It’s never easy to risk turning away business, especially in Mississippi which is currently in the throes of a severe economic crisis.
That is why the Starkville Board of Aldermen’s decision Tuesday to reject a proposed TIF agreement to build a Walmart Neighborhood Market in east Starkville was an act of courage.
TIF — or Tax Increment Financing – is a way to encourage development by using taxpayer money to build infrastructure for a particular project.
Walmart was seeking a $1.35 million TIF pledge to construct an access road from Highway 12 to the proposed development site in east Starkville, but four aldermen — David Little, Jason Walker, Roy A. Perkins and Henry Vaughn — blocked the original request, as well as a $675,000 compromise presented by Alderman Scott Maynard.
We believe the aldermen acted wisely in rejecting this request, not because TIF’s are in all cases bad, but because they are not all good, either.
While it may be hard to walk away from Walmart’s assurance that the project would add 95 permanent jobs and a $2 million annual payroll, there are important factors that argue strongly against the project.
For starters, TIF’s should be used to attract businesses that establish their own markets by identifying and capturing a niche that does not exist or is underserved.
It’s hard for Walmart to make that claim. It is likely that Walmart would build a customer base by attracting customers who currently shop at nearby Kroger and Vowell’s Marketplace stores. Moving customers from one store to another produces little benefit to the community.
Noting that Kroger has recently spent a considerable sum on renovations without asking for tax breaks, the aldermen said, though their vote, that city leaders should not be in the business of choosing sides in marketplace.
We were also disappointed that Walmart seemed to present its request in the form of an ultimatum: No TIF. No store.
That is either a strong-arm tactic or an indictment of the project. If it is the former, the aldermen were right to reject that sort of heavy-handed threat. If it is the latter, the aldermen were right to have deep reservations. After all, if the viability of the project rests so heavily on securing tax breaks, it is likely that the margin for success of the project is small indeed.
Any viable business should base its decision to enter a market on market conditions rather than relying on a taxpayer supported advantage over its competitors. We believe in competition, certainly, but we also believe in a level playing field.
What is true in Starkville is true everywhere.
Our communities should encourage and support new businesses, certainly. But elected leaders also have an obligation to the taxpayers to represent their interests wisely and be careful stewards with the tax dollars entrusted to them.
TIF agreements, in some cases, may be a useful tool in attracting business. But TIFs should not be standard operating procedure.
Each case should be studied carefully and approved or rejected based on whether it stands as a wise investment of taxpayer money.
In this case, Walmart did not make a convincing case.
The aldermen were correct in rejecting the TIF proposal.
The Dispatch Editorial Board is made up of publisher Peter Imes, columnist Slim Smith, managing editor Zack Plair and senior newsroom staff.
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