Auditor watchdog on commitments
It’s painful that Viking Range is only about a third of the size it was a dozen years ago, when the company was blowing and going and persuaded the state of Mississippi to kick in $3 million to help with the company’s expansion into refrigeration manufacturing.
Greenwood and the surrounding area have felt the effects of Viking’s shrinking from almost 1,200 employees in 2005 to less than 400 today — a downsizing that began before its sale to Middleby Corp. in late 2012 and accelerated afterward.
Greenwood has a deep financial and emotional interest in a company that was born here, and most residents hope that it will again kick into high gear. The management and the rest of the employees at Viking are working very hard to try to make that happen.
All that said, however, the state was correct to hold Viking’s owners, past and present, to their word when they promised more jobs — or later not shrinking further — in return for the taxpayers’ assistance. There might have been circumstances outside of its control that kept Viking from keeping its bargain. The Great Recession of 2008 and the housing bust it created, for instance, were particularly hard on the maker of upscale kitchen appliances. Nevertheless, there’s no point in having “clawback” provisions in these economic development deals if you don’t actually claw back the money when companies don’t produce the returns promised.
According to a report released recently by the State Auditor’s office, Viking paid $2.5 million in penalties from 2008 to 2017 on the $3 million grant it received in 2005. The refrigeration project, initially projected to create at least 250 additional jobs, produced less than half of that by 2008, and later shed all of those. The state considers itself square on that incentive package.
But a second one, given to Middleby in 2015, is now in default, although not by much. Last year’s penalty was only $13,300 on a grant worth $2.3 million so far.
The report on Viking is the latest in a series that State Auditor Stacey Pickering has released showing companies that have not met their obligations to the state. Pickering is to be commended for shining a bright light on this issue.
When these economic development deals are announced anywhere in this state, there’s always lots of celebration and optimism about the companies’ growth plans. When asked how much it’s costing taxpayers, the state officials giving the public’s money away invariably guarantee that most of it will come back if the plans don’t pan out. But it doesn’t always work out that way when companies flame out in bankruptcy, or when the Mississippi Development Authority doesn’t do its job of holding companies accountable.
It’s one thing to try to work with a company when it’s asking for a little extra time to keep its promises. It’s another to just let the penalties ride.
In the case of Viking, there appears to be at least one year when MDA forgot to assess a $600,000 penalty against Middleby until the State Auditor’s office started a performance audit in 2017.
Maybe someone other than MDA should be in charge of the real-time monitoring of these economic development agreements. MDA has a history of using fuzzy math and being loosey-goosey in its accounting. Nor does it like to admit its failures. Who does?
Someone in state government, though, needs to be sure that the companies that receive public assistance live up to their commitments. And not just on the deals of a few million dollars but also on the megadeals of tens and hundreds of millions of dollars.
When the companies renege, the public has a right to know it as soon as it happens.