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Missouri Legislature Fails once again to
Break Tax Credit Reform "Road Block" and Move Forward on Economic
Development Programs
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Sen. Eric Schmitt
(R-Glendale)
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Rep. Anne Zerr
(R-St.
Charles)
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A comprehensive economic development
package that included both tax credit reforms and several
important new economic development tools for Missouri failed to
overcome a Senate filibuster on the last day of the legislative session, marking the fifth time in four
years that the General Assembly has been unable to send a major
economic development bill to Governor Jay Nixon.
The bill (HB
698), sponsored by Rep. Anne Zerr (R-St.
Charles), would have reduced the annual caps on the state's
largest tax credit programs and addressed several Chamber priorities. The
Historic Preservation tax credit would have been
capped at $100 million (including $10 million for small
projects), and the Low-Income Housing tax credit
would have been capped at $130 million for FY 2014 and reduced to
$110 million by FY 2018. The bill would also have created
the Missouri Export Incentive Act to help create
an international air cargo hub at Lambert-St. Louis International
Airport, an Angel Tax Credit to help local
high-tech start-up companies attract risk capital,
and Data Center incentives to attract large
IT capital investments. House and Senate conferees had signed off
on the deal the night before, which was then passed by the House
on the last day of session before dying in the Senate.
Senate Jobs, Economic Development and Local Government Committee
Chair Eric Schmitt (R-Glendale) asked his
colleagues "not to let the perfect be the enemy of the good,"
explaining that while the deal might not contain everything they
wanted, it would nevertheless save the
state $460 million over 15 years.
An extension of the New Markets Tax Credit
also fell short during the final hours of session.
Missouri's New Markets Tax
Credit leverages a federal program to attract national
investments to low-income areas of the state. The bill (SB
112) had been used as a vehicle for a larger economic
development package, but when the deal fell apart the House still
had an opportunity to pass the underlying bill to extend the New Markets program;
however, the House did not take action on the bill,
causing it to be yet another casualty of the tax credit road
block.
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Sen. Mike Kehoe
(R-Jefferson City)
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SIMILAR
FATE BEFALLS KEY TRANSPORTATION MEASURE
The Senate similarly was unable to overcome a
filibuster against another key Chamber priority, SJR
16, a joint resolution that would have given Missourians an
opportunity to vote on whether to invest in the
state’s transportation infrastructure system with
a one-cent sales tax over the next ten years. The measure,
sponsored by Sen. Mike Kehoe (R-Jefferson City),
represented the culmination of four years of work by a wide
variety of economic development, business, civic and other
stakeholders that have built a consensus on this approach
throughout the state. It also contained important
governmental accountability features, such as a prohibition on
tolling or fuel tax increases.
SOME BRIGHT SPOTS FOR ECONOMIC DEVELOPMENT
While the Chamber is disappointed that the
legislature could not move forward on these issues, there were
several good economic development measures that passed this
year. A tax credit for the attraction of amateur
sporting events will help our region be more competitive
in attracting events like NCAA tournaments and Olympic
trials. These sporting events increase tourism, boosting
local businesses and generating additional sales tax revenue from
hotel stays, restaurants, and other attractions. The
legislature also allocated more than $6 million for the
Missouri Technology Corporation (MTC) in the state's
annual budget. The MTC is a public-private partnership that
promotes entrepreneurship and fosters the growth of new and
emerging high-tech companies. The legislature also passed
"Missouri Works" and the "Missouri Works
Training Program" to streamline the
state's business development incentives and job training
programs. Missouri Works will combine several incentive
programs, including Missouri Quality Jobs, under a new annual cap
of $106 million, which will be increased to $116 million by FY
2016.
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Missouri Business
Climate Strengthened through
Workers' Compensation Reform, Unemployment Insurance
Reform
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Sen. Scott Rupp
(R-Wentzville)
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One major bright spot in
the 2013 Missouri Legislative session was passage
of Senate
Bill 1, a workers' compensation reform
package sponsored by Sen. Scott Rupp
(R-Wentzville). The bill, which has been a Chamber priority
for several years, will restore solvency to the state's Second
Injury Fund and return occupational disease cases to
the workers' compensation system as
intended.
The Second Injury Fund
was created after World War II to
cover employees with pre-existing injuries,
such as wounded veterans. However, the state had to stop
making payments from the Fund due to lack of
funds, and it now owes $32
million to 1,200 injured workers, with more than 30,000 claims
pending adjudication. Senate Bill 1
narrows the eligible claims handled by
the Fund, reduces the interest rate being paid on outstanding
claims, and
temporarily increases an employer surcharge to restore
the Fund's solvency. The bill also
closes a legal loophole created in 2005 that has
allowed occupational disease cases to be handled
outside of the workers' compensation system. Senate Bill 1 ensures
that employees who contract occupational diseases
will be allowed to continue to have their claims covered under
the state's workers' compensation system.
Another Chamber priority
that will strengthen unemployment insurance laws
is Senate
Bill 28, sponsored by Sen. Will Kraus
(R-Lee's Summit). The bill modifies the
definition for “misconduct” so employees who are
terminated for blatantly breaking company policy or engaging in
illegal behavior are not eligible for unemployment
benefits. House Bill 611, sponsored by Rep.
Bill Lant (R-Joplin), was also passed to ensure the
state's unemployment insurance program is in compliance with the
federal Trade Adjustment Extension Act of 2011. Missouri
and its employers were at risk of losing $1 billion in federal
tax credits, grants and other federal funds if certain
requirements were not met to prevent fraud and protect the
state's unemployment funds. The bill would implement new
penalties for fraudulent claims made by individuals who continue
to accept benefits after returning to work, and require employers
to provide separation information in a more timely
manner.
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Legislature
Did Not Act on Medicaid
Transformation, but will Study Issue During
Interim
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The General Assembly had a unique
opportunity this year to leverage federal funds for the expansion
of Medicaid eligibility, which a recent study has estimated would
provide health insurance coverage for an additional 220,000
low-income Missourians and create 24,000 jobs in
health care and related industries. Virtually every chamber of commerce in
Missouri, along with many other organizations, endorsed Medicaid
transformation.
Because the Affordable Care Act assumed that more
low-income individuals would be insured starting in 2014 due to
state Medicaid expansion, federal funding that helps reimburse
hospitals for uncompensated care is scheduled to be significantly
reduced. Without federal funding to help cover the cost of
the uninsured, hospitals will be forced to make up that revenue
elsewhere, which is expected to result in a "hidden
health care tax" on privately insured
Missourians.
The Chamber is very disappointed the legislature
chose not to expand eligibility this year, since federal law requires that the federal government
pay 100% of the costs for the first three years.
Understanding the challenges associated with the federal budget
deficit and significant debt burdens, we nevertheless believe
returning such federal funding to Missouri is important because
Missouri employers and workers have contributed a substantial
amount of that funding with their own taxes. However, we
recognize that this is a complex matter and that legitimate
concerns were raised during the legislative process about
potential reforms needed in the Medicaid system. We are
encouraged that a Joint Committee on Medicaid
Transformation will study the issue during the interim,
and will work to secure passage of this important measure next
year.
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contact the Chamber's public policy team
The Advocate is published periodically
to inform Chamber members and government offices about important
public policy matters at the state, federal and local levels. It
seeks to provide timely, in-depth coverage on regional issues,
and, at times, to call Chamber members to action. We welcome your
comments and suggestions.
Chip Casteel
| Senior V.P. of Public
Policy | 314.444.1107 | ccasteel@stlregionalchamber.com
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| Eric Scheider
| Senior Director of Policy
Development | 314.444.1148 |
eschneider@stlregionalchamber.com |
| Christine Page
| Director of Government
Affairs | 314.444.1144 |
cpage@stlregionalchamber.com |
| Sherri
Bailey | Executive
Assistant for Public Policy |
314.444.1134 |
sbailey@stlregionalchamber.com |
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