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   GUEST OPINION
  
 Filed 10/6/03

STATE LAW REQUIRES REFORM OF

HARRISON COUNTY DEVELOPMENT COMMISSION POLICIES

By
C. Paige Gutierrez and Richard Bennett
Commissioners, Harrison County Development Commission

            We write this article to make the public aware of recent attorney general's opinions and related laws regarding the Harrison County Development Commission and the Board of Supervisors. 

We are two of the twelve Commissioners of the Harrison County Development Commission.  Richard Bennett was appointed by Supervisor Marlin Ladner; Paige Gutierrez was appointed by Supervisor Connie Rockco.  We joined the Commission three-and-a-half years ago. 

As Commissioners charged with oversight, we discovered on-going problems in the practices and procedures of the agency.  We asked the attorney general's office for guidance.  The attorney general's response to us became the basis of five motions made on August 29, 2003, by Supervisors Connie Rockco and Marlin Ladner, detailed below.

The Sun-Herald reported that these five motions to reform certain practices of HCDC failed by a vote of 3 to 2.  But the Sun-Herald failed to report the crucial point that three of these proposed reforms are flatly required by state law, and the other two are needed to conform to the spirit of state law.  

These reforms are important because they require increased openness and accountability on the part of the Harrison County Development Commission, and they reduce the chance for conflict-of-interest by HCDC staff. 

            Here is a summary of proposed reforms and state law in support of them:

Proposed Reform # 1:  The Board of Supervisors shall appoint the Executive Director of the HCDC and set his salary by contract.

The Attorney General of Mississippi in his official Opinion dated July 9, 2003, referring to the Harrison County Development Commission, stated:  "Section 59-9-15 [of the Mississippi Code of 1972] authorizes the Board of Supervisors to appoint the director.”  Currently only the Development Commission hires the Executive Director and sets his salary, which is funded in its entirety by taxpayers.  HCDC Executive Director Michael Olivier makes $160,000 a year, plus a $600-a-month car allowance, plus gas, plus various other benefits, making him the highest paid employee of Harrison County and one of the highest paid public employees in the state, without review of his contract by the Board of Supervisors, as required by law.

Proposed Reform #2:  All HCDC capital expenditures and proposals to employ professional and technical assistance that exceed the sum of $25,000.00 shall require prior approval by the Board of Supervisors. 

Mississippi Code of 1972, Section 59-9-27 (2) referring specifically to the Harrison County Development Commission, states, “any capital expenditure or proposal to employ professional and technical assistance which exceeds the sum of Twenty-five Thousand Dollars ($25,000.00) shall not be undertaken except upon approval by the board of supervisors by appropriate order spread upon its minutes.”  Approval of the budget is not sufficient to satisfy this law.  In his Opinion of April 24, 1986 to Supervisor Bobby Eleuterius, the Mississippi Attorney General stated that, although routine operations of the Commission do not require Board of Supervisors’ approval, there are several exceptions to this general practice, and the Attorney General said, “For example,  [Mississippi Code of 1972 Section] 59-9-27 (2) requires prior approval by the board of supervisors for certain capital expenditures or proposals to employ professional and technical assistance for sums in excess of $25,000.00.” 

Clearly this state purchasing law requires the Board of Supervisors to approve all such contracts, including large contracts for legal, accounting, engineering and other services.  Yet, the Development Commission hires professionals without the Board of Supervisors voting on contracts, even though payments to some of these professional firms exceed $25,000.00 during the fiscal year.   Hiring a professional firm by the hour does not comply with this law when it is clear from the annual Development Commission budget that total payment will exceed $25,000.00. 

A month after Supervisors declined to adopt this measure, the Development Commission itself voted, on September 30, 2003, upon the advice of its own attorney, to submit all professional contracts exceeding $25,000.00 to the Board of Supervisors for their approval.  As of this writing the majority of the Board of Supervisors remains on record as opposing this procedure by a vote of 3 to 2.  HCDC is currently in the process of selecting a law firm and an accounting firm and recently voted to re-hire an engineering firm, all of which suggests that this matter again should be before the Board of Supervisors. 

Proposed Reform # 3:  In order to make sure the people of Harrison County actually receive the promises made by companies getting tax exemptions, the Board of Supervisors shall require applicants for tax exemptions to appear at public hearings before an exemption is granted and shall require annual public hearings thereafter on the status of all exempt properties. 

If at any time the Board finds that promised investment did not occur, promised jobs do not exist, or the business has ceased operations, the Board should terminate the exemption.  Mississippi Code of 1972, Section 27-31-111 states that if at any time there is a cessation of operations for a continuous period of twelve months or more, all unexpired tax exemptions “for that particular plant shall become void…”.  If the Board of Supervisors learns that there is a misstatement or misrepresentation of fact upon which an exemption was based, Mississippi Code of 1972, Section 27-31-113 states that “it shall be the duty of the…board of supervisors to cancel such exemption.” 

Unless there are annual hearings or audits on the status of each exemption, how will the Supervisors ever learn whether jobs or investment have been produced as stated in the applications for each exemption?  Commissioners do not receive documented, sworn reports or data of any sort to show that companies are living up to their promises.  Such reporting is required in a growing number of jurisdictions throughout the nation, yet after repeated requests for proof of performance, we have received only a summary list of existing tax exemptions by company name with no proof of new jobs or promised wage rates.  We believe it is our duty to follow up on tax exemptions, to make sure that promised net jobs and pay level are produced.

Proposed Reform # 4:  The Board of Supervisors shall require HCDC’s millions in surplus funds (other than restricted bond funds) to be re-budgeted for HCDC’s operating budget for next year and for other county needs, as required by state law. 

Although all five Supervisors voted to enforce the law that requires HCDC’s surplus to be used to fund next year’s HCDC operating budget, three of them balked at requiring the remaining non-bond surplus to go back into the county general fund to be re-budgeted for county priorities. 

This surplus money has not been “saved” or “earned” by the Development Commission, and it is not a result of frugality by the Development Commission. This money comes from sales and leases of public land previously bought by the taxpayers of Harrison County for industrial parks.  HCDC should have to explain to the people at annual budget hearings why any future capital project it wants should have priority over all other County needs.  If a project is truly a priority, surely the people and the Board of Supervisors will support it. 

This conservative approach to budgeting is required by state law.   Mississippi’s Attorney General, in his Opinion to us dated July 9, 2003, affirmed his Opinion to Bobby Eleuterius written fifteen years ago (April 24, 1986), where the Attorney General stated that, “any funds the Commission has on hand at the close of the fiscal year must be applied to the extent necessary to fund the succeeding year’s budget.”  In that same Opinion, the Attorney General stated further:

The Harrison County Board of Supervisors is the final authority with regard to the annual budget of the Harrison County Development Commission.  The Commission may make long range plans and prepare its budget and expenditure recommendations accordingly.  Nevertheless, such recommendations remain subject to the approval of the board of supervisors and the annual budgeting process.

The Attorney General also says in his opinion to Bobby Eleuterius (1986) that "the dictates of public policy do not encourage the intentional massing of public monies in excess of what is required to accomplish authorized public purposes."

Proposed Reform # 5:  The Board of Supervisors shall adopt a policy prohibiting the Executive Director of the HCDC from receiving consultation fees or other compensation from private businesses and from other public agencies. 

Alternatively, the Board should at least adopt a policy requiring periodic reporting of consulting fees and other compensation, in order for the Board and the public to determine whether there are any conflicts of interest.  Although these restrictions may not be specifically required by law, these policies would promote good, conservative government and help avoid conflicts of interest.  The State Ethics Commission in its Opinion dated August 8, 2003, confirmed that the adoption of such policies would serve the declaration of public policy of the state Ethics in Government law found in Mississippi Code of 1972, Section 25-4-101, which states:

The legislature declares that elective and public office and employment is a public trust, and any effort to realize personal gain through official conduct, other than as provided by law, or as a natural consequence of the employment of position, is a violation of that trust.  Therefore, public servants shall endeavor to pursue a course of conduct which will not raise suspicion among the public that they are likely to be engaged in acts that are in violation of this trust and which will not reflect unfavorably upon the state and local governments.

The Executive Director is a full-time public servant with a public salary of $160,000.00 per year, but he engages in economic development consulting work on the side. He does not disclose to the Commission, the public or the Board of Supervisors the sources of his private consulting fees or the nature and scope of his outside employment.  HCDC should require full disclosure of its employees' outside consulting and ban any consulting that could result in conflict of interest or neglect of HCDC duties.

We urge Supervisors to reconsider the motions made by Supervisors Ladner and Rockco to follow state law and to create good public policy.  As one of the poorest states in the nation, we can afford no less than the highest level of efficiency and integrity in government.

Previous Opinion Column on the Harrison County Development Commission...Harrison County Development Commission Needs Reform 


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