Blunt approves manufacturing tax break

A sales tax exemption that caused heartburn for Cape Gir-ardeau County officials was signed into law Wednesday by Gov. Matt Blunt, but the distress may not be over.

Missouri lawmakers passed two versions of a business tax break that exempts utility purchases, chemicals used in manufacturing, and machinery, equipment and materials used for research and development related to manufacturing.

The version signed Wednesday limits the exemption to state sales taxes, while another version pending on Blunt's desk would take away local revenue from those purchases.

The pending version, however, is included in a major revision of state economic development incentives that is undergoing close scrutiny from Blunt's staff, spokeswoman Jessica Robinson said.

If Blunt does sign the economic development bill, it could be up to the courts to decide which exemption will take effect and which is void, Robinson said.

The sales tax exemption could cost Cape Girardeau County $365,000 annually on the utility purchases by Procter & Gamble's plant on Highway 177.

The cost would be higher because other manufacturers would also receive the exemption, and city officials in Cape Girardeau estimated that the city's loss could be about $100,000 a year.

The economic development bill must be scrutinized to make sure it doesn't create unintended consequences and is affordable, Robinson said.

"There were changes added throughout the process where there wasn't appropriate time or a real specific estimate of what the impact on the state budget would be," she said.

Estimates accompanying the final version of the economic development bill showed it could reduce state tax receipts by $100 million or more annually. The legislative office that produces those estimates was unable to put a price tag on the sales tax exemption in the bill signed by Blunt.

The measure signed by Blunt also includes authority for Perry County to seek voter approval of a sales tax to support youth and senior citizen programs.

The Missouri Chamber of Commerce and Industry wanted the exemption applied to state and local taxes but is pleased that the state exemption became law, said Dan Mehan, president of the chamber.

The chamber will be holding meetings for manufacturers across the state to explain the new tax break, including a session June 20 on the Southeast Missouri State University campus in Cape Girardeau.

"This is to make sure the manufacturing sector understands the very significant benefit it allows them," Mehan said.

The exemption is an important economic development tool to keep Missouri on even footing with neighboring states, Mehan said. In the long run, he said, it will help Missouri businesses keep jobs and expand operations that will result in increased state revenue.

"It is sound, and it will pay back in revenue generated when a plant decides to put a new shift in Missouri instead of another state," he said. "We take a jump in their eyes as the place to be, and the manufacturing sector generally creates higher paying jobs than the average in Missouri."

The chamber, in a news release announcing Blunt's action, said the tax change should help stem the flow of manufacturing jobs out of the state. The state has lost about 65,000 manufacturing jobs since 2000, the chamber said.

Mehan commended Sen. Jason Crowell, R-Cape Girardeau, for pushing the exemption. Crowell also helped rewrite the exemption to prevent the loss of local revenue.

rkeller@semissourian.com

335-6611, extension 126