Mo. House passes key bills in special session

Wednesday, June 30, 2010

JEFFERSON CITY, Mo. -- A special legislative session offering incentives to Missouri's automobile industry was transformed Tuesday into a tax-break boon for elderly homeowners, airplane makers and more.

The Missouri House passed legislation extending tax breaks to senior citizens, computerized data centers and manufacturers in a broadly defined transportation sector encompassing everything from bicycles to rockets and food-vendor carts to floating offshore oil platforms.

Lawmakers acknowledged the legislation goes beyond the agenda set by Gov. Jay Nixon for the special session, possibly violating the Missouri Constitution. House Speaker Ron Richard said he has asked Nixon to expand his special session call to include the additional tax incentives -- something Nixon has indicated he is unlikely to do.

The House passed the tax-break legislation 125-19.

It also voted 92-54 to pass the second item included on Nixon's special session agenda -- an overhaul of Missouri's main retirement systems that would force most new employees to make payments toward their pensions.

Both bills now go to the Senate, where there has been less support for expanding tax breaks in tough budget times and greater support for a pension overhaul.

As originally envisioned, the projected pension savings were intended to offset the costs of the automaker incentives. But the House separated the financial link, instead carving the automaker incentives out of the money allotted for an existing business tax credit program.

The primary purpose of the special session is to entice Ford Motor Co. to make a new vehicle model at its Claycomo assembly plant near Kansas City, which local union leaders say is due to stop making the Ford Escape by the end of next year.

Officials at Ford have declined to discuss their plans for the plant or future products, but Missouri officials say Ford will be making those decisions soon and already is getting offers from other states.

Sponsoring Rep. Jerry Nolte, R-Gladstone, said the Claycomo factory is among the highest taxed plants in the Ford system. Ford could get as much as $100 million of tax incentives over 10 years from the Missouri legislation. Additional money could go to its suppliers and other transportation manufacturers.

"This is not about a giveaway, this is not about a corporate handout," Nolte said. "This is about giving our companies and giving our workers the tools to compete in an atmosphere that is more competitive than it ever has been."

Few lawmakers objected when the bill was expanded Tuesday to extend the life of existing tax credit for senior and disabled homeowners. Representatives overwhelmingly defeated an attempt to strip new tax breaks for data storage centers and to reverse an earlier committee decision expanding the automotive incentives to the entire transportation sector.

Nixon's special session proclamation was narrowly tailored to cover incentives only for automobile manufacturers and their suppliers.

Rep. Ray Salva, D-Sugar Creek, argued that colleagues were violating their oaths to abide by the state constitution by tacking on other tax breaks.

If "we don't uphold what we raised our hand and sweared to God for, what good are we?" Salva asked rhetorically. "We have rules, we ought to follow them."

The retirement changes would force most new state employees -- and newly elected lawmakers -- to start contributing 4 percent of their pay toward their pension plans while increasing the minimum age at which they can retire from 62 years old to 65. But House members rejected an effort to require employees to spend a decade working for the state to qualify for pensions, instead of the current five years.

Supporters say the changes are needed to save the state money because pensions are funded through general state tax dollars and the retirement systems' investment earnings. But critics fear that souring the pension benefits of workers making relatively low salaries could hurt the ability to recruit quality workers.

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