Government & Politics

Parson signs GM tax incentives, but $1 billion investment in Missouri plant not final

Governor Mike Parson signed a bill Wednesday that includes a tax incentive package for General Motors’ St. Charles County plant, as well as new workforce and economic development programs.

“This is what people look to see whether we are on the move, or whether we are not,” Parson said Wednesday, in a room full of legislators who advocated for different parts of the bill.

The bill allows auto manufacturers who make a $500 million capital investment to receive a $5 million tax credit annually for 5 years. The tax credit can be expanded if another $250 million investment is made.

Overall, Missouri expects GM to make a $1 billion investment in its plant, but no contract for a potential $50 million in tax credits has been signed, according to Department of Economic Development Director Rob Dixon.

The decision by General Motors to make the investment in Missouri hasn’t been finalized, either, Dixon said. The company has shuttered five plants in the last year, but has also made or promised heavy investments at its plants in Kentucky, Tennessee, Michigan, Indiana and Texas.

“We are still working through all the issues with them,” Dixon said. “Very positive discussions, very favorable — we know we are going to get there.”

Part of those negotiations include the number of jobs the state expects GM to retain in order to receive the tax credit, Dixon said. The Wentzville plant employs about 3,500 workers. During the legislative process, General Motors disapproved of a bill that would require it to retain 90 percent of the jobs at the plant, according to the top Republican senator.

“Obviously we have our priorities: retaining those jobs and helping that plant be successful in the long run,” Dixon said.

General Motors currently receives millions in tax credits through the state. Starting in 2014, it had received $33 million in tax credits under the MO Quality Jobs Program, according to a 2018 DED annual report.

Also, it is able to forgo payments to the state through the Manufacturing Jobs Act, in exchange for making a capital investment of $75,000 per retained job at plants that created a new product or $50,000 per retained job at the facilities that expanded an existing project.

That agreement, which began in 2011 and expires in 2022, authorizes GM to save up $5 million a year in taxes. General Motors will be able to draw down on the new tax credits passed Wednesday in 2023.

Dixon said he didn’t want to comment when asked if the job retention standards for tax credits will be similar to those required of General Motors before 2022.

Though Lawmakers voted on the omnibus GM bill without having to publicly disclose the cost of the entire package: efforts to send the bill to fiscal review in the House were voted down and the Senate never brought up the option.

A fiscal analysis by legislative staff of the bill obtained by The Star showed that fully implemented, the package could cost the state up to $90 million. In its first year, it could cost up to about $59 million.

When asked whether the cost to the state was a concern, Parson said no.

“I don’t know even what that exact number is, but here’s the important thing about the bill: it’s not so much a one-year cost, it’s about the future of Missouri and what that can do to benefit Missouri in the long term,” Parson said. “So if you look 5, 10, 15 years down the road — that’s where it’s going to make a difference.”

Workforce development

The bill also included a trio of programs that Parson has pushed, with support from the Missouri business community.

Fast Track is a new $10 million scholarship fund for Missourians 26 and up who want to go back to college to learn high-demand skills. One Start incentivizes companies to send its workers to two-year colleges for more skills training.

The bill also made changes to a $116 million tax credit program Missouri Works. Now, DED is allowed to have a closing fund with clawback provisions to provide the tax incentives up front, instead of having companies hit jobs and capital investment goals to benefit.

Though Parson’s programs largely received bipartisan support, critics of the bill included St. Charles County Republicans, whose constituents stood to gain the most. Along with the conservative flank of Missouri Senate and House, they were leery of Fast Track, which they called free college, and the Missouri Works deal closing fund, which they likened to a “slush fund.” The tax incentives were “corporate welfare,” they said.

Six senators dubbed the Conservative Caucus filibustered the bill for 27 hours, in an attempt to extract concessions, but were ultimately unsuccessful.

The programs were a top priority for the Missouri Chamber of Commerce, who said having trained workers was one of the No. 1 concerns of employers around the state.

At the bill signing, Chamber President Dan Mehan said the bill was “a tough slog” and lauded the legislators for their perseverance.

“It’s not just about one auto company, it’s about supplier base — it applies to a whole host of companies around the state,” Mehan said.

Parson projected that the programs would most help middle and working class Missourians.

“I believe it’s going to be well worth the investment and we are going to meet the demands of the corporations and need for jobs,” Parson said.

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Crystal Thomas covers Missouri politics for The Kansas City Star. An Illinois native and a graduate of the Missouri School of Journalism, she has experience covering state and local government.