Investing in Rural Investment
Those of us who live in rural Missouri don’t need to be told that the Show Me State is a great place to do business. We know that Missouri is strategically located at the crossroad of America’s transportation network, in the center of the United States. Our business taxes and cost of living consistently rank among the lowest in the nation. Our regulations are reasonable. Our people possess a work ethic unmatched anywhere in the country.
Although rural Missourians know that few places are better suited for business, investors often overlook us when deciding where to put their money to work. Sometimes, we need to show them that we mean business.
Lack of capital is one of the greatest barriers to economic growth in rural Missouri. Large capital funds usually consider investment in rural areas to be risky, which makes it difficult to arrange funding for business start-ups or expansions. Consequently, economic development lags in rural Missouri, where the unemployment rate tops 4.5 percent, nearly 25 percent higher than the state average.
Senate Bill 477, which I presented to the Senate Economic Development Committee this week, is intended to make investments in rural Missouri more attractive. The Missouri Rural Workforce Development Act provides tax credits for “rural funds” that spur job creation in counties with populations below 90,000 residents.
To qualify for the tax credits, rural capital funds would apply to the Missouri Department of Economic Development, which would certify that the projects meet the requirements of the legislation. The rural fund would be required to deploy 60 percent of its capital within two years, and invest the entire fund within three years. All money must be invested to create jobs and expand businesses in rural Missouri counties and remain in use for six years. Businesses benefiting from the fund would have to show job and wage growth annually.
This legislation caps the rural fund tax credit program at $18.75 million per year. Rural funds would receive no tax credit during the first two years of qualifying projects. The fund could receive a credit equal to 15 percent of its investment during each of the subsequent four years, resulting in a 60 percent tax credit on their investment, spread over six years.
The governor has made job growth and workforce development a priority for Missouri. It’s not enough to have interstate highways and willing workers. Even low taxes and a business-friendly regulatory environment alone will not bring outside money to our state. Investors need to know they will receive a return on their investment.
Time and time again, capital investors tell us that the availability of state tax credits are one of the most critical factors when considering business start-up and expansion proposals. More often than not, they’ll pass by states that don’t come to the negotiating table with their own stake in the game. Investors want to know that state governments are willing to share in the investment and become partners in job creation.
Among the many economic development measures the Missouri General Assembly will consider this year, only the Missouri Rural Workforce Development Act specifically targets rural Missouri. As we look for ways to make our state more attractive to businesses and investors, let’s not leave our rural areas behind.
It’s my honor to serve as your senator for the 16th District. If you have questions or need any assistance, please call my office at 573-751-5713 or log onto my webpage at https://www.senate.mo.gov/brown for more information.