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WHAT OTHERS SAY: Nixon, Schweich should take lead in fixing tax credit system

Monday, July 9, 2012 | 7:31 p.m. CDT

Three years ago, the Post-Dispatch's Virginia Young exposed the truth about the state's top job-recruitment tool. As Gov. Jay Nixon, a Democrat, and the Republican-led legislature were trying to raise the cap on how much money the state would commit to the economic development program known as Quality Jobs, Ms. Young pointed out that the numbers in the program, which always has had bipartisan support, were inflated.

Ridiculously inflated.

The program, started under Gov. Matt Blunt, a Republican, and expanded under Mr. Nixon's watch, is popular with governors and lawmakers alike because it allows them to lure corporations with the promise that the businesses can keep withholding taxes they otherwise would pay to the state, as long as they promise good-paying jobs.

And boy, do they promise. The problem is that the jobs promised are rarely produced. In 2009, the Post-Dispatch reported the program had produced about 10 percent of the jobs promised — 2,373 jobs out of the more than 22,000 promised.

Last week, Missouri State Auditor Tom Schweich released an audit that confirmed that nothing has changed.

The audit found that since 2005, the Department of Economic Development had approved projects it estimated would create more than 45,000 jobs. Only about 7,000 jobs have materialized.

The state hasn't paid for jobs that haven't been produced. The program's design allows tax incentives to be earned only when jobs actually are produced. But, as Mr. Schweich's audit pointed out, the program offers little serious oversight, so the public has little confidence the money paid out is tied to real jobs.

Mr. Blunt and Mr. Nixon capitalized on the program by flying around the state to appear with CEOs for ribbon-cutting ceremonies where new jobs were announced. When the jobs didn't show up, the governors didn't show up either. It's good politics, but it's bad government.

Under Mr. Nixon, the program took a further hit because of a couple of high-profile flops, most notably the proposed Mamtek artificial sweetener factory in Moberly. The failure left Moberly on the hook for millions of dollars in government bond payments.

The state got out clean. No state money actually was spent on Mamtek, even though politicians in both parties had touted it as a big success even before a shovel-full of dirt had been turned. Try selling that as consolation in Moberly.

The problem is while Missouri's government is spinning its wheels on these hokey deals, not much else in the way of economic development is happening. It's time to try something different.

Mr. Schweich suggested changes to the Quality Jobs program, including streamlining the calculations of incentives, providing better oversight and adding an expiration date (known as a sunset clause) to the tax credit so the Legislature can revisit the issue of whether the program is working.

These are good ideas. We would go one step further.

Mr. Schweich and Mr. Nixon should join forces in demanding bipartisan reform of Missouri's broken tax credit system once and for all.

In 2010, Mr. Nixon took the lead on that issue, following years of debate in the Missouri Senate, by appointing a Tax Credit Review Commission. The commission worked hard. It recommended eliminating many of the state's tax credits, streamlining those that are used for economic development, capping others and sunsetting all of them.

Lawmakers, primarily in the House, have blocked efforts at such reform. But there is growing bipartisan consensus that the hodgepodge of Missouri tax credit programs, which reduce the amount of revenue available for the state budget, needs to be reined in.

Were it not for tax credit programs, about $700 million more each year would be available for education, health care, social services and roads. Like Quality Jobs, many of the other tax credit programs offer inflated promises and small rewards. Others have grown unrestrained, creating big profits for politically-connected developers.

Missouri's top economic development program should be to improve its schools, both K-12 and higher education, and invest in its crumbling infrastructure. But that can't and won't happen until government leaders fix the broken budget's No. 1 problem: tax credits.

There is a chance that after the elections on Nov. 6, Mr. Nixon and Mr. Schweich will be the senior leaders of their two political parties heading into the next legislative session. They should stand together for Missouri. They should demand that Democrats and Republicans in the Legislature commit to saving hundreds of millions of dollars by fixing the state's broken and outdated tax credit system.

Mr. Schweich's Quality Jobs audit indicts the system, not the governor. He should continue to shine the light on Missouri's wasteful tax credits by sharing the data about which programs are working and which aren't. And Mr. Nixon should renew his call for complete tax credit reform and make it a centerpiece of his plans for a second term.

The fix is easy. What is lacking is political will.

Copyright St. Louis Post-Dispatch. Reprinted with permission. Questions? Contact Opinion editor Elizabeth Conner.


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