Was CAPCO a Political Casualty?

Back in 2000, Missouri Governor Mel Carnahan vetoed an extension of the CAPCO program despite the state’s need for funding for start-up companies:

There is a sense that senatorial politics cast a shadow over the extension of Capco funding in Missouri.

Missouri Gov. Mel Carnahan, who supported the original legislation which created the Capco program in 1997, vetoed an extension this year because he was concerned with cutting $13 million in expenses on an estimated $7.5 billion revenue projection.

Some observers speculate the governor wanted a squeaky clean fiduciary bill of health because of his political battle with incumbent Sen. John Ashcroft. Mr. Ashcroft takes special pride in his own budgeting abilities during his gubernatorial tenure.

While these two joust to determine who goes to Washington, those of us left behind may indeed watch our state succumb to a small-minded vision of economic development.

Thirteen million dollars just doesn’t seem that much in the grand scheme of things for the state’s budget. But the $5 million a year cost of the Capco legislation is a major factor in the lives of start-up companies. It provided the fuel for companies such as PaylinX, Haystack Toys and Stereotaxis.

The Capco program allows qualified venture capital firms to offer tax credits to insurance companies on qualified investments to start-up businesses. The Missouri program has been so successful it’s been copied in other states, including New York, Florida and Wisconsin.

The program enjoyed overwhelming support in the state legislature, not a venue known for its wildly progressive economic outlook. In fact, according to Rick Desloge’s story this week, the measure passed the Missouri House 149 to 5 and received 31 of the 32 votes cast in the Senate.

Those numbers lead one to believe a veto override is possible in the upcoming veto session in September. Overriding a veto would take a two-thirds vote.

Clearly such an override could be a political football during this election year. However, the decision to kill the Capco program has more dire consequences for the companies involved. It takes away their future. If Missouri doesn’t provide special incentives for start-up investments, someone else will.

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