Missouri senators reduce proposed trade incentives for St. Louis airport

Tuesday, September 13, 2011 | 8:27 p.m. CDT; updated 11:20 p.m. CDT, Tuesday, September 13, 2011

JEFFERSON CITY — Missouri Senate leaders significantly scaled back a tax credit proposal intended to spur international trade at the St. Louis airport on Tuesday, acquiescing to colleagues concerned about pouring hundreds of millions of tax dollars into the construction of warehouses without a firm guarantee it would benefit the state.

Senate President Pro Tem Rob Mayer said his latest version of the legislation overhauling the state's business incentives still could spur job creation, but it also could set up a special session showdown with the House by breaking the outlines of a deal struck earlier this summer between Senate and House leaders.

As originally proposed, the legislation offered up to $60 million in tax credits for companies that handle the logistics of exports and up to $300 million of tax credits for the construction of warehouses and manufacturing facilities near the Lambert-St. Louis International Airport. Supporters said the incentives were essential to transforming the airport into a hub for Chinese cargo planes and potentially for other international trade.

But debate on the legislation was delayed last week as some Republicans threatened to filibuster the bill. And concerns about the so-called "aerotropolis" tax credits remained evident Monday night among both Republican and Democratic senators as they publicly reviewed a cost-benefit analysis of the proposal prepared by the state Department of Economic Development. Majority Republicans then held a closed-door, late Monday night meeting at which they decided to pare back the incentives associated with the St. Louis airport.

The version debuted Tuesday by Mayer keeps the incentives for export handlers but eliminates the $300 million in tax credits earmarked for warehouses and manufacturing facilities built near the airport to handle products shipped in and out of the country. Mayer said those businesses still could apply for state incentives through other, existing state tax credit programs. But they would have to meet standard job-creation thresholds intended to ensure the state gets a positive return on the tax breaks.

Sen. Eric Schmitt, R-Kirkwood, a leading proponent of the incentives, said the slimmed down bill still is a good first step toward luring international cargo flights away from airports in other cities such as Chicago.

St. Louis Mayor Francis Slay, another primary backer of the airport cargo incentives, continued to work the Capitol halls after Mayer outlined his revised plan.

"We're still trying to find a way to make sure that, in the end, we have a bill that will do what we need done — and that is create a viable, meaningful, sustainable international trade hub that will help create jobs in Missouri," Slay said.

Senators further pared back the bill Tuesday by eliminating part of the funding source for the new tax credits.

As originally proposed this summer by Senate and House leaders, the legislation would have repealed a tax credit for low-income elderly and disabled residents who live in rented homes. That move would have saved the state about $58 million annually, which could have been poured into the state budget for the creation of new business incentives. But senators voted 17-16 Tuesday to pass an amendment by Sen. Rob Schaaf, R-St. Joseph, that keeps the tax credit intact for senior citizens and people with disabilities. All eight of the chamber's Democrats joined Schaaf and eight other Republicans in voting for the amendment.

Other potentially revenue-saving measures remain in the bill.

The legislation would set an $80 million annual cap on historic preservation tax credits for large renovation projects and a $10 million annual tax credit cap on smaller projects. Current law sets a $140 million annual cap on historic tax credits for large projects but exempts smaller projects from the cap.

The latest version of the legislation also would set a $110 million cap next year on the state's main tax credit program for the developers of low-income housing, with that cap gradually falling to $70 million by the 2015 fiscal year. A secondary such tax credit program would be entirely phased out. Both of those provisions go further than originally agreed upon this summer by House and Senate leaders.

Also absent from the summer agreement is a Senate provision backed by Gov. Jay Nixon that would roll several of the state's existing business programs into a single new program dubbed "Compete Missouri" that would provide incentives for training, hiring and — in some cases — retaining employees instead of moving a business to another state. The new incentive program also would, for the first time, give the Department of Economic Development authority to provide upfront cash to companies, similar to what already is done in Texas and some other states.

Rep. John Diehl, R-Town and Country, who helped negotiate the summertime deal, said he remains opposed to reorganizing the state's existing tax credits under the "Compete Missouri" label. He also expressed concern about the Senate deviating too greatly from the original proposal.

"We're prepared to defend the settlement that was reached between the two bodies and signed off on by the governor" before Nixon called the special session, Diehl said.

Nixon met with Mayer in the senator's Capitol office before Mayer publicly outlined his revised bill. Nixon's administration did not say if he supported the particular changes.

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