Auditor Seal


Office of the State Auditor of Missouri
Claire McCaskill


Report No. 07-02-2004

July 2, 2004



The Missouri Certified Capital Company Tax Credit and the New Enterprise Tax Credit Programs Are Not an Effective Use of State Tax Credits

This audit analyzed the economic impact of two of Missouri�s tax credit programs: the Missouri Certified Capital Company Tax Credit (CAPCO) program and New Enterprise Tax Credit (NECA) program.  Auditors found the economic activity spurred by each of these programs did not offset the cost of the programs to the state. 
CAPCO program will not produce enough state revenue to offset costs of credits

The program was established in 1996 and authorized tax credits to insurance companies that made investments into venture capital firms (CAPCOs).  The insurance companies received $1 in tax credits for each $1 loaned to a CAPCO.  The CAPCO program will use $140 million in tax credits while only generating $23.6 million in projected revenues and creating an average projected 293 jobs for 15 years.  This results in a net reduction in state revenue of $116.4 million over the life of the program. 


Fourteen of the thirty-seven companies receiving investments went out of business


Thirty-seven companies have received investments totaling nearly $89 million through December 31, 2003.  Fourteen of these companies have gone out of business.  Of the 37 companies: 29 were in the St. Louis area, 6 in Kansas city, and one each in Springfield and Willow Springs.  


CAPCOs will collect $35 million in fees


The CAPCOs have collected or accrued about $21.3 million in management fees since 1997 and fees will total $35 million by 2008.  If the CAPCOs reach the mandated 100 percent investment threshold by 2008, each dollar of management fees will have yielded four dollars of qualified investments.


New Enterprise Creation Tax Credit does not create enough economic activity to offset the state tax credits used


The NECA program will use $16.8 million in tax credits while generating $7.3 million in projected state revenues.  It is projected the program will cost the state $9.5 million and will create an average of 129 jobs over 15 years.  The NECA program is in the early phase of its life cycle and should be closely monitored.


Complete Audit Report

Missouri State Auditor's Office