Executive Summary
Introduction
The PEER Committee authorized a program evaluation of the Mississippi State Port Authority (MSPA) in Gulfport, pursuant to the authority granted by MISS. CODE ANN. Section 5-3-57 et seq. (1972). The review sought to evaluate MSPA’s operations in terms of its business activity and financial performance.
Specifically, PEER sought to answer the question of whether the port has a volume of business activity sufficient to sustain port operations and improve the facility. PEER also sought to answer the question of whether the port has achieved a financial position that minimizes the amount of state support provided and maximizes its benefits to the citizens of the state.
Background
The Mississippi State Port Authority at Gulfport is a deep water seaport which leases its facilities and land to dockside gaming casinos, maritime industries, commercial fishing firms, and shipping companies. The port is strategically located in the Mississippi Sound approximately sixteen miles from the shipping lanes of the Gulf of Mexico and five nautical miles from the Gulf Coast Intercoastal Waterway.
MSPA is a "niche market" operation specializing in handling bulk, breakbulk, and containerized cargo. This cargo includes agricultural items, concrete items, frozen items (poultry and other meats), general cargo, ilmenite ore, limestone, lumber, manufactured items (paper, textile, wood, and other products), steel items (manufactured and scrap), and tropical fruits (bananas, pineapples, and other commodities). The port’s primary import and export markets are located in Central America, Asia, Europe, and South America, with an emerging North American market in Canada.
State law does not directly establish a specific mission for MSPA. However, according to MISS CODE ANN. Section 59-5-7 (1972), the public policy for state ownership and operation of a port is "for the benefit of the people of the State of Mississippi." MSPA recognizes this public responsibility and has developed a mission statement that emphasizes a self-sufficient, financially successful operation providing economic benefits to the state and its residents. To accomplish this mission, MSPA must successfully operate as an enterprise fund--i.e., a business enterprise that is self-sufficient. MSPA must meet its financial obligations while generating sufficient revenues, primarily through user charges, to fund port operations and infrastructure development.
Overview
The Mississippi State Port Authority, one of the smaller port facilities in the Gulf Coast region, competes with ports that handle more cargo and have better access to landside transportation systems of truck, rail, and other means. Given this environment, the state port competes by specializing in handling bulk, breakbulk, and containerized commodities that serve "niche markets" at competitive rates.
PEER’s earlier reviews of MSPA (1986 and 1990) found the state port in decline from an effective and financially self-sufficient operation entering the 1980s to an ineffective and financially dependent operation entering the 1990s. The result was a state-owned enterprise that relied heavily on state and local financial contributions to sustain its operations due to decreasing business activity in terms of handled tonnage.
Since 1989, MSPA’s efforts to increase throughput tonnage for established products and to diversify its product base have resulted in increased business activity, tripling the amount of cargo handled from 879,565 to 2,497,880 short tons. The increased tonnage has generated revenues that have grown from $2,834,255 in FY 1989 to $7,338,712 in FY 1998. Also, since the beginning of FY 1994, MSPA’s operating revenues have increased due to the revenue from casino property leases. These leases have generated total revenues of $35,970,651 from FY 1994 through FY 1998.
Harrison County continues to provide a direct tax subsidy to MSPA, averaging approximately $910,000 annually. Since FY 1992, MSPA has primarily used these funds to maintain and operate the port’s commercial small craft harbor, whose primary users are county residents.
The Mississippi Export Tax Credit Program, designed to generate new business activity and revenues for Mississippi’s ports, has essentially been a tax subsidy program that has reduced the amount of tax revenue remitted to the state by companies doing business through MSPA. Almost all tax credits originally authorized to bolster business have accrued to existing port customers, generating only minimal new business activity for MSPA. The state contributed $3,209,742 in tax credits granted in calendar years 1994 through 1997. Tax credits of $11,472 went to twenty-one new customers and $3,198,270 went to ninety-six existing port customers.
MSPA has successfully operated as an enterprise fund during the 1990s. The port’s increased business activity and successful financial performance during that period have decreased the need for state and local funds to supplement commercial port operations and have provided positive economic benefits to state citizens and businesses. In a 1995 economic impact study commissioned by MSPA, the estimated total direct economic impact of port operations was set at $529.9 million in personal income, business sales, local taxes, and state taxes (excluding any impact from casino revenue). Casino leases of port lands have significantly contributed to the port’s renewed vigor, but improved management of the commercial port operation deserves a fair share of credit for the port’s revitalized condition.