County loses round in tax fight

Saturday, May 12, 2007

Area lawmakers are assuring Cape Girardeau city and county officials that they will find a way to protect the local sales tax base despite passage of an economic development bill that could cost the county more than $365,000 a year.

In the twisting course of writing legislation, Cape Girardeau County Presiding Commissioner Gerald Jones thought he had succeeded in a lobbying effort to limit a sales tax exemption for manufacturers. Jones had enlisted the support of Cape Girardeau and Jackson officials, and a bill written to his liking emerged from a legislative negotiating committee.

But the compromise on the bill broke down, and Thursday the Missouri House voted to accept the full Senate version of the bill rather than resume talks on the measure. That put a sales tax exemption for utilities and equipment purchased by manufacturers on Gov. Matt Blunt's desk, and it included an exemption from local sales taxes.

With the death of the compromise version, Jones scrambled to contact area legislators to get the local tax restored through another bill.

"I raised hell, yes sir," Jones said. "You have got to protect yourself. I wasn't going to sit still and say, 'Woe is me.'"

A single business, Procter & Gamble's production facility on Highway 177, pays $365,000 in sales taxes to the county for items covered in the exemption. Other manufacturing firms add to that, and the city of Cape Gir?ardeau had estimated the loss at about $100,000.

The bill in question is a major revision of economic development laws. It includes a $12 million annual tax credit, up to $100 million, for redeveloping large tracts aimed at depressed areas of St. Louis, an expansion of the Quality Jobs Act tax credits and an increase in the film production tax credit to $10.5 million from $1.5 million.

But the negotiated version was stalled in the Senate by lawmakers who objected to its price tag. To avoid losing the whole bill, the Missouri House voted Thursday to accept the Senate version.

"We've given them chance after chance to work with us and they continue to have one new senator pop up, another senator pop up with this demand, that demand," House Speaker Rod Jetton, R-Marble Hill, said in a news release. "Now we've done everything they've asked, and they still can't come through."

Sen. Jason Crowell, R-Cape Gir?ardeau, and Reps. Nathan Cooper, R-Cape Girardeau, and Scott Lipke, R-Jackson, are working to find bills that can include the language protecting local revenue, Jones said.

The provision including protection for the local tax base is already attached to a bill ready for a final vote and has been added to others further back in the legislative process, Crowell said.

The trick, Crowell said, is to get the provision passed the way the county wants it and persuade Blunt to sign the preferred version after signing the economic development bill. "We are working with Gerald to fix all that, and I am working to make sure the correct language gets signed by the governor."

Every bill that could possibly be a home for the provision protecting local tax revenue will be amended if possible, Cooper said. "We are going to try the shotgun approach, and hopefully we will hit one of the targets."

Another path to protect the tax base would be a court challenge to the exemption, which Jones has not ruled out. In a letter sent to Crowell and other lawmakers last month, Jones said the county would consider seeking a court ruling under the tax-limitation Hancock Amendment that the legislature can't reduce local revenue without replacing them.

The efforts of area lawmakers are welcome, Jones said, but a lawsuit could still be in the wings if the tax base isn't restored. "I had already called an attorney about possibly representing us. I wasn't going to put up with that, and they took me seriously."

335-6611, extension 126

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