UPDATE: Gov. Nixon calls for special session on business aid

Wednesday, July 20, 2011 | 5:31 p.m. CDT; updated 12:51 p.m. CDT, Monday, September 5, 2011

JEFFERSON CITY — Missouri Gov. Jay Nixon pledged Wednesday to call a special session to overhaul the state's business incentives after legislative leaders outlined a plan that would reward international trade and high-tech companies while scaling back tax breaks for building developers and low-income residents living in rented homes.

Nixon spokesman Scott Holste confirmed the Democratic governor's plans to call a special session moments after Republican House and Senate leaders announced that legislative negotiators had agreed upon an economic incentive plan. They urged the governor to summon them back to the Capitol to pass it.

Without highlighting specific details, Nixon's administration embraced the general approach.

"By working together in a bipartisan way, we've taken another important step toward passing a major job-creation package in a fiscally responsible manner," Holste said in an e-mailed statement. "The governor intends to call the General Assembly into special session to focus on passing a bipartisan jobs package and moving our economy forward."

The governor's office and lawmakers have been working — sometimes together, sometimes independently — since the legislative session ended in mid-May to craft a package that would authorize new business incentives while paring back Missouri's existing tax credits.

The deal touted Wednesday by legislators would authorize up to $360 million of tax breaks for companies involved in international shipments at Lambert-St. Louis International Airport, where China Cargo Airlines currently is considering establishing a hub. It also would create incentives for science and technology companies, computer-based data storage centers and big-time amateur sporting events. And it would revamp an existing program so Missouri could offer incentives to retain companies being enticed by other states — a provision intended counteract Kansas' efforts to lure companies from Kansas City, Mo.

To offset the new business incentives, the plan put would eliminate some existing tax credits and scale back the amount of money offered under other programs.

Low-income seniors and disabled residents who rent homes would no longer be able to claim a state income tax credit, though their peers who own homes could continue to do so. That proposed change follows the recommendation of the state Tax Credit Review Commission, which concluded last year that renters should be excluded from the program because they do not directly pay property taxes.

The legislative proposal also follows commission recommendations to phase out other tax credits, such as for wine and grape producers, and to scale back some popular tax credits. Most notably, it would impose a $90 million annual cap on tax credits for the renovation of historic buildings, down from the current limit of $140 million. Limits also would be set on tax credits for low-income housing developments. Both programs would be set to expire on Aug. 28, 2018. Developers would be barred from claiming tax breaks under both the historic renovation and low-income housing programs.

The reductions in existing tax credits are projected to more than offset the creation of additional tax breaks. Legislative leaders said their package could save the state about $1.5 billion over 15 years.

"It's a good bill that helps Missouri revamp its economic tools for the economy of the 21st century while, at the same time, it's responsible to taxpayers," said Rep. John Diehl, R-Town and Country, who was involved in the negotiations.

But the announcement of a deal came as a surprise to at least one key senator. Republican Sen. Chuck Purgason of Caulfield, who unsuccessfully filibustered a tax break tailored for Ford Motor Co. during a special session last year, had been involved in this year's negotiations and expected to handle the legislation.

Purgason said there is 80 percent to 90 percent agreement on the proposal, but he said lawmakers had not put their proposal on paper to make sure everyone agreed to specific details.

"I think we're close, but to announce that we've got a deal at this time is little bit premature," Purgason said. "A lot of times you can have conversations and agree to the concept, but you really don't have a deal until you have things written down and both sides have signed off on them."

House Minority Leader Mike Talboy, D-Kansas City, similarly said that he supported the key elements of the plan outlined Wednesday, but added: "I just want to make sure I see what the language is before I say am absolutely 100 percent on board."

House Speaker Steven Tilley, Diehl, Purgason and Talboy all said the legislative agreement also includes a special session call for a measure that would grant the city of St. Louis direct control over its police department and get rid of an oversight board that consists largely of gubernatorial appointees. Nixon's administration made no mention of that in its statement Wednesday.

The legislative proposal does not include a Nixon-backed proposal to create a special pool of money that could be distributed at the discretion of the Department of Economic Development to help close major deals with businesses.

But the legislative plan would dismantle the current structure of the Missouri Housing Development Commission, which awards incentives for low-income housing developments. The plan would create a six-member commission consisting of two people each appointed by the governor, House speaker and Senate president pro tem. The current 10-member commission consists of four statewide elected officials and six members appointed by the governor.

Another prong of the legislative plan would enact a three-month amnesty period in which delinquent taxpayers could pay their bills without penalties or interest — a provision generally backed by Nixon and lawmakers as a way to boost state revenues.


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