Have you ever offered to take a friend out to eat and when he realized you were paying he ordered the steak instead of the pasta? Your friend realized someone else was footing the bill and so ordered the most expensive thing on the menu.

Some friends are like that (friends like U.S. Transportation Secretary Elaine Chao).

The government is a lot like that too, except worse. That’s because the government “spends other people’s money on things it won’t consume,” as former Congressman Bob McEwen puts it. “It doesn’t care about the price or the quality.”

The Gulf Coast Rail Project is a perfect example of this dilemma: something we don’t really need at a price tag that is too high. Of course, “the government” won’t be paying for it, or even riding on it. You will: the taxpayers and residents of Mississippi.

The Gulf Coast Rail Project would bring a coastal Amtrak train back to Mississippi after the service was halted by Hurricane Katrina 14 years ago. The route will feature two trains a day running between Mobile and New Orleans, with four daily stops each in Bay St. Louis, Gulfport, Biloxi, and Pascagoula.

The project is supposed to cost $65.9 million, with $33 million being covered by federal taxpayers. Louisiana, which looks to benefit most, has committed another $10 million. The Mississippi Department of Transportation recently decided to kick in almost $16 million, money not apparently appropriated by the Legislature that just happens to be lying around. Alabama is on the fence, having committed no state funds.

The goal is to provide “new, regular, reliable passenger service along the Gulf Coast.”

Sounds great, doesn’t it? But is this really a good use of $33 million in federal funds and $16 million in Mississippi taxpayer funds? I can imagine about 100 other priorities that would put this money to better use.

It’s “free money,” though, right?

Nothing is free. First, let’s begin with one of the primary reasons Alabama is gun shy about this project. Right now, the Gulf Coast rail line is being used to carry freight by a company called CSX. In order to commence passenger service, Amtrak will have to work with CSX to craft a schedule to minimize delays and scheduling conflicts. (Under federal law, passenger trains have preference over freight, usually resulting in delays for both.)

CSX’s rail line carries a wide array of goods and supplies, ranging from agricultural products to automobiles. The new Amtrak service may well increase the cost of carrying every single one of these items. Sure, some businesses will benefit from the new passenger service, but many others will be harmed by higher freight costs.

Second, if the Gulf Coast Rail Project were a good idea, a private company would be investing in it. Instead, it’s being subsidized by millions in federal and state funds.

Amtrak’s business model is to lose money. Amtrak has never made a profit since its inception in 1970. It expects to run mostly empty, inefficient and expensive trains. “We have to get away from this idea that Amtrak has to make a profit. It does not have to make a profit,” explains Jim Mathews, one of the Gulf Coast Rail Project’s biggest supporters.

Since 2012, Amtrak’s customer base in Mississippi and Alabama has declined every year. In Louisiana, the customer base decreased all but one year. A 2015 study by Amtrak itself projected 26 riders per train at an annual loss of millions of dollars a year. Amtrak cheerleaders consider this a win. Maybe it is for a boondoggle that has soaked up $46 billion in federal subsidies over the years. 

It is well-documented that Amtrak loses money on nearly all of its routes. Ironically, one of the only routes it doesn’t lose money on is the Northeast Corridor, whose ridership is “highly educated, affluent and influential,” with an average household income of $170,000 a year.

In fact, none of Amtrak’s most popular routes are in the South, where most people would rather drive the two hours from Mobile to New Orleans instead of sitting on a train for four hours. This is not even to mention Amtrak’s mounting expenses from remodeling and retiring old trains like the “City of New Orleans” and the “Sunset Limited,” both of which serve New Orleans and, presumably, are part of the business model for the Gulf Coast Rail Project.

If the Gulf Coast Rail Project were a filet mignon, I’d still complain about the high price. It looks to me, though, that we’re paying top dollar for yesterday’s leftovers.

Mississippi should join Alabama in backing away from a deal that’s mostly going to benefit New Orleans and Amtrak at the expense of Mississippi taxpayers. 

This column appeared in the Sun Herald on September 1, 2019.

The U.S. Department of Transportation announced Thursday that the Federal Railroad Administration has awarded a $4,360,000 grant to the Southern Rail Commission.

The grant would assist the implementation of twice-daily rail service between Mobile, Alabama and New Orleans, which would have stops on the route along in the Mississippi Gulf Coast.

“This funding will help Mississippi, Louisiana and Alabama resume passenger rail service between New Orleans and Mobile to enhance regional economic growth and rural mobility,” said U.S. Transportation Secretary Elaine L. Chao in a news release.

Amtrak’s 2015 feasibility study said two trains daily between Mobile and New Orleans would have ridership of about 38,400 annually and require an annual subsidy of $6.97 million. For those keeping score at home, that adds up to about $181 per passenger in subsidies.

The funding is being awarded under the FRA 2017 Restoration and Enhancement Grants Program, which provides assistance grants for implementing, restoring or upgrading passenger rail service between cities.

Passenger rail service between Mobile and New Orleans was canceled before Hurricane Katrina in 2005 amid years of declining ridership. According to the Amtrak 2015 feasibility study, total trips declined from 148,387 in fiscal 1993 to 81,348 in 2005, a decrease of 45.2 percent.

In June, U.S. Sen. Roger Wicker announced a $33 grant to fund infrastructure and capacity improvements along the rail line connecting Mobile and New Orleans, which is owned and operated by freight operator CSX. Amtrak is supposed to provide $6 million as well.

Federal money won’t be the only financial component.

Mississippi taxpayers will have to fork over $15 million as a match, along with Louisiana ($10 million).  Alabama is balking about providing its share of the matching funds, $2.2 million. 

The SRC cites a May 2018 study by the Trent Lott National Center at the University of Southern Mississippi that says restoration of passenger rail on the Mississippi Gulf Coast between Mobile and New Orleans would add $6 million annually to the economy.

An underlying theme of the 2019 gubernatorial election, and the few competitive legislative races, will be the size of government in Mississippi. It just hasn’t been framed in those words. 

Rather, we will hear about how much more taxpayers need to spend. We will hear how we should expand Medicaid, how we need to increase funding for education, and how we should raise the gas tax to spend more on roads and bridges. Sounds wonderful. Big problems addressed with an expansion in government, financed by taxpayers. 

If you’re not in favor of these big ideas, you’re a terrible person. “How else can we move off the bottom of most rankings?,” the politicians ask.

But it all comes back to one question: How much of the economy should government control?

Contrary to what you might have heard, our government is larger than most. Fifty-five percent of the state’s economy is controlled by the government. Said another way, government is in charge of more than half of our economy. 

This gives Mississippi the fifth largest government share of economic activity, behind only Alaska, Minnesota, Hawaii, and Kentucky. That’s not a good sign for a growing economy, which should be our goal (not a growing government). 

Looking at our neighbors, government controlled between 47-50 percent of the economies in Alabama, Arkansas, and Louisiana. It is 43 percent in Tennessee, the most prosperous of our neighboring states. 

The current economic system too often rewards political favor-seeking and lobbying rather than private sector activities. That only increases as the government grows. Therefore, the shift is from creative entrepreneurship towards lobbying and regulatory capture. Such actions benefit some companies and corporations, but they do not benefit the economy at large.  Worse, such actions act as a drag on economic growth at a time when we need more private sector activity from a broader group of industries and participants.

Economic growth from the private sector unconnected to government action should be our goal, and should certainly be the goal of anyone in elected office. 

Wealth does not come from the government. Government doesn’t have anything that it did not already take from someone else. 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. That’s not how markets work and Mississippians are smarter than most politicians think they are.

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.

We are hopeful that over the next few months, we will hear how we can grow the economy, not the government. Or at least we can hear an honest discussion about the current size and cost of our government. 

Only four states have seen a higher percentage of people leave the federal food stamps program over the past year than Mississippi. 

In May 2018, 498,490 Mississippians were on the Supplemental Nutrition Assistance Program, or SNAP. By April of this year, that number had declined to 443,868 participants. This represents a drop of 11 percent over the last 11 months that data is available.  

These numbers coincide with recent job numbers that show more people in Mississippi are working. Over the past 12 months, Mississippi experienced a job growth rate of 1.7 percent, good enough for 17th nationally and fifth in the SEC footprint. 

The states that saw a larger percentage drop from the SNAP rolls were Georgia (-12.6 percent), New Hampshire (-12.4 percent), Wyoming (-11.4 percent), and Kentucky (-11.3 percent).

Nationally, SNAP participation has steadily declined since the recession and over the past year it dropped by another 6.5 percent representing a decrease of about 2.5 million people. 

The percent of Mississippians receiving food stamps dropped a full two percent over the last year. In May 2018, a little less than 17 percent of the state received food stamps. Today that number is just under 15 percent. 

Percent of residents using SNAP among neighboring states

Contrary to what you will hear from many candidates running for office, Mississippi is spending more taxpayer funds to educate a decreasing amount of K-12 students, according to data from the U.S. Census Bureau.

In 2014, local, state and federal funding added up to $4.467 billion or about $9,068 per each of the state’s 492,586 students in public schools.

Fast forward to 2017, taxpayers spent a total of $4.75 billion on K-12 in Mississippi from local, state and federal sources. That added up to $10,092 apiece to educate 470,668 students enrolled in public schools.

Those add up to 7.57 percent and 6.8 percent increases, respectively, in state and local spending compared with 2014. 

During that same period, enrollment in Mississippi public schools decreased by 4.5 percent.

Mississippi ranks 41st in per unadjusted, total per-pupil spending among the 50 states and the District of Columbia. 

South Carolina (35th) is the second highest ranking Southeastern state in per-student spending, along with Arkansas (36th), Georgia (40th), Alabama (42nd) and Florida (45th). 

The District of Columbia spends the most per student nationally, an astronomical $27,696. According to a 2018 audit report, students are allowed to pass courses despite excessive unexcused absences and there is a culture of passing and graduating students who didn’t meet standards.

The highest ranking Southeastern state is Louisiana, which spends $12,683 per pupil and is ranked 23rd.

The Pelican State uses a similar K-12 education funding formula to the Mississippi Adequate Education Program, the Minimum Foundation Program, to divide up state funding among school districts. 

The difference between the two states is that the MFP amount is constitutionally mandated by the Louisiana state constitution, leaving the Louisiana legislature with precious little maneuvering room in the budget during tough economic times.

The MAEP, thanks to a 2017 decision by the state Supreme Court, is not a binding funding amount for the legislature.

In fiscal 2020, the MAEP formula amount totaled $2.477 billion and the legislature appropriated $2.246 billion, a difference of $231,505,356.

In 2017, state ($2.413 billion or 50.8 percent), local ($1.666 billion or 35.1 percent) and $671 million for federal spending (14.1 percent) composed the taxpayer outlay on K-12 education in Mississippi.

For Mississippi to equal Louisiana in per-pupil spending, the state would have to spend more than $619 million more in state K-12 spending and more than $428 million in local spending.

According to the Census data, Louisiana spends more on salaries and benefits (80.98 percent versus 79.4 percent in Mississippi) and a slightly smaller percentage — 55.76 percent versus 56.68 percent for the Magnolia State — on instruction related outlays.

Louisiana (38.79 percent) spends more on support services — defined as school and district office administration and instructional staff support — than Mississippi (36.88 percent).

The small town of Walls in DeSoto county, population 986, leads the state in the amount of its budget coming from fines and forfeitures.

According to the study by Governing magazine, the town sourced 26.53 percent of its budget from fines and forfeitures in 2017. That adds up to $249 of fines per resident.

Data from the state auditor’s office shows this number didn’t occur in isolation. Walls had 25.7 percent of its budget originating from fines and forfeitures in 2015 and 32.2 percent in 2014.

In 2017, the town had revenues of $898,808 and $238,476 came from fines and forfeitures.

Numbers from 2016 were not available.

The Rankin county city of Flowood was second, with $196 of fines and forfeitures per each of its 7,823 residents. The city had revenues of $20.4 million in 2018 and $981,949 came from fines and forfeitures.

Going by percentage of a city or town’s budget, the town of Decatur in Newton Ccunty was second to Walls, with $133,442 of its revenues in 2017 ($767,961) coming from fines and forfeitures.

Mississippi’s numbers were better than most, with only nine jurisdictions receiving 10 percent or more of their revenue from fines and forfeitures. Alabama had nine, Tennessee had 18 and Arkansas had 44 jurisdictions with 10 percent or more of revenue originating from fines and forfeitures.

Louisiana had 70 municipalities and counties in the 10 percent category and had 25 areas receiving 50 percent or more of their budgets from fines and forfeitures.

Georgia had the most nationally, with 92 receiving 10 percent or more of revenue from fines and forfeitures. The Peach State had 13 jurisdictions that received more than 50 percent of their revenue from fines and forfeitures. 

Texas was second with 90 jurisdictions in the 10 percent or greater cohort.

According to the study, fines and forfeitures account for more than 10 percent of general fund revenues for nearly 600 jurisdictions surveyed by Governing magazine. In 284 of those, fines and forfeitures were 20 percent or more of revenue.

One hundred twenty four jurisdictions had fine revenues exceeding $500 per capita.

An analysis of data by the Mississippi Center for Public Policy shows that a 15 cent gasoline tax increase would add up to about $123 annually per vehicle and a 20 cent per gallon tax hike would average about $180 annually per vehicle. 

For a family with two cars, that would be in the $250-$350 range each year.

When tallying up the cost of a potential gasoline tax increase on a family of four, the price would be much higher a month than the $6.67 increase cited by former state Supreme Court Justice Bill Waller Jr. 

His tax swap plan involving a state income tax bracket and the gasoline tax also would be only a tax increase on 42.8 percent of the state’s population who aren’t part of the state’s workforce.

Lt. Gov. Tate Reeves said the cost of a gasoline tax increase for a family of four would add up to about $500 per year, but achieving that figure would require three gas-guzzling trucks or heavy SUVs driving about 20,000 miles per year apiece and a gasoline tax of 15 to 20 cents more per gallon.

To calculate the average impact on a Mississippi driver annually, we used the top-selling vehicles in the state from both this year and a decade ago that included:

• 2019 Ford F-150.
• 2019 Nissan Altima.
• 2019 Toyota Camry.
• 2019 Honda Civic.
• 2019 Chevrolet Silverado.
• 2019 Chevrolet Tahoe.
• 2009 Ford F-150.
• 2009 Honda Accord.
• 2009 Honda Civic.

Then we calculated how many miles the average Mississippian drives per year. According to the U.S. Energy Information Administration, drivers in Mississippi traveled 40,877 million miles in 2017, ranking 28thnationally. Divide that by three million (the state’s population) and the average driver in the state drives about 13,625 miles per year. 

We also ran the numbers using 10,000 annual miles traveled per vehicle and 20,000 to see how much of a difference that makes.

Each vehicle’s U.S. Environmental Protection Agency rating for miles per gallon was used to calculate the average MPG that a Mississippi owner of that vehicle might face. 

The figure for MPG wasn’t the overall MPG, but an adjusted total that takes into account the amount of rural roads and highways with higher speed limits (84 percent of Mississippi roads are the responsibility of counties and the Mississippi Department of Transportation) and thus higher gas mileage. 

An owner of a Ford F-150 equipped with four wheel drive and the 3.5 liter turbocharged V-6 and driving 20,000 miles per year would pay $142 more per year and $11.83 more per month if the gasoline tax was increased by 15 cents per gallon.

The owner of a Nissan Altima that gets considerably better gas mileage (32.7999 miles per gallon) and drives 20,000 miles per year would still be higher than Waller’s stated figure at $7.60 per month and $91.47 per year with a 15 cent gas tax hike. 

Jacking up the gasoline tax to 20 cents per gallon would add up to $189 per year and $15.75 per month for the owner of the F-150 who drives 20,000 miles per year, while the Altima owner would pay $10.08 per month and $121 additionally per year.

Using the state Department of Revenue’s numbers on petroleum taxes, each one cent increase in the state’s gasoline tax would add up to about $23 million in additional revenue for the state’s highway fund, which is used for state-maintained roads only.

No tax swap for 42.8 percent of state’s population

Waller says eliminating the four percent income tax bracket and exchanging this for a gas tax hike would not be a tax increase. The problem is two-fold for this viewpoint.

According to U.S. Census Bureau data, the workforce participation rate in Mississippi is 57.2 percent, versus 63 percent nationally. Also, 15.9 percent of the state’s population is age 65 or older. 

This means 42.8 percent of the state’s population is not in the workforce and wouldn’t be subject to income tax, which exempts the first $2,000 of taxable income and taxes the next $3,000 at three percent, the next $5,000 at four percent and all taxable income more than $10,000 is taxed at a five percent rate. 

The state also doesn’t levy an income tax on retirement income, pensions and annuities, so that eliminates any tax relief for those age 65 or older.  

On Tuesday, the Jackson City Council tabled for future discussion a possible lawsuit against the Mississippi Department of Transportation over which entity has responsibility for maintenance of Medgar Evers Boulevard.

Jackson city Councilman Kenny Stokes said at the city council meeting that the city’s legal department could find no record of the city council approving the 1987 deal for MDOT to delegate maintenance of the road to the city. 

Stokes, who represents Ward 3, said if the item wasn’t placed on the city council’s agenda in 1987 and approved, the transfer wasn’t legally valid.

According to maps, U.S. 49’s route merges with Interstate 20 westbound in Richland and follows Interstate 220 north before resuming its northwest route at Medgar Evers Boulevard north of the interchange. 

Medgar Evers Boulevard isn’t marked as U.S. 49 south of the I-220 interchange.

 “I’m real concerned how the 49 highway in Rankin County can get over a hundred million dollars for the stretch from Richland to Flowood and it’s not even going to the school, Piney Woods,” Stokes said. “This is the gateway, the 49 highway, Medgar Evers Boulevard, to hospitals. 

“This is a sweetheart deal in Rankin County and you have a duty not to discriminate with federal funds. We’re also going to ask the U.S. Congress to get involved.”

MDOT is spending $150 million to repair and expand U.S. Highway 49 between Richland and Florence, with a completion date set for next year. The project will expand the heavily-traveled highway to six lanes between the two Rankin County cities with new culverts, curbs and bridges.

According to MDOT traffic counts, some of the intersections on 49 between Richland and Florence average about 42,000 vehicles per day.

The possible lawsuit was also supported by City Councilman Aaron Banks, who represents Ward 6

“If that agreement wasn’t executed right, then the state should be on the hook,” Banks said.

Mayor Chokwe Lumumba said at the meeting that the city’s 1 percent infrastructure sales tax is going to fund a repaving project on Medgar Evers Boulevard.

According to Public Service Commission Chairman Brandon Presley, four out of the state’s 26 electric power associations have decided to provide internet service to their electric customers.

The four non-profit co-operatives— Tallahatchie Valley, Tombigbee, Alcorn and Prentiss — that plan to provide high-speed fiber internet to the home are all located in northeast Mississippi in Presley’s district and made their announcements within the space of a week. 

The four co-ops that will provide internet service have about 99,000 combined customers, which represents about 5.5 percent of the 1.8 million mainly rural customers in the state who receive their electricity from one of the EPAs.

Tallahatchie was the first to announce the decision by its members on August 9 and plans to offer the service across its nine-county service area. The news release says it’ll take about 48 months for the system to come online.

Prentiss will pick a contractor in the next two weeks. 

“We’re going to beat this drum until every dirt road and every house and every rural community at the end of the line has the same level of service as a city,” Presley said. He compares high-speed internet service with electricity and says a similar effort like the one that electrified rural areas needs to come from the federal government to bridge what he terms a digital divide.

The Mississippi Broadband Enabling Act was signed into law by Gov. Phil Bryant on January 30 and went into effect immediately. The law allows the state’s 26 EPAs, also known as cooperatives, to provide broadband to their primarily rural customer base.

The new law requires EPAs to conduct economic feasibility studies before providing broadband services, maintain the reliability of their electric service, maintain the same pole attachment fees for an EPA-owned broadband affiliate as for private entities wishing to use the EPA’s infrastructure and submit a publicly-available compliance audit annually.

Presley, a Democrat who’s running opposed for his fourth term as the PSC’s Northern District commissioner, also said Mississippi needs more federal funds to expand rural high-speed internet service and that the EPAs won’t be asking the state legislature for any funds this year.

“I don’t believe we’re getting too much federal money in Mississippi to help our people. We’re not getting enough,” Presley said. “We need it more than they need it in Maryland. We need it more than they need it in New York and California. 

“We need it because we’re on the bottom of the economic ladder and until we solve the digital divide in this state, we’re not going to help our economic problems in Mississippi and we’re not going unlock the opportunities that our people deserve to have.”

According to data from the latest FCC wireless competition report from 2017, there is a digital divide in Mississippi. Ninety-five percent of urban residents in Mississippi have access to high-speed internet service (defined as 25 megabits per second or faster). 

In rural areas, only half of residents have access to that level of internet service. In 12 of the state’s 82 counties, five percent of the population or less has access to high-speed internet.

In 27 counties, only 25 percent or less of the population has high-speed internet service available.

Presley is the incoming president of the National Association of Regulatory Utility Commissioners, which is the nationwide trade association for public utility regulators. He said he’ll use that platform to help spread the word about the digital divide between rural and urban areas nationally.