Blunt proposes Missouri Quality Jobs Act

Gov. Matt Blunt proposed the Missouri Quality Jobs Act March 16, calling it an aggressive way to attract and create new jobs in Missouri.
While there are many elements, the core concept is to establish a withholding tax incentive for state and local development officials to use in attracting and creating new jobs.
The program, which would be overseen by the Missouri Department of Economic Development, was filed as Senate Bill 545, sponsored by Sen. John Loudon, R-Ballwin.
Jessica Robinson, spokeswoman for Blunt, said the Missouri Quality Jobs Act is scheduled for a Senate hearing March 30. If it is later approved, the program would be effective Aug. 28.
Loudon’s bill, which mirrors Oklahoma’s Quality Jobs Program, is a preliminary version of the legislation, according to Paul Sloca, spokesman for the Missouri Department of Economic Development. Blunt’s revised version, he said, has not yet been filed.
“That bill is potentially the vehicle for the governor’s Missouri Quality Jobs Act, although in the legislative process, things can change,” Sloca said. “It’s a work in progress.”
Yet to be determined, Sloca said, are details such as the definition of “basic health insurance.”

Putting it to use
As senior vice president of economic development for the Springfield Area Chamber of Commerce, Greg Williams has reviewed Blunt’s proposal. He calls it a “refreshing idea” because it allows companies immediate access to withheld money.
“They could use those monies for business development or for incentive purposes, or they could generate a fund to acquire industrial property,” said Williams, who serves on the four-member executive committee of the Missouri Economic Development Council. “They could do anything they want with it, but it empowers communities at the local level, whereby the community would not be so reliant on state government to assist in their business development program. I think that’s a really refreshing idea.”
The need for the program was confirmed by “Moving Missouri to the Vanguard,” a study of the state’s economic development climate by Taimerica Management Co. Inc., in Mandeville, La. The MEDC commissioned the $100,000 study, half paid for by chambers of commerce and economic development organizations throughout the state, and half from the Department of Economic Development and the Hawthorn Foundation.
The report, Williams said, indicated Missouri should consider offering aggressive incentives like those offered by neighboring states.
“Missouri has been so married to the concept of providing tax credits which, in my opinion, are back-end-loaded incentives, meaning the state would offer company A $500,000 of investment tax credits to help that company offset its state income tax liability where in many, many cases the company is new to the state and doesn’t even have a tax liability in Missouri and probably won’t for three, four or five years,” Williams said. “There has been, for the last 20 years, no real upfront, or what I refer to as front-end-loaded, incentives for business.”
Williams hopes that as the act goes through revisions, language will be added to encourage retention of companies.
“We don’t want to see another Fasco or another Zenith or another Solo Cup,” he said.
The difficulty is determining which existing companies considered leaving Missouri but stayed. Sloca believes local economic developers can find those answers by talking with the right people in the company.
Sloca said that if the program is the success it’s expected to be, the legislature could reauthorize it to keep companies in the state.
Both Sloca and Williams feel that, even with the economy picking up, the Missouri Quality Jobs Act is still needed.
“(Prospective businesses) are kicking tires and looking at Springfield as a possible location. But they’re also looking at Knoxville, Tennessee … Oklahoma City, Tulsa and Wichita,” Williams said.
“Even as we see more activity and more jobs created, I ask the question, ‘How many jobs and how much capital investment have we not seen happen here in the state that we perhaps could have if we had effective front-end programs in place and ready to provide these businesses and industries?’”
The withholding taxes that would be retained by employers under the Missouri Quality Jobs Act wouldn’t create a void elsewhere, both Williams and Sloca agreed.
“By stimulating this kind of economic activity, this kind of incentive, when you’re creating new jobs you’re increasing what Missouri takes in through taxes,” Sloca said.
The payroll tax held by the companies is money the state never had in its hands, Williams said.
“There are still jobs created, there’s capital investment and multiplier effects for suppliers, and employee spending and so many other variables that benefit the state as a whole and benefit the communities locally by providing an incentive such as this, economic activity will be a result.”

Oklahoma’s success
The Missouri Quality Jobs Act is modeled after a similar program established in Oklahoma 11 years ago. In 2004, it was credited with establishing 16,334 new jobs, said Ron Frost, public relations manager with Oklahoma’s Commerce Marketing and Communications Division.
Since its inception, more than $245 million in wage rebates have been awarded in Oklahoma and 341 contracts have been issued in the program, according to the program’s 2004 performance report. Of those, 66 percent have gone to existing companies for expansion and 34 percent for start-ups and new locations. Fifty-six percent were awarded to companies in communities with more than 50,000 in population, and 44 percent were awarded in rural communities. Annual benefits are estimated at $264 million compared to a cost of $40 million, the report said.
Taimerica’s study identified 10 benchmark states for Missouri, including Oklahoma.