TAX NEWS - 2010

Missouri Tax: Missouri needs to approve tax incentives to help Ford's Claycomo plant

Keeping good-paying auto manufacturing jobs in Missouri helps workers, families, businesses and school districts where plants are located.

The benefits are hefty enough to warrant support for a bill that Gov. Jay Nixon wants lawmakers to pass in a special session starting Thursday.

It's not an easy call. Missouri is strapped for cash, and calls to rein in the state's many tax credit programs are clearly justifiable.

But Missouri also needs to sharpen its economic development tools to compete with other states for good jobs. The legislature largely failed to do that in its regular session.

Nixon wants lawmakers to authorize incentives of up to $15 million a year for automakers and suppliers who make a firm commitment to upgrade plants and hire workers. Approved companies would retain withholding taxes that otherwise would go to the state.

The impetus for the legislation is the situation at Ford Motor Co.'s Claycomo plant. The automaker is moving production of the Ford Escape/Mercury Mariner SUV to Louisville, and has not yet committed to manufacturing a new product line at Claycomo.

Nixon and others note that Kentucky offered Ford incentives to move the product line out of Missouri, and other states are competing fiercely for auto manufacturing jobs. The Claycomo plant employs nearly 4,000 people.

The governor proposes paying for the incentives package by requiring new state employees to start contributing 4 percent of their salaries to the state retirement plan.

It's wise to require a new source of revenue to offset the tax break. But this proposal, too, is a tough call.

As the Missouri Budget Project has pointed out, the average salary for Missouri state workers is $14,000 below the national average. The low pay makes it difficult to attract and retain talented workers.

Yet, state and local governments must be looking at ways to control skyrocketing pension costs. Requiring employees to contribute to the plan is common in the private sector, and starting with new employees is the fairest way to go.

A good summer project for lawmakers would be a task force to look at the many tax credits and recommend changes.

But the Claycomo situation requires quicker action. Missouri and the Kansas City region can't afford to lose hundreds of good-paying jobs. The incentive program proposed by Nixon appears to have built-in accountability. Lawmakers should pass it.