Missouri lawmakers endorse economic development bills

Wednesday, April 25, 2012 | 8:53 p.m. CDT

JEFFERSON CITY — The Missouri House endorsed two pieces of business legislation Wednesday. One would create new rules for state and local economic development officials and the other would expand tax credits to apply to the state's auto parts manufacturers.

The House gave both measures first-round approval on voice votes. The chamber must vote on legislation once more before sending the bills to the Senate.

The proposed new mandates for economic development ventures come in response to the Mamtek U.S. Inc. project in Moberly.

Construction on the company's factory halted last fall after the company missed a payment on $39 million in bonds issued by the city. The city has said it will since default on the bonds and its credit rating has been downgraded.

Rep. Jay Barnes, who sponsored Wednesday's measure, led a House panel in investigating the failed project. He said the state Department of Economic Development should already be able to make the changes his bill calls for, but he said the agency has been reluctant to do so.

The Department of Economic Development did not testify at legislative hearings on Barnes' bill, saying it was still analyzing the proposals.

"This is the stuff that should be easy if you care about protecting taxpayers," said Barnes, R-Jefferson City. "We're asking the Department of Economic Development to take responsibility for the projects they pitch to local governments."

Among other things, the measure would require state and local officials to share information they have about companies that seek development incentives, even if that information suggests the company is having financial problems.

In February, Barnes' panel issued a report saying the state should have told Moberly officials more about the possibility of Mamtek's failure, including sharing an email that revealed the company had never started production in China because of a dispute with local environmental groups.

Executives of startup companies requesting incentives could be subject to financial background checks by the state. And those startups would also have to get a third party to verify any financial information they submit to the state.

Barnes' committee found that Mamtek officers had told Missouri officials the company had $7.2 million in cash on hand before the bonds were issued, but the state never asked the company to provide a bank statement to support that claim.

The House also gave initial backing Wednesday to new tax breaks aimed at helping companies that make auto parts expand in the Show-Me State.

The measure endorsed would require auto parts makers to create at least five new jobs to get the tax credits. The companies could also get the credits if they create two new jobs and invest $100,000 in such things as new buildings.

The plants would also have to provide the new employees with health insurance and pay at least fifty percent of the insurance premiums.

The tax break would be equal to 5 to 6 percent of the new workers' salaries, depending on how much the new employees are paid. Companies would also be able to claim for five years, instead of the current three.

That move broadens incentives that were passed in a special legislative session in 2010 to entice Ford and GM to expand plants in the state.

Sponsoring Rep. Chuck Gatschenberger said the state has many auto parts factories owned by other car manufacturers and lawmakers want to encourage those companies to expand their plants in the state as well.

"It's going to open it up not only for major manufacturers," but also for plants that manufacture parts for several different car companies, said Gatschenberger, R-Lake St. Louis.

Democratic Gov. Jay Nixon had called for such measures in his State of the State address in January.

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