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Talks On Mo. Manufacturing Incentives Stalemate

Fri, 05/13/2011 - 9:51am
David A. Lieb, Associated Press

JEFFERSON CITY, Mo. (AP) — The prospects for an overhaul of Missouri's economic incentive programs waned Friday as lawmakers neared the end of the last day of their 2011 session.

Although negotiations continued, House and Senate members said they had yet to settle their differences on a package that would end or reduce many of the state's existing incentives for businesses, developers and residents while creating new tax breaks to attract international cargo shippers to the St. Louis airport, big-time amateur sporting events and new science and technology companies to the state.

"At this point, it's dismal, but it ain't over until it's over," said Rep. John Diehl, R-Town and Country, who has been at the center of negotiations.

Some others shared his outlook.

"I'm not real optimistic at this point that anything will pass," said Senate President Pro Tem Rob Mayer, R-Dexter.

Lawmakers face a 6 p.m. Friday adjournment deadline set by the state constitution.

The fate of a bill granting St. Louis control over its police department — which has been run since the Civil War era by a board with gubernatorial appointees — also appeared linked to the economic development bill. The Senate was holding up a vote on the police bill, which is backed by House leaders, as leverage in its negotiations over the economic incentives legislation.

Several costly bills also remained unresolved, including one reauthorizing taxes on health care providers that help generate about $3 billion annually for the state's Medicaid program. Another lingering bill would renew a roughly $20 million state program that helps pay the prescription drug costs of about 226,000 low-income seniors and disabled residents covered by the federal Medicare program.

A select group of House and Senate members have been working privately to try to settle differences on the economic development legislation. Others were eagerly waiting for something to vote upon.

If the economic incentives bill "works out, I think it was a fabulously, fabulously successful session," said Sen. Jolie Justus, D-Kansas City, "and if it not, I think it will be frustrating. ... It's a failure of the Legislature not to have broken the gridlock and gotten this done."

The last-day drama came despite a first-day pledge from Republican and Democratic leaders alike to make job creation initiatives their top priority. Democratic Gov. Jay Nixon also stressed job-creation efforts in his State of the State address to lawmakers. But House and Senate members had different visions for what that should entail.

Chief among the disagreements this session has been the Senate's insistence that any expansion or creation of tax breaks be offset with budgetary savings by eliminating or reducing existing tax credits. Nixon also has embraced the call for a tax-credit overhaul, which was recommended last fall by a commission he created. The House and Senate also were at odds over how much discretion to grant Nixon's administration in awarding tax incentives.

Missouri has about five dozen different tax credits, which last year waived $521 million in state income taxes. Much of that money went to businesses or developers. But some tax credits promote social causes, such as adoptions or donations to food pantries and domestic violence shelters.

Among the programs targeted for reductions are ones offering tax credits for the renovation of historic buildings and the development of low-income housing. Among those targeted for elimination is a decades-old income tax credit intended to help offset the rent payments of low-income seniors and disabled residents.

Topping the list of new proposals is an incentive program intended to transform St. Louis-Lambert International Airport into a hub for international trade by offering tax breaks for freight forwarders, warehouses, businesses that ship agriculture products to foreign companies and manufacturers that convert imports into new products. The provisions of the "Aerotropolis Trade Incentive and Tax Credit Act" are prompted largely by interest from a Chinese cargo company but would apply to all kinds of products shipped to or from any country.

Some business groups have mounted an intense push to pass the airport incentives, arguing that Missouri could miss its chance to become a trade hub for Chinese goods if it does not act soon.

"This has to happen now," said Dan Mehan, vice chairman of the Midwest-China Hub Commission and president of the Missouri Chamber of Commerce and Industry. "We will sacrifice a lot to get it."

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