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Mo. officials spar over job-creation tax breaks

Mo. officials spar over job-creation tax breaks

January 9th, 2012 in News


Associated Press

JEFFERSON CITY, Mo. (AP) - Missouri Gov. Jay Nixon rolled out his latest job-creation proposals Monday, even as some lawmakers questioned his economic development officials about whether the state's existing business incentives have been a failure.

Nixon traveled to northwest Missouri to outline his plans to lure more automobile parts suppliers to the state, pump money into science and technology startups and subsidize on-the-job training for military veterans. Meanwhile at the Capitol in Jefferson City, some Republican lawmakers engaged in a testy exchange with members of Nixon's administration over whether the state's primary job-creation program is failing.

Jobs are likely to be a key part of Nixon's State of the State address Jan. 17, as well as a central theme of the 2012 campaign for everything from the presidency and governorship down to state legislative races.

Missouri's unemployment rate has declined from a peak of 9.7 percent in January 2010 to 8.2 percent last November, and Nixon has emphasized that Missouri's international exports have risen significantly. But some lawmakers question whether job-creation tax breaks have been effective.

State figures for the Quality Jobs program show that businesses projected they would create 23,145 jobs through a total of 91 projects approved to receive at least $1 million each in state incentives over the past six years. So far, those businesses have reported creating 5,873 jobs - one-fourth the amount they projected. Included on that list are some business ventures that have failed, such as Mamtek U.S. Inc., which had been touted by Nixon to create up to 612 jobs at an artificial sweetener factory in Moberly. Although no state incentives ever were paid, the city said it will default on $39 million of bonds issued for the facility after Mamtek missed its payment, laid off employees and halted work on the plant last fall.

During a hearing Monday of the House Interim Committee on Government Oversight and Accountability, Republican Reps. Jay Barnes and Mark Parkinson pressed economic development officials to acknowledge that Mamtek - or some of the other projects reporting zero new jobs - were failures.

But department officials refused to utter the words. Instead, Business and Community Services Division Director Sallie Hemenway and department General Counsel Chris Pieper stressed that some businesses that have not reported any new jobs still could do so before their deadline to receive state aid. They also noted that no state incentives are paid under the Quality Jobs program until a business meets a minimum threshold for new jobs, which varies from 10 to 100 depending on the type of project.

Frustrated by their response, Barnes implored: "It's OK to say Mamtek is a failure."

Piper responded that "Mamtek did not turn out as anyone would have anticipated."

Some lawmakers came to the department's defense.

"If the taxpayers only put money in when the job is created, I'm having problems understanding how that's characterized as failure" if the business doesn't create the jobs anticipated, said Rep. Chris Kelly, D-Columbia.

Nixon, a Democrat who is up for re-election this year, has preferred not to dwell on Mamtek's demise. During a special session last fall, he instead pushed for a variety of new business incentives. Many of the proposals failed to win passage. But Nixon did sign into law a measure allowing state revenues to be budgeted for grants to science and technology companies. Although that measure faces a court challenge, Nixon said Monday that he will recommend $4 million for the new program in next year's budget.

As part of an initiative he dubbed "Missouri Works," Nixon also proposed to expand incentives for suppliers to the state's automobile manufacturing plants and to subsidize half the salary for military veterans for up to 26 weeks of on-the-job training in private-sector workplaces. He also proposed creating an international exports coordinator position in the Missouri Department of Agriculture and financing the opening of export offices in China, southeast Asia and South America.

"My top priority for 2012 is to create jobs to get Missourians working and keep our economy moving forward," Nixon said in a news release.

The governor said he would provide more details about his economic development strategies during his State of the State address.