CLINTON, Miss. (AP) — An Associated Press analysis finds that the package of state aid and tax abatements to attract a $1.45 billion, 2,500-job Continental AG tire plant to Hinds County is worth approximately $600 million, and probably more.
The numbers continued to emerge Friday as four local government bodies approved agreements with the German tire maker. Gov. Phil Bryant will welcome Continental officials in a Monday ceremony.
State lawmakers Thursday approved the state and Hinds County borrowing $263 million for improvements to the 900-acre site just west of Clinton.
An analysis by a state economist and Associated Press calculations show other tax breaks and incentives are worth at least $333 million. They include breaks on property, income, franchise and sales taxes, as well as an agreement to pay the majority of state income taxes collected from Continental workers to their employer. A few tax breaks have no expiration date.
Despite the cost, figures run by College Board economist Bob Neal suggest the state will come out ahead. He said that just subtracting the cost of repaying the bonds, state tax revenue would be $487 million ahead by 2040. Subtracting an additional $265 million worth of incentives would still leave the state more than $220 million ahead.
The Associated Press asked the Mississippi Development Authority to comment on its calculations late Friday. The state's lead industrial recruiter didn't immediately challenge the numbers.
"Mississippi Development Authority trusts the economic and analytical expertise of Dr. Neal, and we are confident these 2,500 jobs and $1.45 billion in new investments will be good for the state and its residents for many decades," spokesman Jeff Rent wrote in an email.
State and local industrial recruiters often say they're unconcerned with foregone tax revenue, because vacant land generates little revenue.
"The way we look at it is we're bringing in new revenue," Blake Wallace, executive director of the Hinds County Economic Development Authority, said Friday. He spoke after the authority, Hinds County Board of Supervisors, Clinton Board of Aldermen and Clinton school district approved agreements.
Wallace said authority calculations show the county will also come out ahead.
Here's a look at what major incentives will cost:
BONDS: $263 million
The state will borrow $263 million to pay for a range of expenses, including buying the land from the Clinton school district, preparing the site, building a worker training facility and paying for part of Continental's 5 million-square-foot factory. Hinds County has agreed to repay $20 million of that amount.
INCOME AND FRANCHISE TAX BREAKS: $177 million
The state will exempt Continental from corporate income taxes for 25 years. Over that same period, it will cap Continental's corporate franchise tax at $25,000 a year. Neal estimates those things are worth $177 million. The state also agreed that after 25 years, it will collect corporate income taxes based only on Continental's sales in Mississippi, resulting in lower taxes than the standard method of calculating Continental's Mississippi profits based on the share of the company's sales, property and payrolls here. The state will also collect franchise taxes based only on sales.
PROPERTY TAX BREAKS: $68 million.
Local Mississippi governments can grant a two-thirds cut in property taxes to companies investing more than $100 million. Any piece of property gets the cut for 10 years, but if Continental expands, new investments can qualify for their own 10-year tax breaks for up to 30 years. Hinds County attorney Chris Pace said the county projects will receive $99 million in property taxes over 30 years, while Clinton schools will receive $136 million. Assuming they collect one-third of taxes due without the break for 10 years, then all the taxes for 20 years, the break would be worth $68 million. That's low because property is worth most when it's first placed into service and gets the two-thirds tax break.
Also, the city of Clinton agreed not to annex the site for 30 years, meaning the company won't face Clinton city property taxes.
INCOME TAX REBATES: $87.5 million
From state income tax withholding out of worker paychecks at Continental, the company would get 3.5 percent of total payroll for 25 years. With announced yearly payroll of $100 million, that's $87.5 million over time.
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