Thomas Schweich
By Johnny Kampis
ST. LOUIS — Missouri’s Quality Jobs Program took another hit Monday.
A report from state Auditor Thomas Schweich gives the tax incentive measure a poor rating for overstating potential employment numbers, among other “significant weaknesses.”
Missouri Watchdog in June reported the program provided $51 million in corporate subsidies in 2011.
Schweich’s audit says the Missouri Department of Economic Development has approved projects anticipated to create 45,646 jobs, but the department’s latest annual report reduced the estimated jobs by 18,960 – a drop of 41 percent.
He gave the department a “poor” rating, the lowest possible score.
DED fails to verify the accuracy of reported data from businesses in the MQJ program, the audit report says. Schweich says the department did not set a timely deadline for corporations to submit an annual report, as legally required by the program.
“The amount of tax incentives reported to the legislature on the tax credit activity report are understated, and the DED does not ensure key project data entered in the tax credit system is accurate, reliable and complete,” Schweich wrote. “As a result of these deficiencies, the overall economic impact of the MQJ program cannot be accurately assessed.”
DED data shows 7,176 jobs have been created as of Dec. 31, 2011, with $1.1 billion in capital investments. The MQJ annual report says $4.93 billion is projected to be invested by the end of the projects’ benefit period.
The audit says at least one project in which new jobs were supposed to be created resulted in spin-off jobs from an existing company. Schweich said nine of 10 project files reviewed had limited or no documentation showing site visits from DED officials.
The DED declined to talk to Watchdog about the audit. In a written response included with Schweich’s report, the department said employment numbers represented companies’ estimates for a five-to-eight-year period. The DED notes that tax breaks are based not on those projections, but on the actual jobs created.
The department says Missouri has reaped a return of $3.26 in general tax revenues for each $1 in provided incentives, when factoring both created jobs and capital investments reported by MQJ participants.
The Missouri General Assembly created the program in 2005, largely to keep Express Scripts from leaving the St. Louis area.
Jay Nixon
It is one of only five programs nationwide that allows participating businesses to keep 100 percent of employees’ state taxes during the qualifying period.
Gov. Jay Nixon touted the state’s tax incentive program during a groundbreaking ceremony for a Ford supplier last week. LMV Automotive Systems will reap more than $5 million in such subsidies over the next decade to build a plant in the Kansas City suburb of Liberty, including $2 million through MQJ.
