Fight Over Incentives, Tax Breaks, Isn't the First

By Steve Rensberry

   (RPC) - 7/5/2010 - One hundred and fifty million dollars. That's the kind of money in the form of tax breaks Missouri Gov. Jay Nixon and some state legislators are talking about as an incentive to get Ford Motor Company to put its factory in Claycomo to good use in rolling out the company’s new line of vehicles.
   As of Monday, July 5, the package remained in committee in the Missouri Senate.
   Union leaders are fearful the 3,700 workers at the plant will be out of work by year's end. Nixon is pushing for plant upgrades they say are necessary to build the newer Ford models. And the very same arguments heard in every other incentive deal proposed anymore can be heard in this debate, along with the customary allegations of committee stacking.
   Can the state afford to be giving out $150 million in tax breaks in the face of a $1 billion shortfall? That's the "billion" dollar question, being asked by critics. Should Ford be the sole recipient of incentives created with the public purse, or would the state be better off expanding such incentives to everyone as it tries to strengthen the economy?
   Republican State Rep. Bryan Pratt from Blue Springs, Mo., who was at one time on that very Senate committee, makes that exact argument. (1)
   For the record, in 2003, the company was offered an incentive package which consisted of more than $25 million in various kinds of aid and tax breaks to keep its plant in Hazelwood, Mo., up and running. It closed in 2006 before receiving only a small portion of those incentives. Chrysler's operations in Fenton drew incentive proposals of an even larger number, more than $85 million in total. Chrysler's last assembly line in Fenton shut down in the summer of 2009. Finally, state legislators gave their stamp of approval to as much as $240 million in tax credits to Bombardier to build airplanes at a plant in Kansas City. It wasn't enough. (2)
   Ford Motor Company is currently the fourth largest automobile manufacturer in the world in terms of production volume. But despite its size, market share in the United States has plummeted from about $25 percent in FY1995 to only about 5.5 percent in FY 2009. More than 40,000 employees have been cut from the company's payroll in the past three years. The company stock value stood at $10.28/share as of Tuesday, down from a high of $14.46 on April 26.
   (1) Tess Koppelman, Fox 4 - Ford Tax Incentive Package Stalled in Missouri Senate
   (2) David A. Lieb, The Kansas City Star - New session, new crisis for Missouri Jobs