Missouri Gov. Nixon wants $200 million for small businesses

Thursday, April 16, 2009 | 3:37 p.m. CDT; updated 9:40 p.m. CDT, Thursday, April 16, 2009

JEFFERSON CITY — Gov. Jay Nixon is proposing to use $200 million from the federal stimulus package to provide incentives for businesses to expand in Missouri.

But the Democratic governor's latest economic development proposal already is facing some legislative skepticism.

House Budget Committee Chairman Allen Icet outlined a budget proposal Thursday that would provide money for just half of Nixon's proposed business incentive pool. His legislative counterpart, Senate Appropriations Committee Chairman Gary Nodler, said the plan sounds like a "slush fund" for the Department of Economic Development.

Nixon's proposal is unique in at least a couple of ways, partly because it would use federal money to bolster Missouri's competition with other states for new jobs.

The plan also does not rely on the state's existing tax credit programs. Instead, it would use a budget bill to establish a $100 million pool of money for new or expanding companies and an additional $100 million pool to invest in small businesses and emerging technology companies.

Icet, R-Wildwood, is proposing to fund only the first of those two pools of money.

Nixon spokesman Scott Holste described the plan as a way of "priming the pump to make more capital available for job investment."

"This one-time infusion of funds could give Missouri a competitive advantage to attract and retain high-paying jobs, particularly those in emerging technologies," Holste said.

But Nodler, R-Joplin, who said he had been briefed in detail on the plan, expressed concern about using the budget to authorize "unidentified, huge blocks of funds for indiscriminate use."

"Things that look like slush funds are not things I have historically supported in any department," Nodler said.

As proposed by Nixon's administration, no project could receive more than $10 million from the $100 million pool for new or expanding businesses. Companies would have to pledge to create at least 100 jobs within five years, with a projected positive affect on state tax revenues.

The amount that any company could receive would depend partly on the salaries and benefits paid by the employer, with a maximum of up to $50,000 per job. The money could be provided as forgivable loans through several other methods.

Nixon's administration estimated the pool of money could help create about 4,000 jobs, based on an average incentive of just over $25,000 per job.

The second proposed pool of money, which Icet did not include in his budget bill, would be used to make loans or direct investments in companies that commercialize "unique technologies" and are poised to create high-paying jobs. That fund would be limited to providing up to $5 million per project.

Nixon's proposals will be competing with scores of other potential uses for the federal money, ranging from state building projects to police radio systems to increased state subsidies for social service providers.

All told, Icet has proposed about $1.8 billion of spending based on the "budget stabilization" portion of the federal stimulus package, which is intended to help states shore up their budgets. The House is proposing to allot a majority of that money separately from the state's main operating budget.

Earlier this week, the Senate approved an operating budget that incorporates $943 million of federal money from the stimulus package for various state programs and services.

The House and Senate must reconcile their differences and pass a final version of the budget by May 8.

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