Lawmakers defeat China hub bill; $280,000 spent on special session

JEFFERSON CITY — The special session of Missouri's General Assembly ended Thursday without agreement on most of the items requested by Gov. Jay Nixon.

The major issue not to gain approval was a $360 million package of tax breaks for the development of an air cargo transport hub with China in St. Louis.

It was only the third time in at least 50 years that lawmakers failed to pass the major issue for which a Missouri governor had called a special session.

The House adjourned Thursday without plans to meet again before the automatic adjournment on Nov. 5. The Senate adjourned earlier in the week.

The failed China hub bill contained several other requested items, including tax credits for developers, businesses and special interests.

The House and Senate gridlocked over the House's refusal to accept the tax credit restrictions. Senate leaders refused to proceed on a few of the governor's proposals without lawmakers reaching agreement about the tax credits and the China hub bill.

On the 52nd day of the legislative session, the House called it quits. Gov. Jay Nixon said in August that he hoped the session would last two weeks. According to legislative staff, the session cost about $280,000 in mileage reimbursement for members, daily expense costs and extra staff.

Only two of the issues proposed by the governor — lifting a social media restriction and a tax credit for science and technology companies — cleared the special session.

The law restricting school staff from using Facebook to communicate with students was amended. The governor had asked the legislature to repeal the earlier law, but the revision requires school districts to create their own electronic communication policies. The bill was signed by the governor.

The legislature passed the Missouri Science and Innovation Reinvestment Act, but its status is in limbo. The bill contains a provision requiring passage of the failed China hub bill in order for the bill to take effect. In a statement issued when he signed the bill, Nixon announced the administration would implement the measure but questioned the legality of making the law contingent on passage of another bill.

Other issues proposed by Nixon died but could be reintroduced in the next session. They are:

• Incentives for business and increasing foreign trade at the Lambert-St. Louis International Airport. Legislation to create an air cargo hub with China included a package of $60 million in tax breaks for freight companies and $300 million for developers of warehouses and other infrastructure facilities in St. Louis to attract Chinese trade. The bill contained several other separate proposals that died with the China hub bill.

• Compete Missouri, a program to provide incentives to attract and retain businesses, update job training programs and increase the efficiency of business development programs. It was included in the China hub bill. The Senate included it in its version of the bill, but it was removed from the House version.
• Tax breaks for businesses that establish digital data centers in Missouri. This was also included in the China hub bill.
• Tax credits to attract amateur sporting events. This was also tied to China hub bill. 
• Stronger powers to collect back taxes. The governor's proposal would allow the state to contract with private debt-collection agencies to collect back taxes. It also would provide a forgiveness period for some people who owe back taxes. The proposal cleared the House but died in a Senate committee.
• Change in the state's presidential primary election date to March of each presidential election year. As the special session stalled on the issue, Missouri's Republican Party switched to caucuses for selection of convention delegates. The Senate abandoned the bill after a proposal to abolish the presidential primary for just 2012 failed on a tie vote.
• Property tax relief for Joplin businesses. The original proposal would have provided a property tax reduction for businesses with property destroyed by a natural disaster, similar to a tax break provided to residential property owners. The measure passed the House but died in a Senate committee without a vote.
• Control of the St. Louis Metropolitan Police Department shifting to the City of St. Louis. The matter of local control of the city's police department, instead of the current state-controlled board of police commissioners, was barely addressed in the Senate because of the focus on the China hub bill. As he had during the legislature's regular session earlier this year, Senate President Pro Tem Rob Mayer refused to allow a vote on St. Louis local control without approval by the House of an economic development bill that included sunsets on tax credits.

Factors cited by legislators for defeat of the China hub bill included:

• The House and Senate remained gridlocked over the issue of tax credits. Key members of the Senate argued that the state needs to scale back on tax credits because of impending cuts the state will have to make in the budgets for education. The governor proposed and the Senate adopted a provision requiring regular legislative reauthorization of the state's various tax credit programs. The House, by an overwhelming margin, rejected sunsets on two of the state's largest tax credit programs. The House speaker and other House members argued that requiring re-approval for a tax credit program would allow any one member of the Senate to kill a tax credit by filibuster without allowing a full chamber vote on continuation.
• Legislative leaders in both the House and Senate say a major factor causing resistance to the China hub bill were reports about Mamtek, a Chinese manufacturing company in Moberly that essentially vanished after it defaulted on bond payments and failed to create promised jobs under a project that had been touted by the Nixon administration.
• Some fiscal conservatives in Missouri Senate say there is a growing coalition of members who oppose picking winners and losers in tax breaks for business. They argue that economic development tax breaks should be across the board, available to any business that uses the tax benefit to create a new job.
• The Senate majority leader, Sen. Tom Dempsey, R-St. Charles, said term limits played a role because it has led to lawmakers who do not have "a real long-term perspective in working with other members."

The regular session of the General Assembly will begin Jan. 4, 2012. Pre-filing for bills will begin Dec. 1.