State incentives can cost taxpayers
Mississippi has made some good investments when it comes to business and industry but also some very bad ones.
In the news recently was proof of the bad. The state’s auditor is demanding that GreenTech, a company that planned to build 250,000 cars a year at a plant in Tunica County, repay $4.9 million in state and local aid the company received, plus $1.5 million in interest.
In a July 2011 agreement, GreenTech promised to invest $60 million and hire 350 full-time workers by the end of 2014, paying each at least $35,000 and maintaining those jobs for at least 10 years, The Associated Press reported.
The company planned to build electric vehicles.
“I would venture that there isn’t really much of an operation in Tunica at all,” Auditor Stacey Pickering said. “This appears to have been a game of smoke and mirrors, and a corporate entity that never had any intention to deliver on the promises it made.”
Not only did the state provide a loan to the company, it also exempted the company from income, franchise and sales taxes, and loaned Tunica County $1.9 million to buy the site for the company.
GreenTech isn’t the only company to have received generous benefits from the state only to fold later. KiOR, a biofuels company, still owes the state $77 million after failing to operate a plant that was supposed to convert trees into fuel. The state lost $8 million when solar equipment maker Twin Creeks failed, AP reported.
These investments all involved so-called “green” companies that touted questionable technology and lofty goals. While the state is wise to encourage investment into green companies, state officials should be more prudent with taxpayer dollars.
Just because other states are offering incentives to attract a particular company doesn’t mean Mississippi should do the same. Economic development is a game of “who can provide the most incentives,” but it appears Mississippi spent too much time figuring out how to attract these businesses and not enough time figuring out if it should attract them.
In the end it’s taxpayers who lose when these economic development gambles fail.