On Wednesday, April 4, the Mississippi Office of the State Auditor (OSA) Performance Division released a report focused on failed economic development programs. In the 243 projects discussed, the State of Mississippi has generated more than twelve dollars in return for every one public dollar spent by the Mississippi Development Authority (MDA) on economic developments; failed projects represent $185.6 Million in disbursements.
In the report, five major economic incentive programs, which represent $672.9 Million in public fund disbursements, were evaluated: the Mississippi Major Economic Impact Act (MMEIA), the Industry Incentive Financing Revolving Fund (IIFRF), the Mississippi ACE Fund (ACE), Rural Impact Fund Grant Program (RIF), and the Existing Industry Productivity Loan Program. Each funding program targeted specific types of development strategies; these program goals are detailed in the report. MDA oversees each project from funding to completion.
MDA designates economic development projects as currently active, inactive, canceled. Active projects have not yet completed all requirements of the agreement reached with MDA or have not been closed by MDA. Inactive projects have either met all contractual obligations. Canceled projects were awarded grants, but did not materialize; most canceled projects either never actually received public funds or repaid funds that were disbursed. OSA considers projects that did not meet contractual obligations with MDA and no longer operate within the State to be failed.
Currently, the five funding programs within the scope of the report have generated nearly 36,000 jobs and over $8 Billion in capital investment from recipients of economic development loans and/or grants. Overall, this represents a 12.37:1 return on investment for economic development project in Mississippi.
The following projects are considered failed and are listed along with corresponding amounts of public funding:
MS Forge, Inc.
Southern Airways Corporation
WPG America, Inc.
Three of the failed projects relied on unproven startup technology at the time they were funded by the Mississippi Legislature: KiOr, Stion, and GreenTech Automotive. These three projects were all funded with the IIFRF program and lost taxpayers over $150 Million. Notwithstanding these losses, the IIFRF program has still generated an 8.59:1 return on investment during its tenure.
State Auditor Stacey Pickering said, “Economic development projects have been good for Mississippi. Overall, we have all benefitted from industry being recruited to our state by economic incentives. However, we must remain vigilant in ensuring public dollars are only spent on industry with a track record of success instead of risky startup technology.”
The Economic Development Programs and Tax Incentives Evaluation Act of 2014 requires the University Research Center, MDA, and the Legislative Budget Office to conduct economic analyses of development programs and tax incentives offered by the State of Mississippi. The first report published by this group determined that economic development projects have yielded a positive return; however, inconsistency and incompleteness of data made thorough analysis difficult.
OSA recommends continued expansion of evaluation efforts on development projects that utilize public assets to best position Mississippi’s economy for the future.
The full report can be found online at the OSA website.
State Auditor Stacey Pickering Press Release