JEFFERSON CITY, Mo. (AP) — A university economist cast doubt Monday on whether Missouri's job-creation incentives actually result in more jobs, though lobbyists for two of the state's largest companies assured lawmakers that the tax breaks had helped them expand.
The Missouri Quality Jobs program, created under a 2005 law, provides tax breaks to businesses that add jobs with wages that at least meet the local average and offer health benefits. It functions as an entitlement to businesses — triggered in some cases by as few as 10 additional jobs — and has rapidly grown to become the state's main job-creation incentive.
Through the first 10 months of last year, the department had authorized 68 business projects to receive more than $90 million in tax credits — a record annual amount — based on projections by those businesses that they would create more than 6,400 new jobs.
But many of those jobs may not actually be new to the overall economy, said Howard Wall, director of the Institute for the Study of Economics and the Environment at Lindenwood University in St. Charles.
"At best, it will just be a waste of money, because most of the activity in terms of jobs will just be a reshuffling," Wall told the House Government Oversight and Accountability Committee, which began investigating Missouri's business incentives after the financial failure of an artificial sweetener facility in Moberly in 2011.
Wall, a former vice president and regional economics adviser at the Federal Reserve Bank in St. Louis, said many of the anticipated jobs never materialize, others would have been created regardless of the tax incentives, and the addition of jobs at one business often occurs at the expense of another business.
Wall's research concluded that a $1 million tax credit under the Quality Jobs program results in a temporary increase in jobs in the businesses' home county but a loss of jobs in neighboring counties.
"These policies are completely inefficient," he said. "They tend to produce little or no extra employment, or even end up harming the level of employment in a state or a county."
But lobbyists for Monsanto and Express Scripts — both based in the St. Louis area — defended the Quality Jobs program as a key reason the companies decided to expand in Missouri.
Express Scripts received authorization in 2009 for up to $2.7 million tax credits with an expectation of creating 180 jobs as part of an expansion. Department figures show the company has far exceeded that job threshold, adding 459 jobs as of last fall.
To abolish the Quality Jobs program "would be devastating to the state of Missouri," said lobbyist Brian Grace, who represents both Express Scripts and the Missouri Economic Development Council, a nonprofit association of local economic development officials.
Express Scripts often is cited as one of the successes of the Quality Jobs program. But state figures show that many other companies have yet to achieve their job projections. For example, companies approved for the program between 2006 and 2010 had created less than one-third of their total anticipated jobs as of November 2012, according to department figures.
But those figures can be misleading because of a lag time in annual reporting requirements, said Tricia Workman, a lobbyist for Monsanto and the St. Louis Regional Chamber and Growth Association.
The department's figures as of last November show that Monsanto had created 394 of the 500 anticipated jobs under a 2007 project authorized under the Quality Jobs program. But Workman said that Monsanto had added 650 jobs as of Monday — far exceeding the projections.
The Quality Jobs program was one of the main reasons Monsanto chose to expand its research facilities in St. Louis County as opposed to Iowa or other states under consideration, Workman said.
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