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Columbia legislators want more details on Boeing incentive program

Tuesday, December 3, 2013 | 7:04 p.m. CST

JEFFERSON CITY — Columbia lawmakers disagree on what benefits mid-Missouri might see from a Boeing tax incentive program but agree that more details are needed and that legislators should proceed cautiously.

A special legislative session called by Gov. Jay Nixon convened Monday to discuss a proposed $150 million annual incentive program to bring Boeing's production of its new 777X airplane to Missouri. On Tuesday, a Senate panel advanced legislation to create a tax incentive program that could bring thousands of jobs to the state.

Rep. Chris Kelly, D-Columbia, said there are two incentives involved in the package. One is a training incentive that gives money primarily to community colleges to train the workers who will build the plane. The other incentive is a tax credit.

Because tax credits can be structured many different ways, Kelly said he wants to know exactly where the money is going before he chooses a position. 

"If the payments are made directly to Boeing instead of some subsidiary of Boeing, my inclination will be to be supportive," Kelly said. "I want to make sure there's nothing hidden in the weeds."

Kelly said the incentive package is important for Columbia's economy in two ways. 

"One of the things it can mean is subsidiary businesses," Kelly said. "This business will have lots of suppliers. The chance that we will be involved is pretty strong."

The largest economic impact to mid-Missouri, Kelly said, will be the generation of more electricity for the Boeing project.

"Whatever they're doing will take lots and lots of electricity," he said. "It's very important to build another nuclear plant or modular nuclear reactor at Fulton. The Callaway plant will be very important to Columbia and all of mid-Missouri." 

However, Rep. Stephen Webber, D-Columbia, saw a possible negative economic impact of the $150 million annual incentive program and said offering that much money to a single company may hurt Columbia. The Associated Press reported Tuesday that the potential incentives package could mean more than $1.7 billion in incentives over two decades.

"When you give over $1 billion in tax breaks to a specific corporation, you don't have enough money to fund schools," Webber said. 

Webber also noted that although some people estimate the Boeing contract could bring between 5,000 and 8,000 jobs to Missouri, the legislation only requires that it create 2,000 jobs.  

The proposed incentive program would take money out of the general revenue fund, in turn making it harder to fund the school foundation formula and MU, Webber said.

Boeing would receive tax credits only after meeting certain criteria, such as offering a net positive benefit to the state and creating a specified number of jobs.

Rep. Caleb Rowden, R-Columbia, said he was open to the governor's proposal, but he also said legislators will need to be careful of the language included in the bill.

"As quick as we're moving through this program, we just need to be careful," Rowden said. "We just all need to work extra hard to make sure the language is what we need it to be."


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Comments

Mark Foecking December 4, 2013 | 12:28 p.m.

Webber seems to feel that this $1250 million is some type of grant. It's not. It's a tax credit that offsets some of their state taxes during their startup period.

If Boeing doesn't come, we get nothing. If Boeing comes, even with the $150 million/year in credits, the net result may be more funding for schools, not less, due to the increased economic activity of a major manufacturer paying high wages.

Boeing is in a position to ask for concessions. It's a market like anything else. It's not like 50 years ago when investors built factories everywhere.

DK

(Report Comment)
Ellis Smith December 4, 2013 | 1:41 p.m.

I agree with Mark.

Additionally, because Boeing already has significant presences in BOTH Missouri and Kansas, Boeing may ultimately opt to put no further facilities in EITHER of those two states. Has anyone considered that?

If you have worked for one or more major domestic manufacturing corporations (as I have), no explanation is needed, but suffice to say there are potential downsides to such a firm concentrating too many facilities in a single state.

Boeing's Wichita operations in Kansas reach back to World War II. Their situation in St. Louis came about differently: the firm Boeing absorbed there began primarily as an aerospace defense contractor and had a significant role in NASA's space program.

At one time this St. Louis precurser had at least six (6) vice presidents who were MS&T graduates; one of them, a Ceramic Engineer, was my laboratory partner in Physical Chemistry at our campus. (His cousin, who graduated in Civil Engineering the same year we did, heads a highly successful national construction firm and is one of the wealthier residents in the St. Louis metro area.)

(Report Comment)

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