JEFFERSON CITY, Mo. (AP) __ Missouri senators endorsed a massive overhaul of state tax incentives Thursday in a move that they said could save the state $1.5 billion over the next 15 years.
The legislation reduces or eliminates numerous current tax credits for businesses and developers, as well as one that helps cover the rent of low-income seniors. It also creates several new incentives, including ones to entice international cargo planes to the St. Louis airport, encourage the development of science and technology companies and attract more amateur sports events. Another new provision would allow Missouri to offer upfront cash to businesses looking to expand __ an option that state economic development officials and private site-location consultants for businesses have said is essential for Missouri to keep pace with other states.
A financial analysis prepared for senators estimates the legislation could produce a cumulative savings of $1.5 million for the state by 2026.
The Senate embraced the legislation by voice vote early Thursday morning, then sent it to a financial review committee __ a standard procedure for bills with price tags. A final Senate roll-call vote is needed to send the legislation back to the House, where a previously passed version focused largely on ways of ensuring state taxes are collected.
Like the House bill, the Senate version still contains an amnesty period under which some delinquent taxpayers would get a chance to pay off their debts without owing penalties or interest. But the Senate version swelled to more than 300 pages __ the product of several years of haggling and compromise among senators bent on the opposite goals of restricting and expanding state tax credits. Ultimately, senators agreed to a mixture of both.
The bill was handled by Sen. Chuck Purgason, R-Caulfield, who last year led an all-night filibuster against a new tax credit intended to aid a Ford assembly plant near Kansas City before
ultimately giving up and allowing the bill to pass. In this year’s bill, “the bottom line of what I tried to do is make sure that we promote savings in state government,” Purgason said.
One of the biggest state savings __ estimated at $57 million annually __ would come from the elimination of part of the state’s oldest tax credit, a 1973 program that provides an income tax break intended to offset the property taxes or rent payments of low-income seniors. The tax credit was expanded in 1982 to also cover the disabled. But the bill would follow the recommendation of a state Tax Credit Review Commission that concluded renters should be excluded from the benefit.
Gov. Jay Nixon, a Democrat, has opposed the elimination of the renters’ tax credit, though he appointed the tax credit review panel and has encouraged an overhaul of Missouri’s tax breaks. The bill also follows several other recommendations from the commission, including the paring back of tax credits for the renovation of historic buildings and the development of housing for low-income residents. Both of those have been controversial proposals in years past.
The legislation would combine several of the state’s current business tax incentives into a new program dubbed “Compete Missouri,” with new flexibility for upfront cash incentives and a cap on new job-creation incentives of $111 million in the 2012 fiscal year, $126 million in 2013 and $141 million in 2014 and each subsequent year.
Another new program seeks to transform St. Louis-Lambert International Airport into a hub for international trade by offering up to $360 million of tax breaks over 15 years for freight forwarders, warehouses, businesses that ship agriculture products to foreign companies and manufacturers that convert imports into new products. The provisions of the “Aerotropolis Trade Incentive and Tax Credit Act” are prompted largely by interest from a Chinese cargo company but would apply to all kinds of products shipped to or from any country.
“It’s kind of a high-yield, job-producing incentive,” said Sen. Eric Schmitt, a Republican from St. Louis County. “It gives St. Louis a place in international trade that we don’t have.”
The proposal also drew support from some senators outside the St. Louis area.
“I don’t know if Aerotropolis is going to work, but it’s worth a try. Nothing ventured, nothing gained,” said Sen. Ron Richard, R-Joplin, a former House speaker who during recent years has backed numerous tax credits targeted at economic development. Among the amendments added to the bill Wednesday was a provision by Richard authorizing a new state fund to offer incentives to science and technology companies. The proposal has been embraced in the past by Nixon but has failed to clear the Legislature in previous years.
Tax incentive bill is HB116.
Online: Legislature: http://www.moga.mo.gov
Copyright 2011 by The Associated Press.