Continuing Mixed Messages on Targeted Tax Credits

I’ve discussed previously that, although Gov. Jay Nixon likes to talk tough about tax credits, he frequently demonstrates support for these programs in his actions.

Over the holiday weekend, while the commission that he appointed was wrapping up its recommendations for targeted tax credit reform, the governor handed out some more. From an article in the Houston Herald:

Nixon was in Mountain Grove to announce Missouri has awarded $305,907 in Enhanced Enterprise Zone (EEZ) tax credits to 3G Processing, the company that will process food waste into animal feed. It is completely renovating a former steel plant and purchasing new equipment for its facility.

I happened to miss this because I was in Wisconsin for the weekend. Thankfully, though, a regular Show-Me Daily reader alerted me to the event by email.

This particular tax credit program has been shown to fail to deliver on promised results. In a report issued in September 2010, the Missouri state auditor studied 19 businesses authorized for Enterprise Zone Tax Credits (EZTC) and Enhanced Enterprise Zone Tax Credits (EEZTC), and found that the actual jobs created were 6.1 percent fewer than proposed in 2007, and actual investment was 29.5 percent less than proposed.

Despite the program’s lack of success in producing the desired outcome, the Tax Credit Review Commission recommended expansions — not limitations — to the Enhanced Enterprise Zone tax credit program in its final report to the governor. It recommends amending the program to include a discretionary option for up-front financing, and it also recommends expanding the definition of distressed communities to expand eligibility. Because this particular program is underperforming, expanding it will make Missourians worse off.