(Jefferson City) (AP) – Missouri senators endorsed new incentives for high-tech businesses and international exporters early Wednesday as part of a renewed push to overhaul the state’s numerous tax credit programs that divert hundreds of millions of dollars annually from the state treasury.
Senators gave the legislation initial approval after a lengthy debate that began Tuesday afternoon and concluded around 3:30 a.m. Wednesday. The bill, which still needs another Senate vote, essentially marks a starting point for negotiations with the House, which has generally been more supportive of new incentives and more reluctant than the Senate to pare back the state’s existing tax credits.
The Senate legislation would authorize up to $60 million in tax credits over eight years for air cargo exports intended primarily to benefit Lambert-St. Louis International Airport and would allow $36 million of tax credits over six years for so-called angel investors in startup businesses. It also creates new state and local tax breaks for computer data centers.
To offset those costs, the legislation sharply lowers the amount of tax credits available to develop low-income housing and renovate historic buildings. It also eliminates some other tax credits.
Sponsoring Sen. Eric Schmitt, R-Glendale, estimated the legislation could save Missouri $800 million over 15 years, due largely to the cumulative effect of the lower annual limits on the housing and historic development programs.
Missouri has more than 60 tax credit programs that last year waived $629 million in revenues to encourage businesses to add jobs, entice individuals to donate to certain charitable causes and offset part of the property taxes paid by lower-income seniors and disabled residents, among other things. Some lawmakers and Gov. Jay Nixon have raised concerns about the growing cost of the tax credits, especially as Missouri has cut funding to education and other services during several consecutive lean budgets.
But past efforts to overhaul Missouri’s tax credits have failed, most notably in a 2011 special session devoted to the topic.
“This is the year, because we’ve been so close, to complete the job,” said Schmitt, chairman of the Senate Jobs, Economic Development and Local Government Committee.
He was opposed by Sen. John Lamping, among others, who described the newly proposed incentives as giveaways to special interests and argued they wouldn’t provide a good economic return for taxpayers.
“The desire to say we’ve done something, and the desire to invest other people’s money … it’s very attractive,” bemoaned Lamping, R-St. Louis County.
Missouri currently ranks near the top among states in the amount of tax credits authorized under the housing and historic development programs. The legislation would set a $50 million annual cap on historic preservation credits – down from the current $140 million annual limit – and a $55 million annual cap on low-income housing tax credits, which is a cut from the current $190 million limit.
Both of those limits are far lower than the House has previously been willing to support. But Sen. Brad Lager, R-Savannah, argued in favor of a low limit as a starting point for negotiations with the House.
“It’s time to prioritize. It’s time to understand we can’t spend hundreds of millions of dollars investing in old buildings” when other states are enacting new job-creation initiatives, Lager said.
Schmitt particularly touted the importance of the air export incentives, which he said could attract flights that might otherwise land and depart in Chicago. He compared the future economic potential of air cargo to that of the river travel that helped build St. Louis into one the nation’s leading cities in the 1800s and early 1900s.
“What made St. Louis great before – being at the center of trade – will make us great again,” Schmitt said.