It was a composite of small town/rural life all over the south.
Pappy Lee O’Daniels was the Governor of Texas, the song You Are My Sunshine was written by someone in Louisiana, there was a town mentioned (can’t remember the name right now) that is in Oklahoma. It is my favorite movie of all times and my earliest memories were of the small east Texas town that my mother was from and the whole movie reminded me of Cleveland Texas in the 1940’s.
Hmm. I hadn't thought of it that way. I just remember it being set in Mississippi. Though you're right; the governor in the movie was based on a governor of Texas.
It was Jimmie Davis who wrote You Are My Sunshine. Also you neglected to mention the Tennessee Valley Authority, which was also part of the plot.