The tornado that ravaged Joplin and the flooding affecting Missouri River towns and businesses are both human and economic tragedies. Of course, our lost community members, friends and colleagues can never be replaced, and only time will diminish the pain. But the businesses, shops and dreams blown or washed away in 2011 can be rebuilt, reopened and re-imagined, given the right tools for success.
The more than 500 businesses based in Joplin alone will need tens of millions of dollars in private capital, commercial lending and other financial assistance in order to be revitalized. But how does a company that has lost all of its assets, inventory and machinery get a loan? Government cannot afford to rebuild every business, nor should it. But public-private partnerships can help fill this void — and these partnerships should be formed to deliver desperately needed financial assistance.
A similar scenario faced the Gulf Coast in the wake of Hurricane Katrina. In response to this natural disaster, Congress acted in a bipartisan fashion to attract $1 billion of private capital that would allow local businesses to retool and rebuild through a highly regarded initiative known as the New Markets Tax Credit Program.
Rather than spend direct taxpayer dollars for these funds, the federal government tapped an incentive already on the books that required two private dollars to match every public dollar invested in the disaster area caused by Hurricane Katrina. According to the General Accounting Office, the incentive has resulted in $12 of private capital for every taxpayer dollar invested.
A parallel program exists today in Missouri. Since it was enacted in 2007 by Sen. Scott T. Rupp, R-St. Charles County, Missouri has seen more than $750 million in investments into small businesses from the state’s New Markets program. However, we must amend the current program to allow areas such as Joplin and flood-ravaged communities along the Missouri River to qualify. And we must do this immediately. This can be accomplished in the September special session that has been called by the governor, all while remaining revenue neutral and not creating a new tax credit program.
Encouraging public-private partnerships is a win-win for our region. Private investment dollars will be put to work more quickly, will be more targeted to business owners’ needs and will help our communities get back to work faster than relying solely on the federal government. We should utilize successful tools and proven concepts to attract capital and rebuild without delay.
The New Markets Tax Credit Program was the program chosen to help rebuild after Hurricane Katrina wreaked havoc on the Gulf Coast. The same already-existing mechanism can be used here in Missouri after our record number of devastating events. We urge all business owners affected by this year’s natural disasters to encourage the governor and lawmakers: Please include our storm and flood-ravaged areas as qualifying communities for the New Markets Tax Credit program.
Ron Richard is a state senator from Joplin and Scott Rupp is a state senator from St. Charles County. Both are Republicans.