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UPDATE: Ford incentives stall in Missouri Senate committee

Thursday, July 1, 2010 | 12:56 p.m. CDT; updated 2:45 p.m. CDT, Thursday, July 1, 2010

JEFFERSON CITY — Legislation offering incentives to Ford Motor Co. and other automakers ran into a roadblock Thursday in a Senate committee, jeopardizing the centerpiece of Missouri's special legislative session.

The bill offering up to $15 million annually in tax breaks for the automotive industry already had passed the House and a Senate economic development committee. But a Senate panel charged with reviewing the financial effect of legislation adjourned Thursday without voting on the bill, thus blocking it from reaching the Senate floor.

State Sen. Chuck Purgason, who is chairman of the Senate Governmental Accountability and Fiscal Oversight Committee, told reporters that he wants to kill the automotive incentive bill because of its cost.

"I'm frustrated that we're even here to begin with," Purgason, R-Caulfield, said. "We're sitting here in a situation of figuring if we're going to give a private company tax credits at a time when we're looking at a $1 billion shortfall next year."

Purgason, who is running for U.S. Senate this year, is one of several state lawmakers who have tried unsuccessfully over the past couple years to rein in Missouri's expansive tax credit programs. Purgason denied that Thursday's action had anything to do with his campaign.

"Revenues continue to decline, and our answer is to spend more money," Purgason added. "It doesn't make any sense."

The proposed automotive incentives are not tax credits but would similarly reduce taxes paid to the state. The legislation would let automotive manufacturers keep all or a portion of the employee withholding taxes they normally would pay Missouri if they make factory improvements for a new or modified product.

The tax breaks are targeted primarily at Ford's Claycomo assembly plant near Kansas City, which employs about 3,700 people to make the F-150 truck, Ford Escape and its twin Mercury Mariner and the Mazda Tribute.

Local union leaders have said Ford plans to cease making sport utility vehicles there by the end of next year, and Missouri officials say Ford plans to make a decision soon about where to build some its new models.

Ford officials have declined to comment about the company's plans for the Claycomo plant or future products.

Gov. Jay Nixon called a special session with an agenda narrowly focused on the automotive incentives and a proposal to revamp Missouri's main retirement systems. The Senate's fiscal oversight committee voted 4-3 Thursday to send the retirement legislation to the full Senate.

Nixon has promoted the savings from the retirement bill as a way to offset the costs of the automotive tax breaks.

The pension legislation would apply only to new employees. It would require them to contribute 4 percent of their pay toward their pensions, work longer before qualifying for a pension and push back the age at which they would be eligible to retire.

But some lawmakers have argued that the pension and automotive bills shouldn't be linked. Whereas some House members would prefer to pass only the auto incentives, some senators want to pass only the retirement changes.


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