Missouri Senate cuts $341,315 tax break to Kraft for Columbia plant

The company will likely challenge the senate’s action in court
Tuesday, May 1, 2007 | 12:00 a.m. CDT; updated 10:16 p.m. CDT, Sunday, July 20, 2008

ST. LOUIS — Missouri Senate budget writers have decided to cut the pork — quite literally — from a state tax credit.

The Senate Appropriations Committee has invoked a previously unused law to block a tax credit for a Columbia plant to recycle its cellophane-like hot dog casings used in the manufacturing process.

The tax break, originally enacted in 1990, is worth $341,315 a year for Kraft Foods Global Inc. But the Senate committee used a state law that says a tax credit cannot be issued if a budget committee in either the Senate or House refuses to approve the credit’s estimated cost.

Sen. Luann Ridgeway, R-Smithville, led the charge to halt the tax credit. She said tax credits should be designed to achieve broad policy goals, not to help one company.

Kraft Foods spokeswoman Cathy Pernu praised the environmental benefits of turning hot dog casings into dirt that the city sells to gardeners.

She declined to say whether Kraft would recycle the casings — 32 tons a week — without the tax break. Pernu said the subsidy “helps our facility be more competitive, and we strongly hope legislators will view this favorably.”

Recycling is cheaper than sending the casings to the local landfill. It costs $32.50 a ton to leave them at the landfill but only $16.25 a ton to ship them to the composting facility.

Some officials expect the matter to wind up in court because of the way the Senate cut the tax break. Tax credits usually are not part of the budget process.

Lowell Pearson, deputy director of the Department of Revenue, said he will follow the Senate’s directive but has “significant concerns about whether that’s lawful.”

Kraft hopes to reverse the Senate’s decision.

Rep. Judy Baker, D-Columbia, said during a House Budget Committee review of tax credits last week that eliminating the credit could jeopardize Kraft’s charitable gifts of about 250,000 pounds of hot dogs a year for the local food pantry.

Told that House members were worried about losing hot dogs for the needy, Ridgeway cracked: “Well, then maybe they’ll get some healthy food.”

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