The Missouri General Assembly has finally adjourned its special session without creating $360 million in new tax credit programs. This is great news for Missouri taxpayers.
Proponents of the so-called “Aerotropolis” tax credits argued that they would primarily help subsidize warehouse construction and facility construction in order to encourage increased international trade. Don’t get me wrong, I support increased trade. After all, that is one of the best ways to grow an economy.
But, the bulk of the Aerotropolis tax credits didn’t seem to be directed at that admirable goal. My colleagues and I were early and passionate critics of portions of the legislation that didn’t appear to make much sense from a public policy standpoint.
We wondered: Why was the state considering subsidizing warehouse construction in the St. Louis area if more than 18 million square feet of vacant warehouse space was already available? Why did versions of the legislation give the mayor of Saint Louis City and area county executives the power to restrict who could receive hundreds of millions in tax benefits? Why were the construction tax credits in some cases limited to individuals and companies who owned more than 100 acres of land? Where was a substantive cost-benefit analysis?
It didn’t help that proponents of the tax credits cited conflicting, and seemingly overblown, job estimate numbers. Missourians should consider those types of estimates with skepticism. Missouri Gov. Jay Nixon made similar promises last year, when he visited Moberly to announce the creation of more than 600 jobs. The state and local governments promised public support for the development. Unfortunately, in recent weeks we have learned that the jobs have failed to materialize and the city of Moberly may be on the hook for millions in bond payments.
It bears repeating: Tax credits have a poor track record for success.
Frankly, I find it incredible that so much political effort (and taxpayer money) was spent on trying to tack a new form of corporate welfare onto attempts to implement tax credit reform. The legislature is aware that reform is needed; Nixon’s own Tax Credit Review Commission recommended cuts and sunsets to many of Missouri’s tax credit programs. Indeed, several legislators were actually part of that commission. And yet, here we are, having spent more than a month and more than $280,000.
Imagine what could have been accomplished if legislators had spent that much time and effort on accomplishing something substantive. Our state may face a large budget shortfall next fiscal year, and may have to make tough budgetary decisions as federal “budget stabilization” dollars run out. Or, what if the legislature had worked harder on passing more sweeping education reform? School choice continues to be limited to St. Louis City and Kansas City, though certainly students in Columbia and Springfield deserve the ability to choose quality schools just as much as students in urban areas.
Hopefully, the Missouri Legislature will spend less time on corporate welfare during 2012, and more time fixing the state’s worst problems.
Because of cases like Moberly; the seemingly political provisions of the Aerotropolis legislation; and the general poor performance of tax credits, we will continue to comb through similar proposals. We will continue to argue against legislative proposals that will harm Missouri taxpayers. And, we will work to propose market-based solutions to Missouri’s pressing public policy problems.