Missouri Senate resumes debate on tax break bill

Thursday, April 9, 2009 | 12:01 a.m. CDT

JEFFERSON CITY — Missouri senators are again debating legislation that would expand job-creation incentives for some businesses while capping the state's numerous tax credit programs.

The debate that began late Wednesday afternoon marks the fifth time in less than two months that senators have tried to tackle the economic development legislation.

Each of the previous attempts ended in gridlock between a group of Republican senators who want to curtail tax credits and other Republicans and Democrats who want to expand them.

Senators were expected to meet late into Wednesday night to try to reach a resolution.

A version passed previously by the Missouri House of Representatives would expand several existing business tax credits and create some new ones without the restraints proposed in the Senate. That bill was backed by Gov. Jay Nixon, who had wanted lawmakers to pass a job-creation bill before their annual spring break in mid-March.

With that goal unmet, supporters of the economic development bill simply are pushing to pass something before the session ends May 15.

"If we want to get people back to work, we absolutely have to do some of these incentives, whether we like it or not," Sen. John Griesheimer, R-Washington, implored his colleagues during Wednesday's debate.

At the core of the legislation is an attempt to expand the amount of tax credits that can be issued under the Missouri Quality Jobs program, which offers incentives to businesses that add jobs with at least average wages and health insurance.

Quality Jobs currently is capped at $60 million in authorized tax credits. The House version would repeal the cap. The version pending in the Senate would raise it to $75 million.

The legislation would create a new tax credit for companies conducting research in certain targeted industries — agricultural biotechnology, plant genomics, medical devices, pharmaceuticals, aerospace and alternative energy, among other things.

Senators say the new research tax credit is needed to persuade St. Louis-based Monsanto to expand in Missouri instead of Iowa.

The legislation also would authorize a new tax credit for investors in technology-based companies that are in the early stages of development.

But some senators are alarmed at the growth of state tax credits.

Tax credits directly reduce the amount of income taxes due to the state, thus diminishing the amount of money available in the budget for state programs and services. During the 2008 fiscal year, Missouri forwent nearly $505 million of revenues because of tax credits — a more than 40 percent increase from five years earlier.

To counter that, the version of the legislation pending in the Senate would place a cap on the dollar amount of tax credits that can be issued for each of the state's different incentive programs.

The Senate version also would subject tax credits to the state budget process, requiring an annual allocation of how much could be authorized for each program. The combined effect of the two provisions would be to let legislative budget writers lower the tax credit caps in any given year, but they could not raise the caps above what is placed in law.

Sen. Jason Crowell, R-Cape Girardeau, threatened to filibuster the bill if it does not include the provision subjecting tax credits to the budget process.

"It's not because I'm against tax credits. I'm a fan of tax credits," Crowell said. "But I want the flexibility to say (as part of the budget process), is a dollar spent on a sheltered workshop the best value, or is a dollar spent on a tax credit the best value?"

As the Senate debated its wide-ranging, 264-page economic development bill, the House gave preliminary approval to a separate bill making it easier for businesses to qualify for tax credits through the Business Use Incentives for Large-Scale Development Program.

That legislation also would increases the cap on tax credits that can be awarded through the Quality Jobs program from $60 million to $100 million.

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