April 13, 2012

At Least We Are Transparent About Our Cronyism In Missouri!

The Pew Center on the States has published a review of the transparency of state tax incentive programs. Some Missouri legislators, of course, are big fans of tax credits — the Missouri government issued about $500 million last year, and during the 2011 legislative session, some legislators pushed very hard for legislation to create nearly another $400 million in tax credits.

Perhaps because these handouts consume so much of our state budget, our government does pay some attention to where the money is going. As such, Missouri ranked high as one of the states that is “leading the way” in the Pew Center’s study.

While tax credit transparency is a laudable goal, it has accomplished little. Many of our state politicians call for tax credit reform, and then support tax credit programs soon thereafter. Consider Missouri Gov. Jay Nixon, who made news last year when he told journalists that it was time for tax credit reform. And yet later that year, he urged legislators to pass expansive tax credit legislation.

Our state may have a somewhat transparent tax credit system, but taxpayer dollars continue to be misused. Just last week, Missouri Journal reported that Brown Shoe received $2.4 million in jobs training tax credits this year — and is laying off 132 workers. Missouri Journal has also reported that Ford Motor Co. received $1.85 million in job training tax incentives, despite plans to lay off more than 1,000 Missouri workers temporarily. This would have been surprising, if it had not happened before: Despite issuing many of its employees pink slips, Liberty Mutual remained eligible for job creation tax credits.

And, regular Show-Me Daily readers certainly are familiar with the state-level reviews of tax credits with a 2010 audit report that found that the state Department of Economic Development had inflated some job creation numbers associated with tax credit awards, and another 2010 state audit report that found that tax credits are more expensive than advertised. The Governor’s Tax Credit Review Commission report had all kinds of strong recommendations for tax credit reform, but those have, perhaps predictably, not been implemented.

I wonder, if Missouri is considered to be “leading the way,” what is going on in states that Pew considers to be “trailing behind”? It seems we have all kinds of accountability problems with our tax credit programs.  Sadly, transparency seems to have given our politicians enough information to provide tough talk about reform, but not the gumption to implement it.

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