China Hub budget stand-off ends
St. Louis Post-Dispatch
November 8, 2009
By Tim Logan
For weeks, area business leaders have been leaning on Gov. Jay Nixon to find some cash in the beleaguered state budget for their efforts to bring Chinese air cargo flights to St. Louis.
This week, it appears, he did.
Members of the region's Midwest China Hub Commission said Friday that Nixon had agreed to free up $1.1 million to pay for studies and marketing for the project. That's $800,000 more than he had offered two weeks ago, and enough to get the project off the ground, said Hub Commission chairman Mike Jones.
"Basically, we're back in the game," Jones said. "We're tremendously grateful to the governor for figuring this out."
The money would keep up momentum for a project that many in the St. Louis area see as a huge opportunity for the region: a chance to hitch to China's fast growth.
But it's not in hand just yet. A spokesman for the state Department of Economic Development said St. Louis County must apply and be approved for the funds. But that won't take long, said Jones, a top aide to County Executive Charlie Dooley.
And the money comes at a critical time for the two-year-old project.
The Commission has reached deals with Chinese authorities to study air service, but needs to make a business case to airlines and freight forwarders that there's enough demand to support regular flights between St. Louis and China.
For that, they want to hire Guenter Rohrmann, a renowned air freight expert and former top executive at DHL. He's the kind of person who can sell St. Louis to the cargo industry, Jones said. But his fee is $931,000, and the Hub Commission, funded by local governments and business groups and a federal grant, doesn't have that kind of cash.
Enter Nixon.
Earlier this year, the Missouri Legislature set aside $2 million to help fund the project. But Nixon froze it as part of $325 million in spending cuts to cope with the state's budget shortfall. St. Louis-area business and union groups have been lobbying him for months to open the state wallet for what they say could a boon to region's economy. Two weeks ago, citing "historic economic challenges," Nixon's chief of staff, John Watson, said the state could contribute $300,000, and no more.
That wasn't enough to keep the project going, said Jones. So Commission members threatened to cancel it. They kept lobbying, too, including several face-to-face meetings with Nixon. Meanwhile, last week, the governor announced another $204 million in budget cuts, including 363 layoffs.
Eventually, both sides agreed to tap a different source -- not the state's general budget, but federal money designated for economic development: the so-called Community Development Block Grant program, which helps fund a wide range of housing and job-generation programs. The state has about $24 million this year.
The state must approve an application before the Hub Commission gets its money. But Jones said he was confident that will happen. It's a smart solution, said Richard Fleming, president of the Regional Chamber and Growth Association.
"We certainly recognized that the governor and his team were in a really tough spot in terms of finding resources," Fleming said. "It's a good combination."
State spokesmen declined to comment, but confirmed that the county plans to file an application. It's unclear why the China project moved up Nixon's list of priorities, but Fleming and Jones said the project's broad support within the St. Louis community probably played a role. Both union and business groups, Democrats and Republicans from several counties weighed in for it.
"Without that collective effort we couldn't have pulled this off," said Jones. "The unity that's been forged around this is like nothing I've ever seen around here."
The news came the same day as word that Sen. Christopher "Kit" Bond inserted a $500,000 earmark for the project in a Senate budget bill.
The bill was passed Thursday, and if the $500,000 remains after House and Senate negotiators craft a final budget, and it's signed by President Barack Obama, it will help keep the China Hub project moving next year, Jones said.
The cash from Jefferson City will come sooner. They hope to sign a consultant within two weeks, to prove the business case. And they still hope to have planes full of cargo flying between St. Louis and China by the end of next year.
"If this works, it works," Jones said. "We won't fail because it started a month late."
