T

ime was, in Missouri economic development shorthand, "rapid response team" meant economic triage for those affected by layoffs. In the still-young administration of still-young Gov. Matt Blunt, 34, the phrase is coming to stand for how the state responds to corporate prospects.

Missouri needed business climate reform, and the state's new governor aims to deliver it. by ADAM BRUNS

      In short order, workers' compensation and litigation reform were passed by the state's 93rd legislature. Those were followed swiftly by the Quality Jobs Act, which offers incentives to companies that attract new jobs to Missouri or retain those that currently exist. The legislation also allows local voters to enact a sales tax for economic development.
     Those developments should enable the state to literally build on the momentum demonstrated in the December 2004 "Missouri and Surrounding States County Index of Economic Momentum." The state led its eight surrounding rivals when growth in employment, population and income was analyzed across 881 counties in the region between 2000 and 2003, with the strongest performance in Missouri coming in the Rolla/Ft. Leonard Wood and St. Louis areas.
     Blunt, born in the fast-growing southwest Missouri city of Springfield, is a 1993 graduate of the U.S. Naval Academy. His active duty included participation in Operation Support Democracy, involving the United Nations blockade of Haiti, missions to interdict drug traffic off the South American coast, and on duties involved in the interdiction of Cuban migrants in 1994. He also served in Operation Enduring Freedom, and now serves as a Lieutenant Commander in the Naval Reserves.
     In an interview with Site Selection, Gov. Blunt describes how he hopes to guide the ship that is Missouri's economy.

     Site Selection: Let's go point by point through your economic development legislative agenda.
     Gov. Matt Blunt: We have passed a very significant workers' compensation reform bill that really levels the playing field to ensure that

A Tale of Two Airports

Express Scripts, a 1,200-employee prescription drug benefit provider located until now in Maryland Heights, Mo., had been considering offers from Missouri, Illinois, South Carolina and Nebraska for its headquarters, narrowing the choice in March 2005 to southwest Illinois and the St. Louis area. At press time, the St. Louis candidates included the campus of the University of Missouri-St. Louis and a brand new 600-acre (56-hectare) development called NorthPark, near Lambert International Airport (below).      NorthPark is a mixed-use project that could see a total investment of some $400 million, including $29 million from the public sector. Partners in the venture include Clayco, TRiSTAR Business Communities and McEagle. Much of the land for the park has come straight from the airport's holdings in the wake of property buyouts it carried out over the past 15 years. But those parcels did not eventually figure into the airport's own expansion plans, now under way with a major runway addition.      In addition to the NorthPark development, the Missouri Department of Economic Development has approved up to $6.9 million in remediation tax credits through the Brownfield Redevelopment Program for the redevelopment of a 150-acre (14-hectare) parcel just northwest of Lambert that has been vacant for more than seven years. Plans call for 13 buildings totaling over 2.6 million sq. ft. (241,540 sq. m.) of useable space. It is expected that about 264 jobs will be created at the new Hazelwood Commerce Center.      A decision by Express Scripts is expected by summer 2005. If the company selects eastern Missouri over southwest Illinois, it would join companies like Olin Corp. and Smurfit-Stone, both of which recently chose to consolidate some HQ operations on the Show-Me side of the Mississippi rather than in southwest Illinois. But Illinois has garnered its own trophies: Olin's Brass and Winchester divisions, employing some 3,500, are still based in East Alton, where the company was founded in 1892. And Nestl‚ plants in Bloomington and Chicago will absorb production relocated after the closure of three St. Louis-area candy plants.      Meanwhile, north of Kansas City, Kansas City International Airport is seeing the 640-acre (60-hectare) KCI Business Airpark marketed to high-tech companies. It's just a smidgen of the 8,000 undeveloped acres (743 hectares) that are part of the KCI footprint. Economic development officials say the Airpark's chief attraction is the envisioned taxiway direct to a facility's doors, which could prove a marked scheduling and logistics advantage.      A May 2005 report issued by aerotropolis expert Dr. John Kasarda, director of the Kenan Institute of Private Enterprise at the University of North Carolina at Chapel Hill, found that KCI was indeed positioned to be a prime mover.      "Nowhere in the country is there a major airport with such a vast area of inside-the-fence property and open land with a 15- to 20-mile radius that stands ready for development based on 21st century logistics and aerotropolis principles," Kasarda told the Kansas City (Mo.) City Council.      Among his recommendations was the alignment and expansion of an existing foreign trade zone and local enterprise zone into a single new zone called the KCI Business District. He also called for $30 million in roadway and Interstate interchange improvements, as well as a new seven-mile (11-km.) rail spur that could cost anywhere from $24 million to $30 million.

people who are injured on the job because of their job are adequately compensated. Employers are liable only for injuries where they're directly responsible. It restores some balance in the system — we did not have competitive rates in our state. Particularly if you looked at our neighboring states, you saw a real disparity. Like tort reform, it will become effective Aug. 28th of this year.
     I signed the tort reform bill very close to that [in March 2005]. When I was a candidate for governor, one priority was to improve the entrepreneurial climate. Workers' comp and litigation reform were the twin pillars of that effort. Look across the U.S., and you'd be hard-pressed to find a better bill adopted anywhere. It's already having a positive effect on doctor recruitment. It's clearly going to make Missouri a better place to create and retain jobs. There are a number of provisions, including venue reform for all civil litigation. We had a real problem with venue abuse in our state, with cases hauled off to jurisdictions that maybe didn't have the best reputation when it comes to litigation. We were able to instill some strict language so that essentially cases will be tried in the venue in which the incident occurred. To my knowledge, since 1986, about 10 states have done something to address venue, but I'm fairly confident we are the only one that adjusted venue for all civil litigation.
     We adjusted the non-economic damage lid on medical liability cases to $350,000; there is also growing concern across the country about punitive damage awards, and we've limited that to $500,000 or five times the net amount of the judgment, whichever is the greatest.
     Perhaps one of the most significant things we did was joint and several liability reform. We were a state where if you're one-percent liable, you could have ended up paying 100 percent of the settlement. I think that's wrong. We now have significant reform so that you're only joint and severally liable if you were more than 51 percent at fault.
     In other words, if you're one-percent liable, you pay one percent; if you're 10-percent liable, you pay 10 percent; if you're 49 percent liable, you pay 49 percent. Only when you reach that 51-percent threshold would you end up paying the entire settlement. There are a number of provisions within the bill. The more I've become familiar with it, the more comfortable I am in making the case this is one of the best in any state.
     I am fairly confident that the Quality Jobs Act will be implemented this year. The legislative leadership has bought into the proposal. We've had great sponsors in the House and the Senate. Clearly Quality Jobs is modeled after successful programs in Kentucky and Oklahoma.
     [The act, which among other provisions abates payroll taxes on a graduating scale depending on the number of qualified new jobs created, was passed on May 12.]

     SS: There has been discussion about whether the act should or should not include retention incentives.
     MB: The bill as it stands now does have some retention incentives as well. There have been some modifications to the process. It was always designed to help existing employers grow. There have been some parameters established for retention incentives.

     SS: There is also a new TIF [tax-increment financing] cap, and the capability of any community to impose up to a half-cent economic development sales tax.
     MB: We needed to adjust our TIF cap, because we've come very close to the TIF lid established by statute. We're essentially going to raise that, so we can continue to apply a state TIF, which has been important for us. H&R Block's expansion in Kansas City would be an example of a project that's benefited from that state TIF. We're making difficult decisions in our budget so Missouri can remain a low-tax state. But we do believe that local communities ought to have the right to determine what their local tax burden is going to be and how it will be applied. A lot of communities will embrace this opportunity to generate some revenue to help meet infrastructure needs and other costs associated with economic expansion.

     SS: Describe how your incentive programs deal with rising concerns since the Cuno. Vs. DaimlerChrysler decision by the 6th Circuit Court of Appeals. Do you feel like your existing programs are relatively safe, and what have you been able to do in developing alternatives?
     MB: Quality Jobs is an example of a program that would meet any sort of court challenge. It's not a subsidization of new equipment or machinery. If there were any sort of court-created problem, we're going to respond to that quickly.

     SS: You recently stated you would have vetoed a particular piece of right-to-work legislation. Were you in opposition to the concept in general, or just the wording of that particular bill?
     MB: Missouri has opposed right-to-work efforts in the past. I don't believe there is broad-based support for this proposal. Working together, employers and employees can do things to help Missouri reach its full economic potential. Our focus needs to remain on creating that excellent business climate and ensuring we have incentives that allow us to be competitive with other states. We have a lot of areas of the state that don't have a strong union presence and others that do. And in those latter instances generally you find a great working relationship between the employer and the union.

     SS: Would you support the idea of bringing it up on the ballot again?
     MB: I don't think there's broad-based support for becoming a right-to-work state.

     SS: There are several corporate development projects in the works in and around Kansas City International Airport and Lambert Field in St. Louis. Describe how important these two airports are to the state economy, and what you view as the state's role in supporting their growth and development.
     MB: They're absolutely critical. Air transportation is more necessary than ever before to ensure people and products can move at the speed required by businesses today. More and more Missouri businesses are successfully operating in the global marketplace. We've had rapid growth in exports; export sales rose by 24 percent, or [more than] $1.76 billion growth in 2004 — that placed Missouri seventh in the U.S. in terms of export sales growth. Exports were nearly $9 billion of Missouri's 2004 economy, and 20 of the 32 largest industries that export had better than 20-percent growth between 2003 and 2004. It's important to make the investment in airport infrastructure so products and people can move at the speeds needed for a global economy.
     There's a major expansion in St. Louis already that's nearing completion, and will be able to handle traffic. It's probably not necessary at this point to expand runway capacity at either airport, but we're focused on expanding economic development opportunities surrounding the airports.

     SS: Describe the kind of role you prefer to play in corporate project attraction.

Holcim (US) Inc. in October 2004 reached final agreements and permits to proceed with its 4,400-metric-ton cement plant in Ste. Genevieve, Mo., along the Mississippi River. Capital investment will fall somewhere between $500 million and $600 million.

     MB: One opportunity I have now is to go back to significant employers, go down through a list of names that have passed on expanding in the past and have cited some specific concerns. I can go to certain industries and say, "You told me that workers' compensation was a problem for you in terms of operating in Missouri. We've corrected that. We've taken substantial steps to address your concern. We're making Missouri a better place for you to do business." Litigation reform is another example, where people say, "We love Missouri, we're excited about your work force and natural resources, but we're concerned about getting dragged into litigation in a bad venue." We've corrected that through joint and several liability reform and venue reform.
     We have a long legislative session in our state. We'll be able to do more of that in person and on the phone as we wind down the session.
     I see it as my role to be a salesman for our state, to be an ambassador in the domestic and global marketplace. The most important thing is to have some results. If the governor wants to be an effective ambassador, it's got to be more than just being a cheerleader. You have to listen to the concerns of corporate leaders, of people engaged in economic development, and address them.

     SS: An industrial infrastructure grant was recently awarded to Washington, Mo., to help pave the way for a $26-million project from Harman Becker. How would you assess the state's overall industrial infrastructure, in terms of electrical, water and sewer readiness for industrial development, as well as transportation readiness?
     MB: We have great access to vast water resources, both underground and surface. There is a tremendous amount of river mileage. We have an abundant and dependable energy supply, and our electricity prices are among the lowest in the U.S. No question the highway system is in need of repair. We're very optimistic about improvements that are being made, because of Amendment 3 passage — I supported it as a candidate. Essentially, it ensures we're spending transportation money on transportation, not diverting it to other parts of the budget. That's going to end up getting $180-190 million a year of new money into our state's road system. We have a tremendous amount of road construction and refurbishment work going on right now. The "smoother, safer, sooner" initiative [is going to produce] 2,200 miles of new pavement by the end of 2007. And there are several high priority projects we've been able to facilitate.

Missouri Dept. of Economic Development www.missourieconomy.org Missouri Biotechnology Assn. www.mobio.org Kansas City Area Development Council www.thinkkc.com St. Louis Regional Chamber and Growth Association www.stlrcga.org Aquila www.aquilaeconomicdevelopment.com

     When there are infrastructure shortfalls for a particular economic development project, we're willing to step up to the plate and work with the local community. Harman Becker would be an example. We're very excited about that project. In addition to the Community Development Block Grant program, we were able to provide them with some assistance to make sure they had the appropriate industrial infrastructure in place to attract those great jobs. Those are the kinds of jobs we're trying to get into our state.

      SS: How would you assess the state's training and education resources, and the role of community and technical colleges in kicking in educational support for corporations?
     MB: There's a real commitment to education; and we're trying to increase that. We are in a difficult financial time like lots of states, and we're trying to address some structural problems in our budget. I'm committed to doing that without a tax increase, which I think is harmful to economic growth. Virtually every part of state government is seeing a significant reduction in state spending. Education is the exception though — every college will see funding hold steady in the next fiscal year. We're increasing some programs that allow Missourians to go to a community college after high school graduation to gain the skills they need. And we're increasing classroom funding by about 4.4 percent at a time when we're reducing spending across state government.
     One great niche for us is biomedical, life sciences and plant science. Companies like Monsanto are in Missouri. Washington University is a leader in getting federal grants for research. Stowers Institute in Kansas City is going to expand in the future, and we're trying to make sure they expand in our state. And there's the Donald Danforth Plant Science Center in St. Louis. Ventria Biosciences is working in conjunction with Northwest Missouri State University in Maryville, one of our smaller but vibrant communities. We're working with them to do some things in pharmaceutical crops. There are a lot of challenges associated with pharmaceutical agriculture, but we believe it's a big part of Missouri's future.

     SS: When companies think of Missouri, for many it is just K.C., St. Louis and no place else. Name some overlooked regions of the state.
     MB: Maryville would be an example. You have Truman State University in Northeast Missouri that's a great institution. Some of the fastest-growing counties are in southern Missouri — the Springfield area is a very rapidly growing area of the U.S., and has a constantly expanding airport and infrastructure. But you can make that sort of argument for all corners of the state, including here in the central Missouri region in the capital city of Jefferson City. There is an effort under way to have a more diversified economy that's not as dependent on government employment.
     A lot of times when I make a call, it's somebody that's excited about the work ethic and work force in one of our smaller rural communities.