In January, a Post-Dispatch story put a spotlight on a bill under consideration by the Missouri Legislature that would have issued $125 million in tax credits to help spur investments in rural communities.
After comments by Gov. Eric Greitens during his State of the State address, blasting Missouri’s “rigged system” of tax credits, the proposal fizzled.
An investigative report by The Pew Charitable Trusts, published Thursday, took a wider look at rural-jobs tax credits and found that several states that evaluated similar programs found they “failed to deliver promised jobs and tax revenue.”
That hasn’t stopped lobbyists from pushing the programs. Rural jobs bills were proposed in 10 other states this year. Last week, Utah Gov. Gary Herbert, a Republican, signed one into law.
Reporter Jen Fifield wrote:
In rural communities across the country, jobs are disappearing and people are moving away, driving a desperation that helped elect Donald Trump president.
But as state lawmakers look for ways to bring life to these long-struggling areas, many are falling prey to a complex economic development approach, pushed hard by investment firms that stand to benefit, that has failed to live up to its promises.
The programs are so complex, and the promises so appealing, that states typically don’t take a close look at them until it’s too late, according to 10 economists and policy analysts who have studied them. Many critics, such as Steven Miller, senior vice president of the Nevada Policy Research Institute, call the programs “schemes.” Miller says he expects a public backlash once they “have gone belly up and taxpayer dollars have been used for private benefit.”
The “Show Me Rural Jobs Act” would have been the state’s third go-round in 20 years with a type of tax credit that subsidizes investments in a fund that makes loans to or investments in businesses.
A common thread to these programs — in Missouri and other states — is that the laws are set up with narrow eligibility rules, giving a major advantage to a handful of investment firms that help design and promote the bills.
Perhaps the biggest player – the company which lobbied the state for the rural jobs program – is Advantage Capital Partners, with offices in Clayton and New Orleans. An Advantage principal declined to comment for our story.
Neither Advantage nor the other major investment firms talked to Fifield, either.
A second story in the Pew investigation is scheduled to be published soon.