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APRIL 1, 2009
Missouri Economic Development Bill - The Good, the Bad and the Ugly
Last night, the Missouri Senate continued their debate on the State's major economic development programs. The legislation under discussion has many attractive features that would provide Missouri with better tools to compete in attracting and retaining businesses, but there are also provisions that could cripple Missouri's ability to offer effective incentive packages to companies looking to locate and grow in the State.
While last night's bill was tabled, major provisions still under consideration are as follows:
| Good For Economic Growth |
Negative to Business Growth and Expansion
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| - Increases Quality Jobs Program to $120m; Eliminates the per-company cap on high technology businesses and high impact projects |
- Requires all tax credits to be annually authorized by the Legislature and subject to the appropriations process
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- Increases Missouri BUILD
to $15m |
- No packaging of tax credits into a competitive incentive plan |
| - Creates $5m New Angel Tax Credit Program |
- Sunsets all tax credit programs |
- Restores R&D Tax Credit
- Expands the New Markets Tax Credit to $25m
- Doubles the Small Business Incubator Tax Credit to $1m
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- Dramatically reduces the Historic Preservation Tax Credit |
The good provisions of the bill would strengthen Missouri's portfolio of incentives to companies and help small business and entrepreneurial growth. The Missouri Quality Jobs and Missouri BUILD are Missouri's most successful job creation and retention tools, and increasing these programs will provide more opportunities for the State to assist in economic growth. The Angel Tax Credit - one of the ingredients in the RCGA's "Grow Me State" initiative to close Missouri's capital formation gap, the New Markets Tax Credit, and the Small Business Incubator tax credit can be used to support small business growth and provide needed capital to entrepreneurs. The Angel Tax Credit is already used with to great success in Kansas, Oklahoma, Iowa and 15 other states.
The bad provisions of the bill would lead to a "chilling effect" on the State's economic development efforts (learn more from the RCGAdvocate - Special Issue Brief). The annual authorization and appropriation of economic development tax credits would create great uncertainty for economic development prospects and customers as to whether a program would even exist, when companies are ready to expand. In addition, annual authorizations would give legislators the power to "instantly sunset" a the program by zeroing-out the next fiscal year's authorization. This would take Missouri's economic development incentives from proven and predictable "return on investment" tools to a helter skelter, hodge podge of uncertain bureaucratic programs.
With regard to "packaging" multiple tax credits to make an economic development deal competitive, most economic deals across the country use incentives from multiple sources and programs (examples of how incentive packages are used). For Missouri to end "layering" of tax credit programs would handcuff the State's ability to offer an appropriate incentive package suited to the needs of each prospect.
Missouri's Historic Preservation Tax Credit program -- the most successful such program in the country -- has leveraged billions of dollars in private investment in St. Louis' center city and older neighborhoods and downtowns throughout the region and State (in FY 2008, 337 Historic Preservation projects leveraged $700 million in private investments). Drastic reductions to this program would greatly diminish this activity and leave buildings vacant in urban areas and Main Streets throughout the region.
In these challenging economic times, the RCGA urges the Missouri Senate to pass a strong economic development bill as soon as possible. The level of competition between states for jobs is hotter than ever, and Missouri cannot "unilaterally disarm". Please make sure that our legislators know how important this bill is for ensuring economic growth. Contact your Senator today to make your voice known. To find your Senator please click here and type in your zip code in the Legislator Look up section. |
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| Focus on Illinois: U.S. Senator Dick Durbin Speaks on Stimulus Bill at RCGA on April 17
Assistant Senate Majority Leader Richard Durbin (D-Illinois) will kick-off the 2009 RCGA Public Policy Council Speaker Series at a luncheon for RCGA members on Friday, April 17 from 11:30 a.m. to 1:15 p.m. Senator Durbin will address critical issues facing the Congress, his relationship with the new President and the opportunities for the St. Louis region from the American Recovery and Reinvestment Act.
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Senate Assistant Majority Leader Richard Durbin (D-Illinois)
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To register for the luncheon go to www.stlrcga.org/events by April 15th. The cost is $20 for RCGA members and $40 for non-members. For more information contact Sherri Bailey at PPAdmin@stlrcga.org or (314) 444-1134.
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STAR Bonds Legislation Needed for University Town Center Retail-Entertainment Project
RCGA Board Member Bruce Holland, President and CEO of Holland Construction Services, unveiled a $1 billion, 900-acre retail and entertainment project in Glen Carbon, called University Town Center. The development's new restaurants, retail stores, performing arts and entertainment sites would generate $15.5 million in state income taxes during its 5-year construction phase. Local school districts would receive more than $9.5 million in property tax revenue when the project is completed.
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| The Plan for the University Town Center in Glen Carbon (source: Belleville News Democrat) |
To assist with financing of this bold project, legislation to create STAR bonds in Illinois has been introduced in the General Assembly. STAR bonds would capture the new local and state sales tax generated by a project to help pay for infrastructure costs. STAR bonds have been used successfully in Kansas to build the Kansas Motor Speedway and entertainment district in Wyandotte County and several other retail and tourism projects across the State. Senator James Clayborne (D-Belleville) is sponsoring SB 1909 , which would enable the State to issue bonds that would be repaid entirely from the sales and transient guest tax revenues generated by a project within a defined geographic district. The project must have a projected capital investment of at least $300 million, produce at least $300 million of annual gross revenues and create at least 1,000 new jobs. The City of Glen Carbon would need to approve the boundaries of the University Town Center's STAR District and the Illinois Department of Commerce and Economic Opportunity would verify the economic impact numbers.
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| Bruce Holland, President and CEO of Holland Construction Services |
Senator James Clayborne (D-Belleville) |
The STAR Bonds legislation unanimously passed the Senate Executive Committee last week and awaits final action by the Senate. The RCGA supports the STAR bonds legislation as a new economic development tool for major retail development, and congratulates Bruce Holland on this ambitious project for Southwestern Illinois.
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The RCGAdvocate is published periodically to inform RCGA members and government officials about important public policy matters at the state, federal and local levels. It seeks to provide timely, in-depth coverage on regional issues, and, at times, to call RCGA members to action. We welcome your comments and suggestions.
Richard C.D. Fleming ~ President & CEO ~ (314) 444-1100 ~ dfleming@stlrcga.org
Chip Casteel ~ Senior V.P. of Public Policy ~ (314) 444-1107 ~ ccasteel@stlrcga.org
Susan Stauder ~ V.P. of Infrastructure & Public Policy ~ (314) 444-1155 ~ sstauder@stlrcga.org
Eric Schneider ~ Senior Director of Public Policy Research ~ (314) 444-1148 ~ eschneider@stlrcga.org
Kevin Riggs ~ Director of Illinois Government Affairs ~ (314) 444-1108 ~ kriggs@stlrcga.org
Christine Snively ~ Project Manager ~ (314) 444-1144 ~ csnively@stlrcga.org
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