Missouri has as many subsidy programs as the day is long. The state offers loans for large buildouts, abates sales tax for data centers and sporting events, and allows companies to keep all of the withholding taxes that are supposed to be paid by their workers to the state. At the local level, there are numerous property and sales tax abatements for residential and commercial properties (with or without arrangements for payments in lieu of taxes (PILOTs)), industrial revenue bonds, Enterprise Zones, Tax Increment Financing, and other programs as codified in Chapter 353, Chapter 99, and Chapter 100 of the state tax code.
State programs are administered by the Department of Economic Development (DED). Even though some of the worst programs like Missouri Quality Jobs and Missouri Manufacturing Jobs Act programs (which allowed for a 100% withholding tax retention and had no clawbacks) are no longer accepting new applications, existing agreements are still costing the state about $50 million annually.
One redeeming quality to Missouri’s subsidy practice is the transparency. Award amount, anticipated outcome, and actual outcomes are provided for the biggest program, Missouri Works. In addition to annual reports, the DED maintains a database called the Missouri Accountability Portal where users can download multiple years of structured data on various expenditures, tax credits, and bonds.
Missouri is one of the four states that have not issued a tax expenditure budget within the last 10 years. The comptroller prepares the Annual Comprehensive Financial Reports where tax abatements are reported as required by Statement No. 77, but the cost for the data center sales tax exemption is hidden. Missouri’s localities generally report tax abatements. In fact, St. Louis’s omission of tax increment financing from tax abatement disclosures was caught by the state auditor and subsequently rectified.
The auditor’s office regularly evaluates state tax credit programs. The most recent report noted large tax credit liabilities and persistent problems with cost effectiveness and poor returns on investment due to lack of caps and sunset dates. The oversight division of the Legislature also reviews tax credits that are about to expire to determine whether to renew them. Some positive changes have resulted from these efforts.