Updated March 12, 2020:
Senate Bill 2563 has been amended and passed by the Senate. It will now make its way through the House. The amended bill increases the minimum amount of incentives in order to qualify as a certified applicant from $1 million to $5 million. This should significantly decrease the base of affected businesses.
Some of the reporting requirements for certified applicants were also removed, however, the requirements relating to information on a company’s supply chain and its Mississippi vendors remain. The amended bill also eliminates the requirement that the University Research Center (“URC”) performs an economic impact study for each incentive. Instead, the bill now only requires that the Mississippi Development Authority (“MDA”) shares its report with the URC and, upon request, with the Governor, Speaker of the House and President of the Senate.
There may be additional changes to the bill as it makes its way through the House. We will continue to monitor and provide updates as they become available.
Read the original post from March 10, 2020 below:
The Incentives Transparency for a Prosperous Mississippi Act (Senate Bill 2563) is currently floating around the Mississippi legislature and creating quite a stir among businesses and economic development agencies. The bill aims to significantly overhaul the state’s current business incentives structure. Here is what we know so far.
- SB 2563 aims to make the incentive process more transparent and set five-year performance measures that companies must meet, or the incentives must be repaid.
- The bill would require a fiscal impact study for each qualified economic development project showing the benefits to the state.
- New incentives awarded after July 1, 2020, to companies receiving more than $1 million would be impacted.
SB 2563 was introduced on February 17, 2020 by Senator David Parker (R). If passed, this bill would set new initial requirements for incentives awarded by the Mississippi Development Authority (“MDA”) and create mandatory annual reporting obligations for companies receiving those incentives.
MDA would be required to issue a finding for each qualified economic development project showing it is in the best interest of the state. Additionally, the bill would require the University Research Center (“URC”) to issue a fiscal impact study for each qualified incentive.
Businesses awarded incentives by MDA would be required to enter into an agreement with the state to achieve certain performance measures within the first five years. Failure to meet those performance measures would disqualify the applicant from the incentive for five years or until prior incentives have been repaid.
Concerns About Confidentiality
Information required in the report of the incentive recipient includes details regarding those recipients’ supply chain and vendors located in Mississippi, detailed information about the recipient’s employment levels, as well as details regarding the amount of incentives awarded. The exclusion from confidentiality of this information would likely face resistance from businesses as any information in the annual report would be public record.
There is some confusion as to which incentives will actually be affected. Some believe all tax incentives would be affected, while others believe that only the incentives that MDA has authority over would be affected.
Based on my interpretation of the bill, the term “department” is referring to MDA. If so, only the incentives that MDA has authority over would be affected. This would include the Growth and Prosperity incentives, the Advantage Mississippi incentives and various grants among others. It should be noted that MDA does not have authority over all incentives. For example, the Manufacturing Investment Tax Credit and the Ad Valorem Tax Credit should remain unaffected. Authority over those credits is given solely to the Mississippi Department of Revenue.
As written, the bill would impact businesses awarded more than $1 million in incentives from MDA after July 1, 2020. Applicants awarded incentives prior to that date would have the option to file annual reporting information voluntarily.
The details are still being ironed out, and this bill will likely undergo a number of changes over the next month. The HORNE SALT team will continue to monitor this bill and provide updates as they become available.
Please feel free to contact me if you have any questions.
The full text of the bill can be found here.