|The Not-So-Special Session: Lessons Learned From a Public Policy Viewpoint|
|By Andrew B. Wilson|
|Tuesday, October 25, 2011|
Talk about laying an egg! Missouri lawmakers are going home at the end of the 50-day special session of the legislature with little to show for their exertions.
While that is not the worst of all possible outcomes, it represents a failure of leadership on multiple levels. Missouri Gov. Jay Nixon should not have called the session. Leaders of the Missouri House and Senate are equally to blame. They should have made it clear to the governor that he would be wasting their time – and, more importantly, taxpayers’ money. In fact, they wrote a public letter to the governor requesting that he call a special session.
Just as Missouri Sen. John T. Lamping (R-Dist. 24) predicted at a public event at the Show-Me Institute on Tues., Oct. 4, the special session has foundered on the vain hope of a grand compromise between two fundamentally-opposed viewpoints — with leading figures in the Senate wanting to make major reductions in Missouri’s sprawling and out-of-control tax credit programs . . . and House leaders prepared to extend hundreds of millions of dollars in new tax credits to support a “Midwest China hub” or “Aerotropolis” at Lambert-St. Louis International Airport.
In Lamping’s analysis, there was never any real possibility that Aerotropolis subsidies could win legislative approval on a standalone basis. They were therefore tied to deep cuts in other programs — including tax credits for low-income housing and historic buildings, with strong support from special interests of their own. Hence the deadlock.
What, then, are the lessons learned from this inconclusive and not-so-special session of the legislature?
While Sen. Lamping may be right about the tactical reasons for the impasse in the legislature, I would point to a deeper underlying cause. Simply put, the China hub had a big credibility problem. No one — even the supporters — seemed to believe the extravagant promises that were made on its behalf.
St. Louis Regional Chamber and Growth Association (RCGA) claimed that $360 million in tax credits and other subsidies for Aerotropolis would create tens of thousands of new jobs and generate nearly $34 billion in economic activity over a 20-year period — paying back the original investment in taxpayers’ money more than 100 times over.
But did anyone believe that? It is a tell-tale sign of weakness that some of the strongest supporters of Aerotropolis subsidies framed their arguments almost as if they were buying a ticket for Powerball. While freely admitting to considerable skepticism about whether “Missouri can or will pull off the China hub deal,” they insisted that it was worth taking a shot anyway — given a huge potential payout.
President Barack Obama, it may be noted, has used similar language in talking about placing “bets” and being prepared to “double down” in spending on clean energy, electric cars and other politically favored enterprises or industries.
Sorry, Gov. Nixon and Mr. President, but few taxpayers these days like the idea of political leaders playing hunches with hundreds of millions or even billions of tax dollars. To the contrary, more and more people are inclined to blame excessive government spending and interference in the marketplace for the sorry state of the economy.
Over the past few years, policy analysts at the Show-Me Institute have cited numerous instances, in St. Louis, Kansas City and other places around the state, where targeted tax credits have failed to produce promised economic results. The list includes failed shopping centers, the stalled “Ballpark Village” in downtown St. Louis, and other economic wonders that turned sour. And this is a lengthening list as we have seen recently with other tax-favored enterprises defaulting on debts in Moberly (Mamtek) and in Kirksville (Wi-Fi Sensors).
When the legislature reconvenes in January, let us hope that our lawmakers realize their own limitations when it comes to picking winners and losers. That is a task best left to the marketplace. The government may have a role in creating infrastructure that can be used by anyone, but targeted tax abatements are a form of corporate welfare — favoring one group of businesses over others.
In 2012, the governor and the legislature should conduct a thorough reexamination of the state’s 61 different tax credit programs, with the objective of channeling the savings from those that are terminated to all Missourians – through permanent reductions in taxation.
Andrew Wilson is a resident fellow and senior writer at the Show-Me Institute, which promotes market solutions for Missouri Public Policy.