The DED Gets Audited . . . Hilarity Does Not Ensue (Part 2)
When the Missouri state auditor’s office released it audit of the Department of Economic Development’s (DED) Division of Business and Community Services (BCS), problems with the Mamtek deal was not the only item of interest it found. The findings also showed that the state could have saved money if it prevented companies from claiming project costs under more than one program.
According to the audit, “the state issued tax credits totaling over $134 million related to project costs included in the basis of more than one tax credit program during the 11 years ended June 30, 2011.”
The Show-Me Institute is no stranger to criticizing the state’s economic development tax credit system. This report reinforces the notion that the state needs to take a new direction to ensure economic growth. Instead of picking winners and losers through the tax code, the state should make the overall economic environment more favorable for all businesses.
If the state eliminated the corporate income tax and made up for the lost income by capping or eliminating economic development tax credit programs, not only would the state benefit economically, but the it would cut down on the type of double-counting mentioned in the audit.
When one discovers government waste, it is natural to immediately call for tighter controls and more oversight. That is why politicians always say they will cut “waste, fraud, and abuse” when talking about cutting spending. It is a position unlikely to cost votes. However, no matter how tight the controls, it is impossible to guarantee that something will not slip through the cracks. That is why, if non-essential programs are eliminated, such as development tax credits, problems like the one found in the audit are less likely to occur.