U.S. Secretary of Transportation Rodney Slater had a solution to a problem that had vexed President Bill Clinton since he served as governor of Arkansas. Clinton had tried for years to form an organization that would deal with the unique problems found in the Mississippi River Delta Region.
The region touches parts of at least seven states — Arkansas, Illinois, Kentucky, Louisiana, Mississippi, Missouri, and Tennessee. It is one of the most impoverished regions in the country with limited economic and educational opportunities. Public infrastructure and other problems are issues, too.
Slater knew all too well about poverty in the Delta. He grew up in Lee County in Arkansas picking cotton and peaches to supplement his family’s income. He went to law school, worked as an assistant attorney general in Arkansas, was appointed to the prestigious state Highway Commission, and was so well liked by both parties, he was nominated and confirmed as the U.S. Secretary of Transportation during the Clinton Administration.
In that last role, Slater had a conversation with U.S. Sen. Richard Shelby, R-Ala., and Shelby told him if the Black Belt in his home state — a stretch of central Alabama that has many similar demographic and geographic metrics — could be included, he would bring bipartisan support to form what would later be called the Delta Regional Authority (DRA).
Clinton wanted the deal but was a little skeptical at first, Slater recently told members of the Mississippi Delta Grassroots Caucus.
“He asked me ‘Are you sure that’s all he wants? If that’s true, we can do that,’” Slater recalled.
A deal was struck, and in 2000 the DRA was born. It wasn’t funded until 2002, however. The DRA makes strategic investments of federal appropriations into the physical and human infrastructure of Delta communities. Through the States’ Economic Development Assistance Program, these investments help to improve transportation and basic public infrastructure and to strengthen workforce development systems and local business environments, according to DRA. The program had $12 million in it in 2018 along with another $975 million in other public and private sector dollars.
DRA’s core mission is job creation and economic development through innovative approaches to growing local and regional leadership, increasing access to quality healthcare, and boosting opportunities for entrepreneurs to obtain affordable capital, DRA Federal Co-Chairman Chris Caldwell told Talk Business & Politics.
The organization has directly doled hundreds of millions of dollars toward partner projects throughout the region, but the economic impact is in the billions of dollars, Caldwell said. Those projects vary from infrastructure improvements, providing educational opportunities, providing healthcare, and creating new and better paying jobs.
“It’s about jobs … everything we do is about jobs,” he said. “I think the DRA is in a really strong position right now.”
One key member of Congress, former U.S. Sen. Blanche Lincoln, D-Ark., remembers how many long years it took to get DRA formed. She started working on it while a member of the U.S. House in the 1990s, and it continued after the Helena native became the youngest woman ever elected to serve in the U.S. Senate.
“I was extremely passionate about it, having grown up in the Delta and seeing all of the needs, but also watching what was happening in Washington with places like the Appalachian Region Commission and the Denali Commission, where there were resources really targeted to areas that had high poverty, high infant mortality rates, and a whole host of other things,” Lincoln said. “It just made so much sense for us to develop and create the Delta Regional Authority.”
While she was in the House, she worked closely with the late U.S. Sen. Thad Cochran, R-Mississippi, and U.S. Rep. Bill Emerson, R-Missouri. They started with things they agreed on and worked their way out from there, Lincoln said. Cochran played a key role in getting it funded, but there were times when Lincoln thought all their work may have been for nothing.
“I remember the last year we were working on some of that, and he said, ‘Oh my God, I don’t know if I can hang in here any longer.’ I said ‘Thad, I swear, if you just hang in a little bit longer, I promise you I’ll do the legwork. It’s been meaningful. I think one of the most meaningful things that most people don’t realize is that we are a donor state in many ways. We send a lot of tax dollars to Washington and being able to get them back is critical.’”
Since it began, DRA has directly invested $211 million from 2002 to 2018. There have been an estimated 1,239 projects and about 60,000 jobs created or maintained. Almost 54,000 people have received some type of training and more than 400,000 Delta families have been impacted by the DRA’s efforts. Lincoln noted there have been at least 262 DRA projects in Arkansas alone.
Finding enough skilled labor has become one of the top problems in the DRA coverage area, Caldwell said. Electricians, plumbers, machinists, welders, and others can earn a high income and there is a shortage of those workers, he said.
Population flight is a common problem throughout the area, as well, he said. As the populations dwindle in small towns, it has a snowball impact on the local infrastructure. Fewer taxes are collected, meaning less maintenance is performed on systems such as water or sewer, and it causes those systems to degrade even faster. And then it costs even more to repair and replace them, Caldwell noted.
Poor infrastructure can ultimately lead to job losses, which accelerate the community’s decay. Those infrastructure problems can also stunt new job growth.
One way to stave off this problem is to merge systems. For example, if two nearby towns operate independent water systems, those towns might be encouraged to merge their systems and share costs. This can improve the lives of residents in both communities and save money.
“We see a lot of examples where systems can be merged,” he said.
THE OPPORTUNITY ZONES
Caldwell thinks that one recently passed tax change could really be a “magic bullet” for many communities in the Delta and Black Belt regions. It’s the new Opportunity Zones.
Opportunity Zones were created by the federal government over a year ago and announced last year. Arkansas has 85 Opportunity Zones, which are economically distressed U.S. Census Bureau tracts where investors can benefit from temporary tax deferrals for capital gains, a step-up basis for capital gains invested, or a permanent exclusion from taxable income of capital gains from the sale or exchange of an investment in a qualified opportunity zone fund if the investment is held for at least 10 years.
To qualify for investments in Opportunity Zones, a qualified “opportunity fund” must be created as an investment vehicle organized as a corporation or partnership with the specific purpose of investing in Opportunity Zone assets. The fund must hold at least 90% of its assets in qualifying property.
State officials said two key defining characteristics of the zones are if 40% of the low income census tract is above the poverty line or if only 80% of the average household wage is below the state or national average wage.
“We need to prioritize opportunity zones … I think they’re a great vehicle for capital investments in the Delta,” he added.