Saving Missouri taxpayers nearly $1 billion over the next 15 years, the Missouri Senate today approved 26 to 8 the Senate Substitute for Senate Bill 8. The measure, introduced and considered as part of a special session called by the governor, is aimed at creating performance-based tax incentive programs that will help spur job creation while requiring mandatory reviews and caps to dramatically reduce the amount of funding dedicated to tax credits annually. The measure includes the combination of several existing performance-based credits to create a more flexible program called “Compete Missouri”; the elimination, sunset, capping or making subject to appropriations a number of tax credit programs; and the creation of tax incentives to support international trade exports at Lambert-St. Louis International Airport. The Senate also advanced Senate Substitute for Senate Bill 7 by a vote of 30 to 4 that would target growth in high-tech areas of science and innovation industries.

 Senate Leader Robert N. Mayer, R-Dexter, said the bill balances the growth of performance-based programs with capping and ending other tax credits. Mayer, the bill’s sponsor, said it is part of the solution to Missouri’s on-going budget crisis.

 “Our state’s economy is reliant on people working, so the solution is putting people back to work in good-paying jobs with benefits,” said Mayer. “Offering incentives to businesses in a financially responsible way to expand or relocate to Missouri is a step in making those new jobs real and available.”

 The bill is estimated to save taxpayers up to $947 million over the next 15 years. Missouri’s current tax credit system consistently expends more than half a billion dollars annually.

A main provision in the bill combines six current performance-based tax credit programs to create a new program titled “Compete Missouri.” Mayer said the new program is designed to allow quicker action and flexibility to the Department of Economic Development when working to lure companies to locate or expand in Missouri.

“By consolidating several of the performance-based credits such as the Quality Jobs Act where we can tangibly see the outcomes of our investment, we give the Department of Economic Development more flexibility to compete to bring jobs to Missouri,” said Mayer. “Compete Missouri can be an option for companies and businesses across the state, including any facilities that would be developed in relation to our efforts to encourage international exports at Lambert-St. Louis International Airport.

The Aerotropolis Trade Incentive and Tax Credit Act would play a key factor in developing international trade hub at Lambert–St. Louis International Airport, said Sen. Eric Schmitt, R-Glendale. Schmitt helped craft the compromise securing air export tax incentives for freight forwarders capped at $60 million over eight years. 

  “It is vitally important we seize this opportunity to encourage new investment and jobs we currently do not have in our state,” Schmitt said. “This provision can help catalyze this historic opportunity for St. Louis and our state as a whole — from the individuals that produce agricultural and machinery exports the international market demands to workers in St. Louis who could fill job openings created by these new businesses. Developing an international cargo hub can change the trajectory of our economy for decades.”

 Missouri’s more costly tax credit programs, including Low-Income Housing and Historic Preservation, are capped and sunset after seven years. Under the Historic Preservation credit, the total for large projects (more than $275,000 in tax credits) would be capped at $80 million annually, while the total for small projects (less than $275,000 in tax credits) would be capped at $10 million annually. Owner occupied residential projects would be limited to $125,000 in tax credits per project. The Low-Income Housing Tax Credits will be stepped down annually over a four year period from $125 million to $70 million by FY2015. The act also prohibits the stacking of state historic preservation tax credits with state 9 percent low-income housing tax credits.

 “We must rein in our spending on the unchecked tax credit programs that currently exist,” said Mayer. “This bill does that by phasing out some tax credits while capping and limiting spending on others, plus requiring mandatory reviews of the programs by creating a statutory end date for all of them.”

 The bill also creates state and local sales and use tax exemptions for new and expanding data centers and permits donation lease agreements between municipalities and data center projects as well as includes $3 million to attract amateur sporting events to Missouri by offering a credit per ticket sold to the event.

 Senate Bill 7, also sponsored by Mayer, would create the Missouri Science and Innovation Reinvestment Act (MOSIRA) with funding for the tax credit subject to appropriations. The MOSIRA proposal would create a funding source to target growth in high-tech areas by capturing a small percentage of the growth in state revenue over a base year from a designated group of Missouri science and innovation companies. Money generated would then go into a fund that would continue to do outreach to attract more high-tech jobs.

 An emergency clause on SB8 also passed, meaning provisions of the bill would take effect immediately upon the governor’s signature. The measures now advance to the House for similar consideration.

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