Tax incentives remain unresolved in Missouri legislature

Friday, May 13, 2011 | 12:48 p.m. CDT

JEFFERSON CITY — Missouri lawmakers neared their mandatory adjournment Friday with a proposed overhaul of the state's economic incentive programs still unresolved.

The tax break package would end or reduce many of the state's existing incentives for businesses, developers and residents while authorizing new incentives intended to attract international cargo shippers to the St. Louis airport, new science and technology companies to the state and big-time amateur sporting events to arenas and fields around the state.

Some House and Senate members negotiated from Thursday into early Friday morning, but still had not settled differences over how greatly to curtail existing incentives in exchange for the creation of new ones. Lawmakers face a 6 p.m. Friday adjournment deadline set by the state constitution.

Senate President Pro Tem Rob Mayer said he would like to see the tax incentive bill pass. "But I hold out little hope that that's going to happen," he said.

The fate of a bill granting St. Louis control over its police department — which has been run since the Civil War era by a board with gubernatorial appointees — also appeared linked to the economic development bill. The Senate was holding up a vote on the police bill, which is backed by House leaders, as leverage in its negotiations over the economic incentives legislation.

Several costly bills also remained unresolved, including one reauthorizing taxes on health care providers that help generate about $3 billion annually for the state's Medicaid program. Another lingering bill would renew a roughly $20 million state program that helps pay the prescription drug costs of about 226,000 low-income seniors and disabled residents covered by the federal Medicare program.

A select group of House and Senate members have been working privately to try to settle differences on the economic development legislation. Others are eagerly waiting for something to vote upon.

If the economic incentives bill "works out, I think it was a fabulously, fabulously successful session," said Sen. Jolie Justus, D-Kansas City, "and if it not, I think it will be frustrating. ... It's a failure of the Legislature not to have broken the gridlock and gotten this done."

The last-day drama came despite a first-day pledge from Republican and Democratic leaders alike to make job creation initiatives their top priority. Democratic Gov. Jay Nixon also stressed job-creation efforts in his State of the State address to lawmakers. But House and Senate members had different visions for what that should entail.

Chief among the disagreements this session has been the Senate's insistence that any expansion or creation of tax breaks be offset with budgetary savings by eliminating or reducing existing tax credits. Nixon also has embraced the call for a tax-credit overhaul, which was recommended last fall by a commission he created.

Missouri has about five dozen different tax credits, which last year waived $521 million in state income taxes. Much of that money went to businesses or developers. But some tax credits promote social causes, such as adoptions or donations to food pantries and domestic violence shelters.

Among the programs targeted for reductions are ones offering tax credits for the renovation of historic buildings and the development of low-income housing. Among those targeted for elimination is a decades-old income tax credit intended to help offset the rent payments of low-income seniors and disabled residents.

Topping the list of new proposals is an incentive program intended to transform St. Louis-Lambert International Airport into a hub for international trade by offering tax breaks 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.

Some business groups have mounted an intense push to pass the airport incentives, arguing that Missouri could miss its chance to become a trade hub for Chinese goods if it does not act soon.

"This has to happen now," said Dan Mehan, vice chairman of the Midwest-China Hub Commission and president of the Missouri Chamber of Commerce and Industry. "We will sacrifice a lot to get it."

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