Holden suggests changes to tax credit plans

Monday, December 8, 2003

JEFFERSON CITY, Mo. (AP) -- Gov. Bob Holden has sent ideas to a legislative committee for improving the state's tax credit program, including requiring more data from businesses applying for credits and ensuring that promised jobs are created.

Holden had ordered a review of all oversight procedures for tax credit programs run by the Department of Economic Development and has urged legislators to repeal the Rebuilding Communities program, which the attorney general's office is investigating for possible fraud.

A similar proposal was included in legislation that failed earlier this year, and Holden is again pushing for changes. Under that bill, several programs would have been replaced by a new small business tax credit that had more job creation requirements.

"The ongoing investigation by the attorney general's office into a potential act of fraud against the state should serve as a wake-up call for legislative action," Holden wrote.

The Legislature's Joint Committee on Tax Policy planned to meet Monday afternoon to begin drafting a plan to improve tax credit accountability.

The Rebuilding Communities program is intended to attract high-tech companies to poor areas. It applies to businesses with fewer than 100 employees that locate in "distressed communities" -- a fairly broad distinction that includes the entire city of St. Louis, 179 other Missouri towns and certain neighborhoods in scores of other cities.

The program returned 19 cents for each $1 in tax credits last fiscal year, according to a department analysis.

The St. Louis Post-Dispatch reported last month that a dozen companies got $2 million worth of tax credits in the last three years by claiming to have bought millions of dollars worth of equipment, much of it from a used computer store in St. Louis. Most of the businesses are closed and never provided jobs.

Holden's recommendations to the committee, which is evaluating the state's 54 tax credit programs, included:

-- Businesses should provide basic information such as project location and should permit inspections of their buildings and finances.

-- The state should have authority to revoke tax credits when businesses don't create jobs or submit false information.

-- The public should have access to the addresses, contact people and types of businesses receiving tax credits.

In addition, Holden said, all programs should be reviewed to determine if they are generating a public benefit.

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