Surprise! Freely Given Away Taxpayer Money Attracts Criminals

As my colleague Christine Harbin mentioned yesterday, the Associated Press reported on Friday that the president of Hometown Innovation Team, a Cape Girardeau development company and recipient of $2 million in state tax money, pleaded guilty to passing bad checks about three years ago worth more than $90,000.

Of course, this news came out after the state awarded the company $2 million in state tax credits and other subsidies and after Gov. Jay Nixon traveled to Cape Girardeau to promote the project.

From the AP:

Nixon spokesman Sam Murphey said Friday that the governor’s office was unaware of Dickerson’s criminal probation before Nixon traveled to Cape Girardeau last week for the news conference with Dickerson and other local officials to announce the state aid. At the time, Nixon, a Democrat, described the project as “wonderful news for Cape Girardeau’s downtown and the overall economy of this region.”

I hope the governor isn’t surprised. Former felons are surprisingly frequently awarded state credits. And in Missouri, the state Department of Economic Development is known for mis-recording numbers provided by tax credit recipients (those mistakes result in an overstatement of a tax credit program’s success).

Even better for dishonest (or careless) individuals and companies, the department will correct a tax credit application (even working during the holidays) if you happen to substantially overstate the amount of money the state should pay you. After all, there’s no state law that specifically prohibits fraud in tax credit applications, right?

This lack of oversight will tend to attract individuals excited by the prospect of money that can be obtained by making promises — with little to no obligation to deliver on those promises.

This is the problem of government subsidy for “economic development.” Not only are such tax credits and other subsidies generally awarded to the least successful businesses, and not only are these subsidies usually extraordinarily bad at producing tangible benefits remotely worth the taxpayer cost, but if government officials aren’t even bothering to do the basic legwork it takes to discover whether an applicant has a record of fraud, how can tax credit programs be anything other than an excuse for press conferences to announce “jobs” that likely will never materialize?

From the Southeast Missourian:

Mayor Harry Rediger said he was not aware of Dickerson’s criminal past until earlier this week and that Dickerson had been upfront with city officials, telling them he had personal financial problems in the past.

“We knew earlier on that he had a previous bankruptcy. We did not know about a probation,” Rediger said Friday.

He had a bankruptcy? That wasn’t enough to spend a little more time and care reviewing the tax credit application? Is that type of past really the kind that should be glossed over when awarding state money?

Rediger continues:

“We are not really concerned about his past record. What we are concerned about is that he and his entity meet the state standards required to receive this funding.”

Of course. With such stalwart watchdogs over taxpayer money, who needs theft, waste, or corruption? I know I am not the only Missouri taxpayer upset that the state spends money so carelessly. When the legislature reconvenes in January, I hope that legislators consider the bad track record of state credits in general and the recent failings of Missouri’s administering of tax credits specifically.