rail service operated privately in the U.S. We should show Virgin Trains USA our hospitality and invite them to Mississippi. 

This column appeared in the Meridian Star on September 5, 2019.

In this episode of Unlicensed, we talk about the $15 million the state is appropriating for passenger rail on the Coast and why this is a bad deal for the taxpayers of Mississippi.

D’Iberville’s city attorney was involved in several land transfers related to a shopping center development heavily funded by a now-defunct state program.

Fred “Dub” Hornsby III is D’Iberville’s city attorney and prosecutor. He and his law firm were involved in several swaps between the city of D’Iberville and Coast developer Bob Mandal’s company that owns several car dealerships in the city, including two that are on the site of the new development. 

His firm also helped with several transfers that didn’t involve city government, including a swap with some city-owned land for the site of one of Mandal’s former dealerships in 2016. The city bought and later sold back to Mandal land bordering the interstate that was supposed to be the site of a now-defunct aquarium, Ocean Expo.

Attorneys are often tasked with property transfers in Mississippi as deeds exchange from a buyer to a seller. Hornsby’s firm wasn’t the only law firm taking part, as several others participated in the land transfers involved with the Galleria development.

The Gulf Coast Galleria is being developed by Mandal and Rise Partners of Chattanooga — which took over for original partner CBL Properties — at an 80-acre site located at the junction of Interstates 10 and 110, which connects the primary highway with downtown Biloxi and the beaches at its terminus at U.S. 90. 

According to WXXV TV, the development’s first phase is supposed to be completed by summer 2020. 

Two of Mandal’s limited liability companies — Ramco Developments and TAC of D’Iberville —joined Popps Ferry Road LLC to buy up lots that bordered the interstate along Popps Ferry Road and D’Iberville Boulevard. 

Popps Ferry Road was a Chattanooga-based LLC that was set up by Rise Partners. Both Ramco and TAC are listed on the Mississippi Secretary of State’s website as being Mandal-owned firms.

Some of the land transfers on the Galleria property that Hornsby’s firm participated included: 

• July 25, 2011– A transfer of two parcels from Ramco Developments to the city of D’Iberville that later became part of the Galleria property.
• February 20, 2012 – Transfer of a parcel from George Wilkins to Ramco Developments.
• February 19, 2013– A transfer of a parcel from Victor Igich to TAC of D’Iberville.
• April 30, 2013 – A transfer of a parcel between Popps Ferry Road LLC. and TAC of D’Iberville.
• November 1, 2013– A transfer from five owners of a parcel to TAC of D’Iberville.

The Mississippi cultural retail attraction program died in the Mississippi legislature in 2016, when the authorizing law expired without passage of an extension, but the Galleria is still approved to receive $96 million from the program.

The Galleria project was authorized on December 19, 2013 by the MDA, with a minimum required investment of $50 million and an estimate of a $320 million capital investment by the developers.

The Galleria received its third extension from the Mississippi Development Authority in July 2018 that moves the deadline for the start of construction to 2022. That’s nine years after the project was authorized in 2013 and six years after the program ended. 

D’Iberville provided $2 million in a tax-increment financing bond to build two car dealerships on the site, also owned by Mandal. The city also provided $16 million to build five- and six-lane roads that feed into the Galleria site.

MDA and the Federal Highway Administration spent $50 million to rebuild the interchange at interstate 10 and Galleria Boulevard.

Under the cultural retail attraction program, Mississippi returns 80 percent of the sales tax revenue to the developer until the total reaches 30 percent of construction costs. Each retail project in the program must offer either $1 million worth of state-related art, historic markers or audio-visual equipment, or host space for the MDA for 10 years for tourism promotion purposes.