The Associated Press October 6, 2011, 5:40PM ET

Mo. House OKs jobs bill that differs with Senate

The Missouri House passed legislation Thursday offering an across-the-board tax cut to corporations, extra incentives to businesses in certain favored fields and a sales tax break to shoppers who buy products made in the United States.

House members voted 98-48 for the wide-ranging bill that supporters touted as a means of spurring job creation in a state where unemployment remains around 9 percent. But the bill's ultimate fate remains uncertain, because it differs significantly from a version passed by the Senate last month and from the agenda set for the special legislative session by Gov. Jay Nixon.

The next decision will be the Senate's. It could accept the House bill, which seems unlikely. It could ask for negotiations with the House to come up with a compromise. Or it could declare the differences irreconcilable and simply end the special session. No Senate decision is expected until at least next week.

House Speaker Steven Tilley expressed a new willingness Thursday to conference with the Senate over differences. But he declared of the House version: "You've got an economic development bill that I think really can make a difference in the state of Missouri."

In one of the biggest additions, the House plan would reduce Missouri's corporate income tax rate from 6.25 percent to 5.5 percent in January. Had that proposal already been in effect, it would have shaved nearly $37 million from the $306 million of corporate income taxes collected by Missouri during the 2011 fiscal year.

"If we're going to do economic development in this state, I think we absolutely need a tax cut to be part of it," said Rep. Andrew Koenig, R-Winchester, who sponsored the amendment that passed on a largely party-line vote.

Democratic lawmakers argued the tax cut ultimately would hurt Missouri's economy by reducing the money available for public schools and universities, which provide a skilled workforce. Higher education institutions already have sustained tens of millions of dollars of state funding cuts in recent years, and Missouri has failed to provide K-12 school districts with the full amount of money called for under the state's school funding formula.

The proposed corporate tax cut "is a strike at the heart of economic development in Missouri, because if we can't put our kids in school, nobody's coming here" for jobs, said Rep. Chris Kelly, D-Columbia.

Senate President Pro Tem Rob Mayer said he generally supports a corporate income tax cut but is unsure whether it's best to consider it during the current special session or when lawmakers reconvene in January for their regular session. If the Senate embraces it, the corporate tax cut would be the second passed this year. In April, Nixon signed a bill phasing out Missouri's corporate franchise tax, which applies to assets not income.

There was no immediate estimate about how much revenue Missouri might forego from another tax cut added Thursday by the House that would exempt products made in the United States from the state sales tax during a one-week period from July 1-7 in 2012 and 2013.

The House legislation would authorize several specific tax credits that also were included in the Senate version, including new incentives for computer data centers, amateur sports events and businesses that handle international exports through Lambert-St. Louis International Airport. Although the details vary, both chambers' versions also would create new tax incentives intended to keep Kansas City-area businesses from being lured to nearby Kansas. And both versions offer the potential for Missouri to provide upfront cash incentives to some businesses.

But the House version doesn't go as far as the Senate bill in curtailing some of Missouri's existing tax credit programs, a move that had been counted upon to help finance the new business incentives.

House members voted 131-17 to defeat an amendment that would have placed a July 2018 expiration date on two of Missouri's most expensive tax credit programs, which waived a combined $250 million of taxes last year to promote the construction of low-income housing and renovation of historic buildings. Instead, representatives approved an amendment that would allow legislators to vote in 2016 on a measure to halt the tax credits.

Representatives touted the amendment as a potential compromise with Senate leaders, who have insisted that so-called "sunset" dates be placed on developer tax credits. But Mayer reiterated Thursday that it would be "impossible or difficult" to pass any bill in the Senate that lacks program expiration dates.

If "they feel so strongly about taking care of low-income housing developers by not putting sunsets on the program, it might not do any good to go to conference," said Mayer, R-Dexter.

Unlike the Senate bill, the House version also would expand a tax credit for developers who assemble large tracts of land in impoverished areas. The program has been used solely by a firm associated with St. Louis developer Paul McKee. The House bill would expand the time period for which McKee could claim tax credits for his interest costs -- something Nixon specifically sought to exclude from the special session agenda. The House version also seeks to make the program available for redevelopers of the former Bannister Mall site in Kansas City.

Another provision added by the House could provide a property tax break for businesses destroyed by the Joplin tornado or recent flooding, but a similar provision already has stalled in the Senate.


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