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Pair of Reports Delivered to Missouri Gov Outline Strategies for Economic Growth

December 08, 2010

Two economic development reports, one outlining strategic initiatives to transform the state's economy and the other making recommendations for reforming the state's tax programs, were delivered last week to Gov. Jay Nixon. The governor's Strategic Initiative for Economic Growth, launched in May, submitted initial job-creation proposals focused in the areas of advanced manufacturing, energy solutions, bioscience, health science and service, information technology, financial and professional services and transportation and logistics. Meanwhile, a 27-member commission established by the governor to review the state's tax incentive programs suggested eliminating 28 tax credit programs, including the film tax credit, which they say should be replaced with a new angel tax credit program to address the financial gap serving as an obstacle to growing new businesses.

Developing a science and technology/innovation fund is one of three policy recommendations presented in the initial report by the Missouri Department of Economic Development. This recommendation supports two of the group's identified strategic initiatives — investing in technology and innovation and stimulating small business development and entrepreneurship. Funds would be used for technology transfer and commercialization, capital formation, projects to address the physical infrastructure needs of science and innovation companies, workforce development and talent recruitment, expansion of science and innovation industries, building an entrepreneurial infrastructure and culture, and an opportunity fund to attract major federal or other outside investment.

Charged with developing a five-year economic roadmap for the state, the group will unveil detailed tactical plans over the next three months, including legislative and policy proposals. Read the summary: http://www.ded.mo.gov/Content/Dec%201%20Strategies%20and%20Targets%20per%20Steering%20Com.pdf.

Gov. Nixon also received a report from the Missouri Tax Credit Review Commission identifying $220 million in savings by eliminating or not reauthorizing 28 tax credit programs that have outlived their usefulness and do not create a justifiable benefit in relation to the cost to taxpayers. Missouri's 61 tax credit programs waived $521 million in state income taxes last year, reports the Associated Press. To help the state reap a greater return on its investment, the commission recommends the General Assembly establish a new angel tax credit program, authorizing tax credits to encourage equity investment in early stage technology-based companies. The commission recommends using the existing cap on the film tax credit ($4.5 million), which they say should be eliminated during the 2011 session because its narrow focus fails to provide a positive return on investment.

The report also proposes changing the incubator tax credit to a grant program based on an annual appropriation to the Missouri Technology Corporation for award and distribution in a manner similar to the existing process for funding Innovation Centers and other similar state and federally funded programs. The current program is capped at $500,000 and is divided among all the certified incubators around the state, which fails to provide sufficient efficiencies-of-scale to operate a contribution tax credit program, the commission finds. Read the report: http://tcrc.mo.gov/pdf/TCRCFinalReport113010.pdf.