Guest Editorial: City should consider tax incentives to lure needed manufacturers

Boone County’s precipitous fall from 45th to 130th in a national economic ranking is alarming.

Lagging wage growth and lack of economic diversification have taken a stealthy but steady toll on our region’s quality of life. The poverty rate is up; construction spending is down; and high-wage employers are increasingly scarce.

Columbia Business Times editor David Reed reported on Dec. 2 that growth in number of jobs and per-worker earnings define economic strength.

But with a vast expansion of retail employment, Columbia and Boone County are growing wage earners while shrinking earned wages. Economist William Fruth partly blames local governments for failing to attract manufacturers and other high-wage employers with the right mix of tax incentives.

Our local politicians have generally opted for transportation development districts (tdd), a “user pays” approach that requires few, if any, up-front government outlays.

Critics debate whether tdds—best suited to large retail enterprises—offer the average person any real long-term benefits, noting that these development-based incentives increase sales taxes in exchange for creating low-wage jobs.

With federal cutbacks and tax reduction pressures, local governments commonly lament that stretched finances discourage the more direct incentives likely to lure non-retail employers, e.g. property tax breaks and Chapter 100 industrial bonds.

But in Boone County, multimillion-dollar city and county office space expansions belie that argument.

Local officials have also labeled tax incentives “bribery,” decrying their potential for “looting the public coffers.”

In an October 2005 Columbia Tribune editorial, then Columbia Public Schools (cps) board member Kerry Crist called Regional Economic Development Inc. (redi) efforts to push tax breaks “surprising and upsetting,” warning that without good taxpayer-funded schools, high-paying employers won’t come to town.

But Boone County has had great schools for years, so by Crist’s argument, the dearth of high-paying employers must have other causes.

Writing about recent county incentives extended to Analytical Bio-Chemistry Laboratories, Tribune editor Hank Waters said, “economic development promoters simply give up any semblance of maintaining rational controls, arguing they must outbid the next community to keep companies like abc Labs at home.”

But local officials apply that same argument—the need to outbid the next community—when they push through a 20 percent raise in the school superintendent’s salary package or a quarter-million-dollar boost for a football coach, increases some critics also term “irrational.”
In her editorial, Crist complimented “companies such as State Farm Insurance that have refused to ask for tax breaks.”

Maybe they should have.

In recent years, Boone County has rewarded State Farm, Square D and 3M—high-paying employers all—with massive property tax increases they all appealed.

Their appeals denied by the Board of Equalization—a.k.a. the Boone County commission and the tax assessor—all three firms went to the Missouri State Tax Commission, where a hearing officer cut Square D’s assessment by over two thirds and State Farm’s assessment by about half. In those cases, the county further appealed, with mixed results for State Farm but a fully sustained reduction for Square D.

Though 3M’s status could not be determined, county assessor Tom Schauwecker publicly chided them at their first hearing. “3M has been an outstanding corporate citizen, but obviously things have changed,” he said.

The lesson seems to be that it’s better to ask for tax incentives up front than fight county government—and public insults—through several appeals, even if you’re a high-wage employer with a history of conscientious corporate citizenship (3M and State Farm are well-known cps Partners in Education).

Real bridges between our schools, our community and the future of our citizens must lead to better economic opportunities. We need well-paid citizens to buy goods and services and support our quality of life.
If Columbia and Boone County really want to boost retail sales while helping the local economy, average people, schools, children, teachers, and even—yes—business owners, honoring the back-to-school sales tax holiday—just once—would be a step in the right direction.