For the past several years, one particular issue in Jefferson City has repeatedly escaped resolution. Many hours of work in Legislative committees and debate on the floor of the House and Senate had produced no real breakthrough. But this week revealed the hint of a silver lining as the Senate passed a landmark piece of legislation that appears to address the concerns of all involved.
The underlying issue is that of economic development and tax credits. For years, the Legislature has divided into two camps – the one side believing that the state earns a good return on tax credits and that they promote economic growth. The other side maintains that tax credits are inefficient and that they ultimately decrease state tax revenue.
By way of background, a tax credit is a reduction in state tax liability. These credits are granted by the State of Missouri when a person or corporation engages in certain activities (hiring new workers, expanding their business, giving to certain non-profit organizations, etc.). Often they are targeted at certain industries the state is trying to attract.
Over time, the amount of tax credits being given out had grown to the tune of hundreds of millions of dollars the state was forgoing in tax revenue. With the recent slump in the economy, all sorts of programs and departments were forced to tighten their belts and the eyes of the Legislature once again turned to our policy on tax credits.
The bill that was hammered out this week after several hours of constructive debate represents a compromise that all parties can live with. It eliminates or reduces certain tax credits that were producing little or no revenue. It also gave the Legislature more control over the amount of certain tax credits the state was offering by forcing them through the regular appropriations process that schools and other state agencies have to go through each year. The bill also created certain new incentives, such as one targeted at making Lambert Airport (and the greater metro area) a hub for international trade. If proposed new air hub project comes to pass, the state will still gain a projected $1.5 billion in net savings under the compromise legislation over the next 15 years. No state tax credits will be awarded if the air hub is not realized.
I am pleased with the work of the Senate this week. This legislation will help streamline the state’s economic development programs and make them more efficient. After final Senate approval, the bill will be sent to the House for its consideration.