Economic growth programs face budget constraints
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Economic growth programs face budget constraints

Date: December 8, 2008
By: Emily Coleman
State Capitol Bureau

JEFFERSON CITY - The auto industry financial troubles that have dominated the attention of Congress are also having an impact on Missouri -- both it's budget and on workers like Darin Gilley.

Gilley was laid off Oct. 29 from the Integram-St. Louis Seating plant in Pacific, Mo., which made seats for the Chrysler minivan plant in Fenton that closed Oct. 31. He also serves as the president of Union Auto Workers Local 1760.

"There's one family; I've already helped them move out of their house, they've lost their truck, their house has been foreclosed upon, they're both in the training program to find new occupation, which allows you to collect $320 a week but provides no health care, and they have two little kids," Gilley said. "It's been a disaster for them."

Gilley and his fellow workers at the plant receive up to 26 weeks of sub-pay as a severance package on top of unemployment compensation.  He receives approximately $520 a week to support his wife and two daughters, 6 and 14. He also plans on going to school through the trade adjustment assistance program.

Job training is one of the options being considered by the Missouri governor-elect's transition team and legislators.

"The manufacturing jobs have been hit particularly hard," said Oren Shur, spokesman for the Gov.-elect Jay Nixon's Transition Team, in a November interview. "We've seen jobs outsourced to other states and overseas.  What he'd like to see, what Gov.-Elect Nixon would really like to focus on (is) what he calls 'next-generation jobs', jobs that create new energy solutions."

For laid off workers, there seems to be only two choices available, Gilley said. They can either go to school or find another job where they take a significant pay cut.

"The people who access the Trade Adjustment Act retraining, which is only for people who lost their jobs due to bad trade policy, those people are expected to live on $320 - which is the unemployment amount - with no health care for up to two years while they retrain for another position," Gilley said. 

"That is not a realistic approach to retraining people for a new occupation. That's why so many people cannot even access that program, they can't afford to live and support a family on those wages and lack of health care. They have to go to work somewhere at $10 an hour in a factory. We end up having people who are underemployed with tremendous strains on their family budgets." 

Some worry, however, at whether unemployment compensation hurts the economy more than it helps.

"There is a danger in saying, 'Well, we're just going to extend the benefits,'" said outgoing Sen. John Loudon, R-St. Louis County. "What I'd really like to see Missouri do is give more, a better benefit to fewer people and figure out how to structure it that way. Because we have a fairly low benefit, but it never fails to amaze me how many people will look at that and say, 'Hey, I've got that money there. I'll go do side jobs for cash. I'll do whatever.' And people will kind of ride that where the unemployment benefits can be a disincentive to seriously looking for work."

Politicians on both side of the political spectrum are considering using agendas that move forward both economic and other goals, such as transportation.

"Federally, this discussion about spending and making an investment in the infrastructure of this country is something that is long overdue and some of that will pass down to the states," said incoming Senate Democratic Floor Leader Victor Callahan, D-Jackson County. "Clearly, in Missouri, if we rebuilt I-70 and our roads and bridges, 100 miles of highway construction produces about 36,000 jobs. All of the money stays here. They're all good jobs. And it's an investment and it's issues that we have to deal with anyway. We have to fix our infrastructure anyway."

Rep. Charlie Schlottach, R-Owensville, the 2007-2008 chair of the House Appropriates for Transportation and Economic Development Committee, agreed. He pointed to railroads and waterways as infrastructure that should be improved.

Attaching the economy to the environment and energy has appeared at both the national and state levels.

President-elect Barack Obama has said he would instruct his economic team to create a long term plan to help the auto industry as well as meet goals in his energy and environmental policy.

The gubernatorial transition team is considering tying energy and environmental solutions to jobs beyond the auto industry, Shur said.

"Gov.-elect Nixon has long supported a broad range of new energy solutions - such as wind power, solar power, bio diesel, cellulosic fuels, a whole array of new energy solutions - and when you invest in those creating new jobs," Shur said. "So it's not only creating a new job, but it's moving our state forward toward the energy solutions we need for the future."

Some Republican lawmakers also cite new energy sources as a way of creating jobs and increasing incentives for businesses to move to Missouri.

The Republican's choice for House Speaker in the next session -- Ron Richard, R-Joplin -- said, the House has been looking into nuclear, - with the Callaway No. 2 plant - hydroelectric, wind and clean coal power.

"We've about 40 or 50 streams in Missouri that been identified for dams," Richard said about hydroelectric power. The construction of the dams would result in jobs.

Schlottach said, "All type of energy will be part of our future.... I think the government's role in that is not to pick an energy sector at all. I think we're learning from our errors, I hope, by doing some of those things, but categorically make an incentive for all types of entrepreneurship and all types of energy."

In addition to the state government being the force behind new jobs, tax credits are being considered to encourage companies to choose Missouri when starting their business.

"We really have to look at our tax credit programs in a comprehensive way and see which ones have tangible results," Loudon said. "That's going on right now. One proposal that I've heard is to actually reverse the trade deficit and bring manufacturing to Missouri and create an export specific tax credit. So if you're a company that is shipping goods out of the U.S. to areas like southeast Asia, if you're shipping to China, that there would be tax credits here, something to improve that trade balance."

Tax credits and other tools can be used to help local businesses as well as encouraging new businesses to come to Missouri, Schlottach said.

However cutting the state's revenue base with tax credits for business or expanding new spending programs will face a likely fiscal hurdle -- the decline in state tax collections that has forced some government agencies to begin planning on staff and budget cuts.

The governor-elect's budget adviser, former state Sen. Wayne Goode, has projected a shortfall for the current fiscal year that ends June 30 of more than $340 million -- out of a total General Revenue budget exceeding $8 billion.

"The budget situation will impact what they're able to get done in the immediate term," Shur said. "But no, (Gov.-elect Nixon's) priorities have not changed. And as governor-elect and working with the legislature, his job is to do as much as they can with the dollars available to them. Missouri is a low-tax state, and we're going to keep it that way. The last thing the people of Missouri need is a tax increase. What they need is a government that is more efficient and effective and respects the taxpayers' dollars, and gives Missourians the most bang for their buck."

Budget constraints may force legislators to pick their priorities and methods for economic development more carefully.

"In expending that dollar, what kind of investment is it?" Callahan said. "It's an investment in not only producing the job of rebuilding that bridge, it also produces economic development. So you take that dollar and it's an investment not only now with the job, but it's an investment in the future. And it's an investment in the future that we would have to expend anyways. So that dollar becomes times five."