Gov. Jay Nixon will press Missouri state legislators next week to provide up to $150 million a year in tax breaks and other incentives in hopes of luring Boeing Co.’s 777X commercial airplane assembly plant to north St. Louis County.
The concept is likely to have broad support, though a debate over whether and how to offset that expense is already taking shape.
“Building this next-generation commercial aircraft in Missouri would create thousands of jobs across our state and secure our position as a hub for advanced aerospace manufacturing,” Nixon said in a written statement Friday calling lawmakers back to Jefferson City Monday in a special session. “I am committed to competing for and winning this project.”
The special session will begin at 4 p.m. Monday. Boeing has set a Dec. 10 deadline to accept states’ bids for the plant, which in effect means the Legislature would have to get it done next week.
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Nixon’s proposal appears to be built for speed, as it would simply expand the capacity of several current economic development programs, instead of establishing a new one explicitly for Boeing. That should be less complex and an easier sell to lawmakers, people familiar with the proposal said.
Still, the Democratic governor will have to push it through a Republican-controlled Legislature with which he has sparred over tax cuts and other issues.
The two parties have come to agreement before on tax incentives to lure jobs, such as in 2010 when Missouri set up a new program to help expand a Ford Motor Co. plant near Kansas City. But other economic development proposals — such as tax credits to bring air cargo flights to Lambert-St. Louis International Airport in 2011 — have foundered on disputes among the House, Senate and Nixon.
Key Republicans in both houses have said they’re on board with the concept of incentives to lure the Boeing plant. However, with Missouri already giving away hundreds of millions of dollars a year in business-related tax credits, even some pro-business Republicans may insist on offsetting savings.
It could be especially bumpy in the Senate, where GOP leaders for the past few years have promoted the goal of offsetting any new incentives with enough cuts from current incentives for the state to come out ahead.
“For the Senate, it’s unrealistic for us to think, if we’re adding $150 million (in incentives), that we can get a net savings” with other cuts, said Sen. John Lamping, R-Ladue. He said he supported landing Boeing but wanted the incentives to be offset to some degree.
“At the very least there should be neutrality,” said Lamping, which would mean $150 million a year in cuts from other incentive programs.
Nixon himself in the past has urged tighter caps on popular but expensive tax credit programs that fund historic preservation and low-income housing, and there could be calls from deficit hawks for those cuts in exchange for new Boeing credits.
“The governor himself ran around the state this year and suggested that every dollar that goes to corporate America is a dollar that leaves the classroom,” Lamping noted.
Competition for the plant is fierce. Boeing sent requests for proposals to a reported 12 to 15 states after plans to build it near Seattle fell through. Many of those places are likely to offer generous incentives. Washington state was prepared to offer $8.7 billion worth of tax breaks over 15 years, while other states are also reportedly mulling ten-figure packages.
At $150 million a year, the tax credits Nixon wants to put on the table are comparatively modest, though other state and local incentive programs, real estate and road and rail improvements could also be part of the final mix.
All the programs Nixon wants to expand — Missouri Works, Missouri Works Training, Missouri BUILD and the Real Property Tax Increment Allocation Redevelopment Act — are tied directly to job creation. Supporters insist that Boeing won’t receive any tax credits if it doesn’t generate the promised jobs.
In just the last two weeks, state and local officials here have ramped up a campaign to land the plant, touting the St. Louis region’s current aerospace workforce and supply chain and its deep ties with Boeing, where 15,000 people work at the company’s defense headquarters. Still, outside analysts give St. Louis slim odds, saying Boeing would be smartest to stick in Seattle, and if not there go to a place with more commercial aerospace experience and a seaport.
Still, luring 777X assembly would be a huge win for St. Louis, probably generating thousands of good-paying jobs at Boeing and suppliers and establishing the region as a center in the lucrative commercial jet-building industry. In a speech in Chesterfield earlier this week, Nixon said winning the plant would be a “transformational opportunity” for the region.
That, he wrote in a tweet Friday, is worth reaching a little deeper for.
“Missouri’s existing #ecodevo programs work, just need more capacity to accommodate massive scale of @Boeing project,” Nixon said in the tweet.
