Mississippi Lawmakers Approve $247 Million In Incentives For Aluminum Manufacturer

Legislative leadership swiftly approved a plan to fund a large incentives package for a proposed aluminum mill in Northeast Mississippi on Wednesday, with the promise that the facility would bring 1,000 high paying jobs to Mississippi. Photo by Nick Judin

JACKSON, Miss.—Lawmakers at a swift Wednesday special session of the Mississippi Legislature took less than a day to approve an incentives package worth roughly $247 million for a planned aluminum mill in Northeast Mississippi. The company behind the mill is Steel Dynamics, Inc., which is based in Fort Wayne, Ind.

Lt. Gov. Delbert Hosemann celebrated the project in a press event in his office during the one-day special session. “A $2.5 billion dollar project doesn’t come to Mississippi very often, but you’ll see it coming more. The state is open for business,” he said.

On Monday, legislators seemed blindsided in conversations with the Mississippi Free Press, having had no prior  of the proposed mill or the upcoming special session to approve its construction. But in Jackson on Nov. 2, many of the same lawmakers were convinced after meetings with legislative leadership on the plan’s details.

Senate Finance Committee Chairman Josh Harkins, R-Flowood, told the Mississippi Free Press on Wednesday, Nov. 2, 2022, that performance-based funding means the state will only continue to spend if the project is successful. AP Photo by Rogelio Solis

Senate Finance Committee Chairman Josh Harkins, R-Flowood, decided to support the project after a briefing with Hosemann. “There’s a place for people to be careful and cautious, and that’s what we’ve done,” he said Wednesday. “We’ve been briefed significantly on this, and it appears to be a phenomenal project for Mississippi.”

But the Senate Democratic Caucus excoriated the governor for calling a special session over economic development while neglecting legislative rapid action on Jackson’s water crisis and the growing threat of hospital closures across Mississippi, two issues that disproportionately harm Black Mississippians.

“We aren’t just looking at a strained system anymore,” said Senate Democratic Caucus Leader Derrick Simmons, D-Greenville, in the afternoon at the Capitol steps. “We’re looking at a full blown economic and a health care crisis in the state of Mississippi. We are no longer going to ignore it. By the governor and our Republican colleagues ignoring it, it will not go away.”

Hosemann: No More Money ‘Until It’s In The Ground’

Wednesday’s legislation include $155 million in grants and millions more in tax incentives for Steel Dynamics. Of those funds, the company will receive $54 million immediately to begin construction on the facility. Additional funds on the way include $25 million for road improvements in Lowndes County and $18 million in loans to complete the company’s purchase of the entire site. Lowndes County will also be providing its own tax incentives, as well as performing water and sewer improvements for the planned facility.

In all, the state’s “Triple Crown Fund” will include over $81 million for the immediate spending. The Legislature is setting aside $45 million in additional funds in a reserve account in anticipation of the state continuing to cut income taxes. In his office, Hosemann said future funding for the aluminum plant will depend on the company accomplishing milestones in the site construction process.

“They’re not getting any (more) money from the State of Mississippi until it’s in the ground. I thought that was really important,” Hosemann said.

In Gov. Tate Reeves’ initial announcement, he highlighted the company’s pledge to bring 1,000 high-paying jobs to Mississippi, estimating an average salary of $93,000. In his own press event, Hosemann shared more details about the scope and timeline of those jobs.

Lt. Gov. Delbert Hosemann, speaking to the press in his office during the special session on Wednesday, Nov. 2, 2022, shared additional details about the jobs at the proposed Steel Dynamics, Inc. aluminum plant. Photo by Nick Judin

“This will be a gradual process,” Hosemann said. “They have agreed with us that they will have a minimum of 1,000 people working there by December 31st, 2029. So I anticipate that they will accelerate that. Because time is money.”

Hosemann told the Mississippi Free Press that workers at the aluminum mill and the other facilities, like the biocarbon production plant, can expect a minimum salary well above the state’s average. “They told me that their starting salary for the most base positions would be $58,000, plus bonuses, health insurance, retirement benefits (and more),” Hosemann said.

In interviews with the Mississippi Free Press during the special session, lawmakers stressed the importance of clawbacks, provisions that can return the funds to state coffers in the case of a failure to build out the facility, to protect the state’s investment. Harkins explained the requirements in an interview after an Appropriations Committee hearing early in the day. 

The first payment, Harkins said, was based on extensive plans to begin construction on the site, which is itself an extension of a pre-existing facility.

“We’re not gonna say ‘Hey, here’s a check for $55 million to get started.’ They’re gonna have to start doing the work and then it’s a performance-based reimbursable. You don’t get any money until you meet the metrics,” he said. 

“If they somehow get to a thousand employees and they fall to 920, they’ve got 90 days to (fix that). And then if they don’t, they lose that year of corporate income tax and sales and use tax. They don’t get the benefit of those tax incentives for that year,” he added.

Sen. David Blount, D-Jackson, said later in the day that Steel Dynamics was a reputable entity with a long track record. “This is a company that’s established. So if you do have to claw something back, there will be something to claw back,” he said.

‘A Political Pep Rally’

Legislative Democratic leadership did not attempt to derail spending package, but in a press event on the south steps of the Capitol on Wednesday, they challenged Gov. Tate Reeves for choosing to call a special session to address economic development but not the myriad health crises facing Mississippi.

House Democratic Leader Robert Johnson, D-Natchez, led the press conference. “When the governor announced a special session on his social media account, he boasted that Mississippi is on fire. Well, he’s right, but not in the way he thinks,” Johnson said. 

“The state’s only burn center has closed. The only neonatal intensive care unit in the Delta has closed. A Jackson hospital that serves rural portions of Hinds County is reducing critical services to stay afloat. Greenwood Leflore Hospital itself is on life support, staying open only with the help of the city and county putting up money to keep it from closing its doors for good,” he continued.

And the Jackson water crisis, too, which remains an open challenge to the health and safety of Capitol City residents, will have to wait for the regular 2023 session for legislative action. Democratic leadership presented bills at the meeting which they said included $40 million in immediate funding for the crisis.

Legislative Democratic leaders like Sen. Derrick Simmons, D-Greenville and Rep. Robert Johnson, D-Natchez, both at the podium, criticized Gov. Tate Reeves for failing to act on the Jackson water crisis and other Mississippi health catastrophes. Photo by Nick Judin

“So what compelled him to bring us back to Jackson?” Johnson asked. “A victory lap being portrayed publicly as an emergency. This feels a lot more like a campaign event—a political pep rally—than public service.”

Sen. Simmons followed Johnson up. “To be clear,” he said, “we were rushed to Jackson to figure out how to continue giving away more of Mississippi’s money to a corporation to secure 1,000 jobs. We routinely come to Jackson and leave millions and millions of dollars on the table by refusing to expand Medicaid. Imagine how else we could have spent millions of dollars. Imagine how many lives we could have saved.”

Both men said they did not oppose the investment in the Golden Triangle region and both voted for the bills.

Indeed, Wednesday saw little opposition to the investment proposal at all, introduced and passed to the governor’s desk in a matter of hours. In the Senate, no lawmaker voted against the bills. In the House, the only organized votes against the proposal came from the House Freedom Caucus, including Rep. Dana Criswell, R-Olive Branch, and Rep. Dan Eubanks, R-Walls.

“Yesterday, in less than 5 hours with little to no debate, the Mississippi Legislature gave away $250 million of your money to an undisclosed company,” Criswell wrote in a press release afterwards.

“This project uses millions of tax-payer dollars, including cash and compensation to the company, a 15-year exemption of corporate income taxes, and exemption from sales and use taxes. It pays the company back 3.5% of the gross payroll for 10 years and it allows the company to pay for employees’ moving expenses from other states. This is not acceptable to business owners and job creators in Mississippi who do not benefit from any of these carve-outs,” he added.

‘The Bottom Line Is We Won’

The deal comes months after the collapse of an earlier attempt to construct a similar facility in Kentucky. That plant, originally estimated at $1.9 billion, was the project of Unity Aluminum, formerly known as Braidy Industries. The Associated Press reported this July that the 2017 Unity plan, once the source of much fanfare from Kentucky politicians, failed to materialize into a workable facility.

“Unity, formerly known as Braidy Industries, had intended to build an aluminum mill near Ashland in northeastern Kentucky but struggled for years to line up sufficient financing for the project,” wrote AP reporter Bruce Schreiner.

Around the same time, Kentucky Gov. Andy Beshear lashed out, calling Unity’s original proposal “the shadiest economic development deal in Kentucky’s history.”

“We saw nothing for Kentucky … We were used. We were conned. They sold us false hope and that is very, very wrong,” Kentucky’s Democratic governor said.

But Unity is now merely a small minority shareholder in a proposed Steel Dynamics planned aluminum mill. Steel Dynamics announced this year that they would be stepping in to plan and construct a much larger version of the facility, bringing in Unity employees to “provide expertise.” The original site in Kentucky was no longer appropriately sized for the plant, a Unity spokesperson told the Associated Press.

Lawmakers and agency officials at the capitol on Wednesday professed no knowledge of the earlier Kentucky deal. Lt. Gov. Hosemann told this reporter that he was only aware that Mississippi had competed with two other states for the plant. “The bottom line is we won,” he said with a grin.

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