This article first appeared in the St. Louis Beacon, Jan. 20, 2012 - In 2001 and 2004, Alpha Plastics Inc. -- owned by Kirkwood businessman David Spence -- applied for and received state tax credits to help cover its expansion costs.
Now a Republican candidate for governor, Spence is proposing a closer look at state tax credits, saying their explosive growth in recent years has not been healthy.
"We need to have a moratorium on all state tax credits until they are fully vetted for effectiveness by independent review," Spence said in a statement this week. "Taxpayers deserve a positive return on investment, we should be treating every dollar as if it is our last," Spence added.
Spence's comments about tax credits were part of a broader list of his economic proposals, which he contrasted with the policies of Gov. Jay Nixon, a Democrat seeking re-election this fall.
Nixon also has sought unsuccessfully for several years to persuade the Missouri General Assembly to cut back and revamp the state's tax credits.
Documents obtained by the Beacon indicate that Spence, while chief executive of Alpha, sought state tax breaks under programs aimed at encouraging business expansion.
In the 2001 application, Alpha Plastics wrote that it planned to consolidate four facilities. The tax break was approved. In 2004, one application was denied, while another appears to have been approved. None of the documents shows how much money Spence's firm received in tax credits.
State Democratic Party spokeswoman Caitlin Legacki contended that Spence appears to be a hypocrite. "Dave Spence says he wants government out of business, but he wanted a whole lot of government help with his own businesses," she said.
Spence's campaign consultant Jared Craighead replied that the Democratic attack is off base, noting Nixon's own concerns about state tax credits.
Craighead contended that Spence's concern now does not conflict at all with his firm's acquisition of tax breaks. Among other things, he said that Alpha was seeking the tax credits at a time when Missouri was doling out far fewer of them.
Craighead also emphasized that Spence wasn't calling for an end to state tax breaks to businesses. "What Dave wants to do is take a step back. He wants an independent review,'' the spokesman continued. "He's not saying all tax credits are bad."
What's changed since Spence sought the credits, continued Craighead, is that Missouri government's "tax credit market has grown exponentially since then."
He then jabbed at Nixon, who Craighead asserted had contributed to a change in the awarding of the state tax breaks. "It's more political now,'' the Spence spokesman said. "It's more 'pay to play.' "
Legacki replied that it was Spence's campaign that was mischaracterizing the issue. "Governor Nixon has consistently advocated for tax credit reform," she said. "Spence is just shamelessly trying to cover up his own hypocrisy -- the guy wanted state tax credits for his own business."
Economics Key, in Government and in Campaigns
The sparring -- even as Nixon and Spence appear to share the same beef about tax credits -- exemplifies the high-profile role that economic issues will likely play in Missouri's battle for governor.
Nixon has made the state's economic improvements, and his tight-fisted approach to Missouri's budget, the centerpiece of his bid for re-election. Last Tuesday's State of the State address, his last before the November general election, was in keeping with those themes.
Missouri Republicans are attempting to push back, even as the party is recalibrating since Lt. Gov. Peter Kinder opted to drop his challenge in the wake of personal issues<.
Democrats are paying attention to Spence, who has not run for office before, largely because he has the money to promote his message.
Spence, a wealthy businessman, is so far the largest donor to his own campaign. Of the $2.37 million he reported raising since jumping in the race in November, Spence contributed $2 million.
Most of the rest came from business executives throughout the area, including several who work for Alpha Plastics. Spence has taken less of a role with the company since selling most of his interest to a private equity firm in 2010.
Spence reported $2.3 million in the bank as of Dec. 31. Nixon, who has raised $8.15 million overall, reported $5.01 million in the bank as of the end of 2011.
Spence already has come under attack for serving on the board of a bank that took federal bailout money and has yet to begin paying it back. (Spence says that's why he left the board.)
There also has been the flap over his campaign's initial failure to disclose that the college degree he obtained in economics was in home economics.
Nixon, Spence Stress 'work'
When it comes to the economy, Nixon lately has been promoting an initiative called "Missouri Works'' that he says will build on the private-sector successes in some areas.
Spence is proposing a package of proposals he calls "Back to Work."
Besides a tax-credit review, Spence proposes putting a private-sector executive in charge of the state Department of Economic Development, improving the state's highway transportation system, expanding the state's energy supply and changing state laws that he says are skewed in favor of workers and impede businesses.
"We must consider reasonable, common sense reforms in workers' compensation, the judicial system, employment legislation and tort law to help attract or create new jobs," Spence said in his economic paper issued this week.
He also is calling for an examination of the state's prevailing-wage laws, which requires that workers on projects financed with government money be paid the prevailing wage in a community. Some Republicans contend that the requirement curbs jobs by setting the pay too high.
Kansas City Conservative Also Challenging Nixon
Spence, by the way, is not the only Republican running for governor. Also competing is Bill Randles, a lawyer who operates a consulting firm in Kansas City.
Randles has been particularly harsh about Nixon. For example, he contended that Nixon's State of the State address last reflected "simply more of the same failed policies that have placed Missouri near the bottom in every measure. His governorship has been one of failure in every category."
Randles' latest campaign-finance report shows that he has $5,176.53 in his campaign bank account, as of Dec. 31.
