Missouri may not be the biggest state spender on job subsidies, but it does have several tax credits whose costs have caused growing concern among state officials. In 2010 Gov. Jay Nixon announced the creation of the Tax Credit Review Commission, which issued a report recommending the elimination or reform of many programs.
This interest in reining in tax credits had been put aside earlier in 2010, when the Governor pushed the legislature to approve a ten-year, $150 million tax credit deal to encourage Ford Motor to maintain production at its assembly plant outside Kansas City (see below).
In 2011 there was an effort to get the state to approve a $360 million tax credit for Aerotropolis, a super cargo hub at Lambert–St. Louis International Airport. The move came in a special legislative session during which Gov. Nixon also proposed a new fund, which he would control, combining six subsidy programs. Both the Aerotropolis plan and Nixon’s proposal ended up being defeated.
An earlier tax credit reform effort in 2004 prompted the passage of the Tax Credit Accountability Act, which requires companies to verify their capital investments and jobs created. The Act followed a 2003 investigation of the Rebuilding Communities program which resulted in state and federal criminal charges against individuals who had applied for credits through fake companies. The Quality Jobs Program, created in 2005 with companies such as Express Scripts (see below) in mind, is also covered by the Accountability Act. But as a 2009 investigation by the St. Louis Post-Dispatch pointed out, participants in the Quality Jobs Program have a poor record of creating jobs of any kind. A 2012 state audit confirmed the findings. In 2013 the state combined several of subsidy programs, including the Quality Jobs, into one program called Missouri Works.
Missouri has a longstanding controversy over the local use of tax increment financing (TIF), especially in the suburbs of St. Louis, where TIF subsidies for developers have been criticized for undermining school funding and contributing to retail overbuilding and sprawl. Efforts to reform TIF have been repeatedly defeated by developer interests at the state legislature.
In January 2011, after three years of research, the East-West Gateway Council of Government released a report criticizing the overuse of TIF and other subsidies. The Council found that over 20 years $5.8 billion ($2.6 billion in TIF) went to subsidize private businesses, in many cases retailers. The report found that the subsidies served mainly to move jobs around and did not create economic growth.
Another local controversy in the state concerns the practice of officials in the Kansas City area of using subsidies to lure companies back and forth across the border between Missouri and Kansas. In April 2011, in an unprecedented response to the situation, 17 CEOs issued a letter to Missouri and Kansas authorities urging them to stop the self-defeating practice. Unfortunately, the border-jumping continues. In 2011, for instance, AMC Entertainment was given $40 million to move its headquarters (with 450 jobs) from downtown Kansas City, Missouri to an affluent suburb in nearby Kansas. Both states have started official talks to stop subsidizing relocated companies, but unfortunately there is no border-war truce yet.
Accountability Portal, created in 2007, provides data on multiple forms of government spending, including company-specific disclosure for three major subsidy programs we track.
Key Subsidy Programs
|Subsidy Program||Recent Annual Cost||Online Recipient Disclosure||Recipient Disclosure Score*||Job-Creation/Job-Quality Score**||Monitoring/Enforcement Score***|
Business Use Incentives for Large-scale Development (BUILD)
bond financing and refundable corporate income and other tax credits for firms which meet job creation, wage, and investment requirements
|$7.1 million (2009)||43/100||70/100||70/100|
New Jobs Training
workforce training subsidy funded through worker personal income tax withholding revenues; in2013 replaced by Missouri Works Training Program but has ongoing fiscal impact
|$8.5 million (CY2012)||
Quality Jobs Program
refundable corporate income tax credits linked to worker personal income tax withholding for businesses which meet job, wage, and heath benefit requirements; in 2013 replaced with Missouri Works but has ongoing fiscal impact
|$42.1 million (CY2012)||64/100||90/100||85/100|
State Supplemental Tax Increment Financing
a state-level TIF program in which companies are eligible for up to 50% of the increased amount of state sales or income taxes
|$10.9 million (CY2012)||
|0/100||not included||not included|
* The score is derived from the Good Jobs First report Show Us the Subsidized Jobs (January 2014).
** The score is derived from the Good Jobs First report Money for Something (December 2011).
*** The score is derived from the Good Jobs First report Money-Back Guarantees for Taxpayers (January 2012).
Major Subsidy Deals
Ford Motor (2010)
In late 2009, amid reports that Ford Motor might cut back production at its 4,000-worker assembly plant in the Kansas City suburb of Claycomo, state officials began discussing subsidies to encourage the automaker to locate a successor product line there. Legislation was introduced and had passed the House but not the Senate as the legislative session was coming to an end. In May 2010 Gov. Jay Nixon, who had become an advocate of a customized tax break for Ford, called a special session to deal with the issue. The plan that emerged called for a maximum of $150 million in corporate income tax credits spread over ten years, with the money coming from the state income taxes paid by workers at the plant.
Skeptics pointed out that in 2003 the state had given Ford a generous package to keep open a plant in the St. Louis suburb of Hazelwood, only to see the company shut it down three years later. The legislation was held up by Republican State Senator Chuck Purgason, who protested what he called the “insanity” of having government pick winners or losers in the marketplace. The logjam was broken after Purgason, who was seeking the Republican nomination for U.S. Senate, was removed as chair of the committee considering the legislation. The bill, which also made tax credits available to Ford’s suppliers, was signed into law by Gov. Nixon in July 2010. Six months later, Ford announced that it would spend $400 million to retool and upgrade the Claycomo plant, and in October 2011 the company said it would add a new manufacturing line for the F-150 pickup truck. (Key sources)
Express Scripts (2005, 2009, 2011)
In 2005 the pharmacy benefit management company Express Scripts set off a bidding war when it announced it was considering various states for its new headquarters with an expected 1,200 jobs. But the company's main goal may have been to maximize retention subsidies for staying in the St. Louis area. The company turned down what were reported to be higher offers from other states after Missouri legislators, reportedly with an eye on the Express Scripts competition, created new corporate tax breaks through the Quality Jobs Act.
Express Scripts decided to locate its new headquarters on the campus of the University of Missouri at St. Louis as part of a subsidy package worth about $20 million – $12.5 million from the state, and more than $8 million from St. Louis County in property tax abatements and sales tax exemptions on construction materials. When Express Scripts decided in 2009 to build a new drug distribution center, it created another bidding contest. The Missouri Development Finance Board promptly awarded the project $3 million in Build Missouri bonds. That plus another $4 million in financial assistance apparently persuaded the company to put the facility in north St. Louis County. In November 2010 the company asked the county for another $63 million in bond financing.
In December 2010 Express Scripts was awarded a ten-year, $6.2 million property tax abatement, $3 million in Quality Jobs tax credits and $1 million in BUILD subsidies for an expansion of its headquarters complex. (Key sources)
Wal-Mart in Missouri
- At least 23 Wal-Mart locations have received subsidies worth about $90.7 million in Missouri.
- At least 4 Wal-Mart locations in Missouri have challenged their property tax assessment.
- Many Wal-Mart workers are ineligible for health coverage from their employer or choose not to purchase what is available, because it is too expensive or too limited in scope. These workers often turn to taxpayer-funded health programs such as Medicaid. Missouri is among those states that have not disclosed data on the employers with the most workers or their dependents enrolled in such programs.
- Wal-Mart receives about $10.4 million a year from a state policy that allows retailers to keep a portion of the sales tax they collect from customers.
For more information, see the Missouri page of Wal-Mart Subsidy Watch.