Mississippi is open for business and seeing success in attracting more jobs, Lt. Gov. Tate Reeves told a crowd of legislators from around the country at the 40th Annual Meeting of the American Legislative Exchange Council.
Lt. Gov. Reeves recounted legislative successes to grow businesses and reform education at the closing lunch with economist Dr. Arthur Laffer, who was member of President Reagan’s Economic Policy Advisory Board. Because Lt. Gov. Reeves was a featured speaker, ALEC funded his trip, and no taxpayer dollars were spent. Former Florida Gov. Jeb Bush, Oklahoma Gov. Mary Fallin and Iowa Gov. Terry Branstad also spoke at the meeting.
“With every bill that crosses my desk … I ask ‘Does this help the private sector grow and create jobs for Mississippians?’” Lt. Gov. Reeves told the audience. “That’s the approach we’ve tried in Mississippi. It’s working.”
In ALEC’s Rich States, Poor States report, Mississippi earned the 10th best economic outlook of all the states. The U.S. Bureau of Economic Analysis ranked the state’s GDP growth rate 17th in the nation after the economy grew 2.4 percent in 2012.
Lt. Gov. Reeves cited the 2012 updates to the workers compensation law, the $150 million tax break on inventory costs for small business and the Attorney General Sunshine Act as ways Mississippi is improving the business climate. He also spoke of education reform efforts in 2013 to provide students with a better opportunity for success.
“We can’t have a strong business climate without a strong workforce,” Lt. Gov. Reeves said. “And we can’t have a strong workforce without better education. It’s a simple formula, and one Mississippi has to master.”
Text of Lt. Gov. Reeves’ speech:
I appreciate the privilege of speaking to you today. Appearing on the same program as Dr. Laffer is an honor for this economics major.
Thank you, Steve Seale, for those kind introductory remarks. You should know that ALEC has a strong defender in Steve.
We have a weekly syndicated columnist back home, Bill Minor, that has spent the last 10 years making a habit of attacking Haley Barbour and Tate Reeves. One week he would attack Haley. The next week he would attack me.
Well, a few months ago he decided to attack ALEC. You see – Mr. Minor doesn’t believe legislators from around the country should gather to share ideas on how government can get out of the way so businesses can grow. Even more sinister, legislators also listen to businessmen and women on ways to add jobs and raise the personal income of our constituents.
Know that Steve wasted no time in setting Mr. Minor straight on ALEC’s purpose – to act as a “forum for lawmakers to share ideas, grow a stronger Democracy and help make government work more efficiently and effectively.”
And I agree with Steve when he wrote “This recipe for growth and effectiveness creates opportunity for all Mississippians.” And, I would add, for your people back home as well.
By state legislators sharing ideas on the best ways to create a healthy economy, we bolster our states – which is only good for our nation as a whole. Successful states mean a successful United States.
We have a strong delegation from Mississippi here this week – led by two very important members of the Mississippi Legislature. Senator Buck Clarke serves as our State Chairman. He also serves as the Chairman of the Appropriations Committee. It was thought to be a novel concept when I appointed Buck to that position – appointing the Senate’s only CPA to chair Approps.
And, of course, my good friend, Speaker of the House Philip Gunn. He is our party’s first leader of the House since Reconstruction. He and I work very closely on all legislation, and any items I mention today would not have been possible without his leadership and friendship.
Mississippi is fortunate to have for the first time – three conservative leaders in Speaker Gunn, Governor Bryant, and myself who are working together for free market, limited government principles that grow our state’s economy.
We share a political philosophy that believes government does not create jobs…government simply creates an environment which encourages the private sector to invest capital and create jobs.
And often times, the best action is for us to simply step aside or clear a path for business to be successful.
With every bill that crosses my desk – and about 3,000 are introduced every year in Mississippi with less than 10 percent actually becoming law – With every bill I ask “Does this help the private sector grow and create jobs for Mississippians?”
That’s the approach we’ve tried in Mississippi. It’s working.
According to the Bureau of Economic Analysis, our GDP growth rate for 2012 was ranked 17th amongst all 50 states. While 2.4% GDP growth is nothing to get excited about, our ranking relative to our peers does speak to how our pro-growth policies are positioning us for the future.
ALEC and Dr. Laffer provide states with a good measure of where we are – and where we need to go. In this year’s Rich States, Poor States Report, Mississippi did pretty well. We were given the 10th best economic outlook out of all the states.
There were three changes we made to state law in 2012 and 2013 to make Mississippi even more competitive. Tenth place isn’t good enough for me – so I look forward to Mississippi rising even higher in the rankings.
First, we took the workers’ compensation law and made it fair again. This law should give both employees and employers equal footing in representing their interests. Over time, court decisions had created an unbalanced playing field for companies and workers. So the Legislature updated the workers’ comp law to return that balance. Mississippi’s workers’ comp costs are ranked ninth in this report. I only hope we can climb to Number 1 soon.
Second, we gave businesses a tax break on inventory. Mississippi was one of the few states that still taxed what businesses had in the warehouse or on the shelves at the end of the year. Mississippi counties collected the tax, meaning any debate about eliminating it pitted local county supervisors against their legislators.
We finally found a solution in 2012. While the county still collects the tax each year, companies can now claim that payment on their state filings and receive credit. We have several counties where industry is scarce – so this tax was an important segment of their revenues. This solution essentially allowed the counties to maintain their current budgets and shift any reductions to the state – where it can be absorbed. The bottom line is this change in our tax code will lead to a $150 million tax cut for small businesses in our state once fully implemented.
We have several counties – particularly near Memphis – where distribution centers are popping up. We hope this tax break encourages more to come to Mississippi and attracts more manufacturing as well.
Third, we continue to evaluate ways to improve the legal climate in Mississippi. Many of you in ALEC are well aware of the strides Mississippi made in tort reform almost 10 years ago. We shed that “judicial hellhole” label by passing what the Wall Street Journal called at the time “the most comprehensive tort reform package passed by any state.” But we still see areas we can improve upon.
One area to tackle was in the attorney general’s office. That office was able to hire law firms to go out and seek large settlements from companies without any public transparency on how much those attorneys were getting paid and where the money was going.
So, we passed the Attorney General Sunshine Act. If the state goes after a large corporation in court and hires outside counsel to pursue the case, the attorney general must disclose the details of the contract with those attorneys. It also limits how much that outside counsel can claim in attorney’s fees.
The law earned us the 2012 State Legislative Achievement Award from the U.S. Chamber’s Legal Reform Institute. More importantly, I hope it will brighten the future of the state’s legal system.
On the financial side – we are in better fiscal shape than we have been in many, many years. We have seen revenue growth and frugal spending over the last two budget years lead us to having over 5% of our total budget in one of our rainy day funds while having a balanced budget that only appropriates 98% of our projected revenues for next fiscal year.
Now, Mississippi still has its challenges. I’m fighting a deeply rooted tradition of issuing debt for any need.
Right now, the state has $4 billion in outstanding debt. We have a $5 billion general fund budget.
For a small state like ours – that ratio is unsustainable.
As treasurer, I sat on the state’s Bond Commission and often spoke against the projects we were putting on the taxpayers’ credit card. Mississippi fell into the habit of issuing long-term debt for short-term needs.
We were using 20-year bonds to pay for air conditioners that had a seven- or eight-year life in a university dorm.
Debt was an addiction for Mississippi.
So, I had an intervention. In my first year as lieutenant governor, the Legislature did not pass a bond bill for the first time in anyone’s memory. No bonds for large requests or minor pet projects in legislators’ home districts. I simply refused to do state business the old way.
The reaction in the media was so strong, you would have thought all roads and bridges, universities and community colleges crumbled to dust the minute the gavel fell ending that session.
But guess what? The year passed, and Mississippi survived. This year, the Legislature paid off or repealed almost $500 million in bonds and only issued $199 million for projects whose long-term benefits outweigh short-term costs.
And we paid cash for repairs that were traditionally bonded – like bridges and technology upgrades.
One phrase I despise is, “We’ve always done it this way.” When someone tells me that – my response is simple, “And that’s why we’re in the mess we’re in.”
But I am concerned about the effects of Detroit’s bankruptcy on borrowing. It’s foolish for anyone – state or local level – to laugh at the Motor City’s troubles. When a city as large as Detroit files for bankruptcy – saying, we can’t pay the bills anymore – that makes investors squeamish about lending money to cities, counties and even states. It could potentially drive up the cost of borrowing for all of us, and therefore, it is a problem for all of us…. One we will have to watch develop over the next few months.
We’ve done the work to strengthen Mississippi’s business climate – but that alone cannot create a successful Mississippi – or any other state. Without a workforce that can read, write and show up for work every day, on time….no state can prosper.
In ALEC’s Report Card on American Education, Mississippi earned an education policy grade of C-minus. I’d say that’s about right. They recognized steps we began taking last year toward school choice and accountability.
We adopted the A-F rating system for schools and erased the previous seven-tier label program that meant nothing to parents and students.
We also took our first serious steps into school choice by allowing students with dyslexia to go to a specialty school that teaches those students how to learn in a traditional class and returns them to their public school. Parents who want to take their children through this program can use their child’s share of state education funds to apply to the school’s tuition.
Mississippi hasn’t had true school choice before. We had a charter school law that was written by the education establishment in a way to ensure a charter school never opened in Mississippi. ALEC gave that law a well-deserved F in the Report Card.
I believe we’ve worked our way up to a much better Report Card after this year’s session. Our 2013 charter school law is not as broad as I had fought for, but it’s a good start.
For the first time, public charter schools will be allowed to open in school districts rated D or F. And public charter schools can open in districts rated A, B, or C – as long as the local school board does not block what parents demand.
We are putting parents in charge….and we are just getting started.
This session, the Legislature also raised the bar on what we expect from our schools. Right now, 47 percent of Mississippi third graders can read at grade level and understand what they’re reading. And we wonder why so many students give up in ninth grade and drop out!
53 percent of them never even left the third grade with a high probability for success. Why? Because after third grade you begin to read to learn – not simply learn to read.
That is why the Legislature created a “Third-Grade Gate” meaning a child will have to read proficiently in the third grade before passing to the fourth grade. We will raise standards for Kindergarten, First and Second grades as well. We are going to throw everything we have at those four years to make sure every young Mississippian gets off to a great start in life.
In Mississippi, we’re focused on reform – not simply throwing more money at a broken system.
We know we can’t have a strong business climate without a strong workforce. And we can’t have a strong workforce without better education. It’s a simple formula, and one Mississippi has to master.
Rich States, Poor States and the Report Card on American Education are good tools to measure where states are and how far they have to go. With support from groups like ALEC, I know we will succeed.
Again, I thank ALEC for inviting me here to speak. And I thank ALEC for helping legislators craft laws that support the free market principles that will lead our states, and ultimately our country, to a brighter future.
Lt. Governor Tate Reeves