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State and Local Government / Transparency

If You Build a Good Business Environment, They Will Come

By Caitlin Hartsell on Apr 6, 2010

The Missouri Department of Economic Development has requested $343,697,083 for the 2011 fiscal year, which is equivalent to the combined total of requests from the Departments of Agriculture, Conservation, and Labor and Industrial Relations.

Some line items in the Department of Economic Development’s budget:

Expenditure FY 09 FY 10 Governor recommends ’11
Marketing $3,344,842 $4,414,229 $4,399,229
Sales $1,355,887 $1,535,333 $1,519,337
Finance $977,815 $1,194,556 $1,194,556

The stated purpose of this department is:

The Business and Community Services Division consists of the Missouri Economic Research and Information Center (MERIC), Marketing, Sales, Finance, and Compliance Teams. The division promotes Missouri as a great place to do business and helps create an environment that will stimulate jobs and new private investment. Other services include various programs aimed at investing in Missouri’s communities to allow for future sustainable growth and to increase opportunities for new local and state revenues.

The keys to Missouri’s recovery from the current economic recession are: 1) job creation and new capital investment through the retention and expansion of existing Missouri companies and the recruitment of new job opportunities; 2) the development of a skilled, motivated, and productive workforce; 3) support for the development of innovative and high tech next generation industries; and 4) leveraging state and federal funds for community development.

This department’s function is in line with suggestions floated in a St. Louis Post-Dispatch article series last week, titled “Can St. Louis compete? Time to act is now.” The first two points in the last article of the series were about attracting young, educated people to live in Saint Louis. It focused both on those who come here for school and those who have left to go to school elsewhere. The article suggested a publicity tour of sorts that would herald Saint Louis’ good characteristics to other cities, and might entice people to live here.

Attracting educated young people does not take a publicity campaign. Young people will come to Saint Louis — and stay here — if there are jobs. Jobs will come to Saint Louis if the area provides a good business environment, with low taxes and amenable employment structures. Show-Me Institute scholars have suggested policies that would make create a more business-friendly economic climate, like eliminating the earnings taxes in Saint Louis and Kansas City, or eliminating the income tax statewide. Respectively, eliminating those taxes would entail a 1- or 6-percent raise to employees — income that can then be spent on goods and services. Lowering tax rates in general (rather than targeting lower rates through the use of distortionary tax credits) would help attract businesses and jobs, and subsequently young educated people. (One additional benefit of lower tax rates is that it would not be necessary to fund million-dollar publicity programs.)

The publicity campaign has it backwards, attempting to bring young people to Saint Louis in order to attract more business. Bring the business and jobs to Saint Louis, and young people will want to stay.

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About the author

Caitlin Hartsell

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