Mo. bill makes governor sign off on big incentives

Mo. legislation would make governor sign off on business incentives of more than $1M

Associated Press

JEFFERSON CITY, Mo. (AP) -- A Missouri lawmaker who has been critical of the state's job-creation enticements wants to put the governor in a high-risk, high-reward scenario when awarding seven-figure incentives for businesses to expand their payrolls.

Legislation filed Friday by Republican Rep. Jay Barnes would require Gov. Jay Nixon to personally sign off on all discretionary tax incentives of more than $1 million. If the projects succeed, the Democratic governor could enjoy the glory. If they fail, the governor would share some blame.

Barnes has dubbed his proposal the "Buck Stops Here Economic Development Tax Credit Reform" act.

In addition to putting the governor in the spotlight, the legislation would consolidate several existing business incentives into one new program that would give the Department of Economic Development and governor greater discretion in determining how much money to award to businesses.

"Creating that system of accountability, where any governor has to put his name at stake with an award, improves the system," said Barnes, of Jefferson City.

A spokesman for Nixon had no immediate comment Friday about the legislation.

Missouri's main job-creation program currently functions as an entitlement for employers who add a minimum number of jobs — ranging from 10 to 100, depending on the type of business — that pay at least average wages and cover at least half the employees' health insurance premiums. The incentives are paid only after a business creates the jobs.

The Missouri Quality Jobs program authorized $578 million in incentives to create a projected 47,000 jobs from the program's inception in 2005 through last October, according to records provided Friday to The Associated Press by the Department of Economic Development. Some of those jobs never panned out, and some businesses still have more time to make good on their projections. Through October, the state had paid out $116 million of incentives for 13,000 jobs.

Barnes' legislation would keep the framework of the Quality Jobs program by basing future incentives on the number of jobs created — or retained — that meet certain thresholds for wages and health insurance benefits. The amount of money businesses would be entitled to receive would be smaller than under the current program, but Barnes said the department would gain discretion to award applicants twice as much as is currently possible.

One of the factors department officials would have to consider in awarding enhanced benefits is the likelihood that a business would create the jobs or make a capital investment even without the state incentives. Whether there is competition to lure the businesses elsewhere also would have to be considered.

Barnes is chairman of the House Government Oversight and Accountability Committee, which began investigating Missouri's business incentives after the financial failure of an artificial sweetener facility in Moberly in 2011.

Nixon had said at a July 2010 news conference that Mamtek U.S. could eventually create more than 600 jobs at the Moberly site. But the company collapsed financially before construction was completed, causing Moberly to default on a $39 million bond issuance for the facility. The state had authorized $17 million of incentives but never paid them because the failure occurred before the company met the criteria for the incentives.

"The problem with the current system is there's no way for the department to stop an award on a project they know, or should know, is going to fail," Barnes said Friday.

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Incentive bill is HB620.

Online:

House: http://www.house.mo.gov

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Follow David A. Lieb at http://www.twitter.com/DavidALieb

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