By the Editorial Board, St. Louis Post Dispatch
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Here’s the pitch Gov. Jay Nixon sold to Missourians this summer as the Missouri Legislature was debating a corporate tax-cut bill that would have starved the state of upward of $700 million in revenue over a decade, most of it going to the wealthy.
“They could support education, or they could support House Bill 253,” Mr. Nixon said of lawmakers who were considering an override of his veto of the bill. “But they could not do both.”
Mr. Nixon was right, and he won the battle.
His words might haunt him, however, as he now plays footsie with the executives of the Boeing Co. The aerospace giant is playing several states against each other, dangling thousands of high-paying manufacturing jobs in exchange for a fortune in tax subsidies.
Last week, Mr. Nixon announced that Missouri would be a player in the Boeing sweepstakes.
Let’s be clear about a couple of things right off the bat:
- Boeing, which employs about 15,000 workers in the St. Louis area, is a fine corporate citizen. The company builds war planes, missiles and smart bombs here, but no doubt St. Louis workers could make fine commercial airplanes, too.
- Landing the several thousand manufacturing jobs to build the new 777X airliner would potentially change the region’s economic fortunes for a decade or longer.
- St. Louis is already home to Boeing’s second-largest location after Seattle, so pursuing the jobs, should they actually leave Washington, makes sense.
But let’s also call this what it is.
- This is the mother of all corporate welfare stories.
- It is an example of everything that is wrong with economic development policies.
- It is Boeing’s attempt to play states against each other to see who will pay the biggest bribe.
Keep in mind, the state of Washington, which gave Boeing $3.2 billion in tax breaks in 2003, already has agreed to be held up again. The offered ransom, or bribe, or — to use the business-friendly term, subsidy: $8.7 billion over 27 years. The only reason Boeing is now exploring other options is because union machinists’ refused to throw $2 billion in cuts to pensions and health care benefits into the kitty.
Good for them. It’s not like Boeing is hurting for cash. It paid its CEO, Jim McNerney, $27.5 million in 2012, a 20 percent raise over the previous year.
If Mr. McNerney is worth $27.5 million a year, the machinists are worth their benefits, too.
So here comes Mr. Nixon, a Democrat, and Republican partners like Senate Majority Floor Leader Ron Richard of Joplin, who has indicated support for a special session to discuss billions in taxpayer dough as a Christmas gift for Boeing. Call us scrooges, but at what cost?
Mr. Nixon already said he planned to ask the Legislature to fully fund the K-12 school funding formula by the end of his term. It’s a great idea, but it’s also a $600 million idea. Just Monday, Mr. Nixon announced a plan to put an additional $15 million in his budget proposal for next year to offer high-achieving Missouri high school graduates an additional $5,000 a year college scholarships if they agree to stay in Missouri after they graduate.
It’s another good idea, but remember his warning this summer: You can be for education. Or you can be for corporate tax cuts. But you can’t be for both.
The money has to come from somewhere. And since Missouri lawmakers are allergic to tax increases, it won’t come from new revenue.
Washington state’s offer would cost about $322 million per year through 2040 in lost tax revenue, and that’s just to keep an employer who is already there. Missouri’s deal would likely have to be even more expensive. Looking at Washington’s history with Boeing sheds light on what Missouri should expect if it wins this multistate bribe-a-thon.
The 2003 incentives to Boeing were passed as the state was facing a budget deficit of more than $2 billion. So how did lawmakers balance their budget?
They cut education, of course, to the tune of more than $800 million, even though voters had recently passed two initiatives intended to increase teacher pay and reduce class sizes. Boeing got its money; schoolchildren were robbed.
So were the poor and the elderly, who had their Medicaid services cut.
Which brings us back to Missouri.
Last year, Mr. Nixon offered a different $8 billion deal to lawmakers to create thousands of jobs and spur economic growth. All lawmakers had to do was expand Medicaid to more working poor as called for in the Affordable Care Act. The $8 billion would have come entirely from the federal government for the first three years. Study after study said the economy, particularly the health care industry, would have boomed. Worth noting: Boeing is the second-biggest employer in St. Louis. No. 1 is BJC Health Care.
Lawmakers said no.
Now they’re open to a different $8 billion deal, only this time, they’d be giving away Missouri tax dollars, not receiving federal tax dollars.
This is not a tough call. In the debate between schools vs. corporate welfare, schools should win every time.
