This month, two separate but perhaps related events will occur.
Already this month, Fitch credit rating agency has given Mississippi’s bond rating a negative outlook. Fitch essentially said the state is still struggling economically while it has a high level of poverty and too many undereducated people. In addition, Fitch said Mississippi’s fiscal house is not in order.
Later this week, the Outlets of Mississippi, the state’s largest retail development, will open in Pearl, and the state will begin the process of paying the owners of the giant mall more than $20 million over about a four-year period.
The owners of the retail development will take advantage of a state law that will allow them to be reimbursed 80 percent of the retail sales tax collected at the mall until they receive 30 percent of their investment back.
Ricky Cummings, a former Iuka state House member, was the architect of the sales tax rebate legislation. Cummings, Appalachian to his very core, was convinced that his native Tishomingo County would be the ideal location for various tourist attractions – whether it be water parks, amusement parks or perhaps a luxury hotel.
Cummings always maintained that Tishomingo had natural beauty that was unmatched and would be a destination tourism location if given a little help.
To that end, in the early 2000s, Cummings proposed and successfully passed legislation designed to lure major tourism projects to Tishomingo or in any other location in the state through the sales tax rebate program.
The idea behind the program is that no taxes would be collected if the attraction did not locate in the state. So it was a good deal to provide the rebate to lure a new attraction to the state. The key word here is new.
Cummings, for instance, made sure that casino-related attractions would not qualify for the rebate. They were coming to the state without the need of an enticement.
The sales tax rebate program was used to build the baseball stadium in Pearl for the AA affiliate of the Atlanta Braves.
The Legislature during the 2013 session amended the law so that it could be used to help pay for the development of an outlet mall in Pearl.
It came to light during the 2013 session that the mall was set to open whether it got state help or not. But with a state subsidy, legislators were told the mall could open sooner.
Legislators readily agreed.
House Ways and Means Chair Jeff Smith, R-Columbus, told legislators at the time that the mall was a tourist attraction because it would have murals, a Mississippi music motif and perhaps live music would be played.
No doubt, the mall will generate some out-of-state visitors, but the bulk of its customers will be shoppers redirected from Jackson and the other suburbs, such as Madison, Ridgeland, Clinton and Richland. More than likely those customers would have spent their money somewhere on shopping if the Outlets of Mississippi did not open.
Of course, the new retail outlet will create a bunch of jobs – more than 1,000, according to reports.
It is a safe bet that the bulk of the people employed at the Outlets of Mississippi will receive few benefits – no health care – and be eligible for food stamps because of the low wages they will be paid. In other words, the taxpayers will be subsidizing the retailers not just with the construction through the sales tax rebate, but with the everyday subsistence of their employees.
Now, do not get the wrong idea. I strongly believe in the value of work. All work should be honored and respected.
But it is fair to ask if the should the state be in the business of subsidizing retail developments – shopping malls – especially when a national credit rating agency is questioning whether Mississippi has its financial house in order? In other words, do Mississippi’s political leaders need to be giving away limited state revenue to people building shopping malls?
Oh, a planned new mall in Southaven will be asking for the same tax incentives.
Bobby Harrison is the Daily Journal’s Capitol Bureau chief. Contact him at (601) 353-3119 or email@example.com