Missouri Senate to try again on tax breaks

JEFFERSON CITY, Mo. -- Compromise has failed. So has a grueling late-night Senate session designed to wait out the opposition.

But supporters of a tax-incentive package for Missouri businesses vowed Thursday that they will regroup and return for a sixth attempt at passing the bill before the May 15 end of the legislative session.

The economic development legislation is a priority for Democratic Gov. Jay Nixon and Republican legislative leaders alike, who contend thousands of existing and potential Missouri jobs are at stake.

But some senators have seized upon the bill as a chance to force restrictions upon Missouri's numerous income tax credits, which they contend are sapping state dollars.

That tension between expanding and curtailing tax incentives has been amplified by two particular senators.

Republican Sen. Jason Crowell of Cape Girardeau has vowed to filibuster any proposal that does not make tax credits subject to the state budget process. But Democratic Sen. Jeff Smith of St. Louis has suggested he would filibuster any bill that imposes significant caps on certain tax credits, particularly one for the redevelopment of historic buildings.

After more than 10 hours of debate that began late Wednesday afternoon, senators quit early Thursday morning without voting on the economic development legislation. When they reconvened later Thursday, they moved on to other bills and then went home for a four-day Easter weekend.

Senate President Pro Tem Charlie Shields, R-St. Joseph, said efforts to forge a compromise will continue.

"We still need an economic development bill, and there are probably reasonable reforms that can be made to tax credits," Shields said.

House Speaker Ron Richard, growing skeptical that the Senate can reach a compromise on its 264-page bill, said his chamber would start amending pieces of its previously passed economic development package onto separate bills and sending them over to the Senate again.

"I have no other option but to break it up," said Richard, R-Joplin. "I just don't know what else I can do."

A key provision in the House package, also backed by Nixon, would eliminate a $60 million cap on the amount of tax credits that can be issued under the Quality Jobs program. The Senate version would merely raise the cap to $75 million for the program, which offers incentives to businesses that add jobs with at least average wages and health insurance.

Both versions would create a tax credit for investors in technology-based companies that are in the early stages of development.

They also would create a tax credit for companies conducting research in certain industries, including agricultural biotechnology, plant genomics, medical devices, pharmaceuticals, aerospace and alternative energy.

Unlike the House version, the Senate plan would place an annual cap on the amount of tax credits that can be authorized for each of the state's dozens of incentive programs.

Tax credits for the renovation of historic buildings, which currently are unlimited, would be capped at $75 million annually, far shy of the of the $170 million authorized in the 2008 fiscal year and just half of the average annual amount authorized over the past five years.

Some developers contend a cap could cripple the redevelopment program, which has been used extensively to revitalize parts of St. Louis and Kansas City but also is available for homes and businesses statewide.

In an attempted concession to Crowell, the Senate legislation would subject tax credits to the budget process by requiring an annual allocation of how much money could be authorized for each program.

But Crowell also wants to limit the ability of the Missouri Development Finance Board to issue tax credits. The board gained public attention recently for approving $25 million in tax credits for the Kansas City Chiefs, part of which would be used to finance a new training facility in St. Joseph.

The finance board also is considering tax credits for the proposed Ballpark Village development next to the St. Louis Cardinals stadium.

The Senate bill would cap the board's annual tax credits at $10 million but would allow credits of up to $25 million annually with the approval of three executive branch officials and the House and Senate budget chairmen. That would put the board under tighter reins than currently.

Senators on Thursday defeated Crowell's amendments to impose an inflexible cap of $10 million, $15 million or a mere $1 on the board's tax credits. A cap of $1 would have effectively eliminated the board's tax credit authority.