Economic incentives

Sunday, July 15, 2007

Economic-development incentives play an enormous role in the expansion of Missouri's business and industrial base.

Thanks to tax credits and other programs offered in recent years, the state's employment has grown and tax revenue has exceeded projections.

Nonetheless, excessive programs that provide incentives beyond the scope of a prudent and affordable program are unacceptable.

And for that reason Gov. Matt Blunt recently vetoed this year's major economic-development legislation, House Bill 327.

He has already met with legislative leaders in an effort to get a consensus on a reasonable and effective bill that could be adopted in a special session.

The governor's major concern about HB 327 was it's cost. In his budget message at the start of the year, Blunt called for a package of incentives that would cost $50 million to $70 million.

What the legislature adopted was a program with cost estimates in excess of $200 million, a figure Blunt believes is fiscally irresponsible.

In addition, HB 327 included language that would have given tax incentives to businesses that paid below-average wages and did not provide health insurance.

That, the governor said in a telephone conference call with newspaper editorial writers last week, was not the intent of any economic-development program he could support.

Other concerns listed by Blunt in his veto message included authorization for the creation of regional railroad authorities that would give some eminent domain and taxing powers to unelected officials.

And another problem with HB 327 was language that conflicted with Senate Bill 30, which he has signed, regarding local sales-tax exemptions for energy sources used in manufacturing. SB 30 grants the local exemptions, while HB 327 did not.

This raised a serious concern for both Cape Girardeau and Cape Girardeau County, which estimated they could lose hundreds of thousands of dollars in sales-tax revenue if HB 327's provisions prevailed.

What's needed now is for legislative leaders to work as expediently as possible to come to an understanding with the governor on an affordable economic-development package that continues to boost business development while protecting the workers who will take advantage of new jobs.

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