Kinder: Blunt would do St. Louis - and Missouri - a great service by signing HB 327
The following op-ed from Lt. Gov. Peter Kinder will appear in this week’s print edition of the St. Louis Business Journal.
Gov. Matt Blunt would do the St. Louis area and the entire state of Missouri a great service by signing HB 327, the 2007 Economic Development Bill, which some critics have been urging him to veto.
The bill would extend and expand the Missouri Quality Jobs Program, the landmark legislation that in two short years has proved to be precisely what the Governor himself called it in his 2007 State of the State address – “the most important economic development tool we have ever had.”
It also would create a tax credit for land assembly in distressed areas, a feature that has received considerable misleading attention in the St. Louis media. The reality is that this credit would bring hope to portions of the St. Louis area that have been largely hopeless for half a century or more. And it would do the same in other depressed areas of our state.
Both initiatives are under attack from legislators inclined to view all tax breaks as bad. Such formulaic thinking flies in the face of the facts.
The Quality Jobs Program is artfully constructed to provide tax credits only after new jobs are in place. The state is never, therefore, betting on the come. It is, instead, rewarding companies after the fact for creating jobs featuring above-average wages and health insurance.
Since its inception in 2005, this program has helped cinch some of the biggest economic development projects in the St. Louis area, including Express Scripts’ move to North County, Pfizer’s expansion at Chesterfield, and Chrysler’s potentially $1 billion expansion at Fenton. In fact, between September 2005 and February 2007, 19 companies in the St. Louis area alone used the program to create 100 or more jobs each. More than a dozen other companies in every corner of the state have done the same.
This success, however, has created a problem. The $12 million in credits provided under the 2005 legislation are expended. The bill on the governor’s desk would provide for $30 million more. With studies showing that each dollar of incentives creates $3.18 in new state tax dollars, the money would clearly be well spent.
So too would the incentives provided under the Distressed Areas Land Assemblage Tax Credit.
One reason distressed urban areas have proved so difficult to redevelop over the decades has been a complete lack of interest from major developers. Because of the crazy quilt of land ownership, acquiring large, useable tracts would require not only Confucian-style patience, but the extraordinary expense of carrying property cost on their books for a long period of time.
In recent years, small developers have, to their great credit, produced progress in several under-invested neighborhoods. But real, sustainable progress requires development of scale, which in turn requires large developers.
These developers are not going to work, however, in a field where they can’t make an adequate return. Something must be done to lower their interest and land acquisition costs so they can reasonably choose work in a distressed area rather than a suburban greenfield.
More than 50 years of bitter experience shows us how the present system “works.” It doesn’t. It’s a disaster. If Gov. Blunt will sign HB 327, he’ll give us a fighting chance at success.
Peter Kinder is the Lieutenant Governor of Missouri.