2007 Legislation Affecting MEDC (FINAL)

HCS HB 184 – CHILDREN’S SERVICES PROTECTION ACT (Signed by Governor July 5, 2007)

• Prevents sales taxes levied for Children Services Protection from being diverted to TIF projects after August 28, 2007.

SS HB 205 – TOURISM (Signed June 26, 2007)

• Authorizes local transient guest taxes for Pemiscot County, the City of Sullivan, and part of the Sullivan C-II School District in Franklin County.

• Allows additional cities and counties to form theater, cultural arts and entertainment districts that are currently allowed only in St. Charles County.

• Extends the Division of Tourism Supplemental Revenue Fund expiration date to June 30, 2015.

SS SCS HCS HB 327 – ECONOMIC DEVELOPMENT (Vetoed by Governor July 6, 2007)

• TIF provisions:

• Any municipality in St. Louis County, St. Charles County, or Jefferson County to establish a county TIF commission similar to St. Louis County’s current TIF commission to approve TIF projects in those areas;

• Prohibits any new TIF projects in “greenfields” in St. Louis City or County, or in St. Charles, Jefferson or Franklin counties;

• Prohibits any new TIF in a 100-year flood plain (including the "flood plain" as currently designated by FEMA or as amended in the future by FEMA).

• Hunting Heritage Protection Act;

• Land Assemblage Tax Credit – allows a developer to receive a tax credit equal to 50% of the acquisition costs and 100% of the interest on financing used to assemble large tracts of land of at least 75 acres in certain areas. The credit is capped at $12 million per year with a cumulative cap of $100 million;

• Small Business Investment Tax Credit revisions;

• Disabled person home modification tax credit;

• Civil War Site Preservation Tax Credit;

• Maternity Homes Tax Credit cap increase from $2 million to $3 million;

• Qualified Beef Tax Credit with an annual cap of $10 million and cumulative cap of $30 million;

• Equity Investment Tax Credit of up to $15 million annually;

• Film Production Tax Credit changes and increasing the annual cap from $1.5 to $10.5 million;

• Enhanced Enterprise Zone annual cap raised from $7 million to $25 million and other technical changes to the program;

• Missouri Homestead Preservation Act changes in exemption limit;

• Tax incentives for alternative fuel sellers and consumers;

• Motor fuel tax exemptions for public transit and school buses;

• Sales tax exemptions for common carriers used in intrastate commerce;

• Rebuttable presumption that auto manufacturers meet the 25% recycled raw material requirement of the Electrical Energy Direct Pay exemption, eliminating current requirements that require them to prove entitlement to such exemption every year (all current auto manufacturers already qualify for the exemption) ;

• Sales tax exemption for agricultural biotechnology and plant genomics utility and other purchases and for utilities used in pharmaceutical research and development;

• State and local sales tax exemption for all manufacturing inputs;

• Sales tax exemption for aviation jet fuel used for transoceanic flights;

• Eliminates “nexus” for out-of-state companies (including Internet retailers) that own or control a distribution or data processing center in Missouri, allowing such companies to avoid sales and use tax collection requirements and ensuring there is no income tax liability or franchise tax liability for such out-of-state companies. Currently, such out-of-state companies would be required to collect and remit sales or use taxes on sales made to Missouri customers;

• Vocational School Districts are authorized for several counties;

• New Jobs Training Program expiration is extended for an additional 10 years;

• Family Development Account program changes;

• Transportation Development District changes;

• Establishes a Regional Railroad Authority in all Missouri cities and counties;

• Workforce Investment Board is established and the Missouri Training and Employment Council is eliminated;

• Quality Jobs Program changes and increases in tax credit annual cap from $12 million to $30 million;

• Small Business and Entrepreneurial Growth Act allowing small businesses to retain withholding tax if they are adding a certain number of jobs, do not otherwise qualify for Quality Jobs, and pay at least 85% of the county average wage; and,

• Decriminalization of ticket scalping.

SS HCS HB 741 – REGIONAL ECONOMIC DEVELOPMENT DISTRICTS (Signed by Governor June 26, 2007)

• TIF provisions:

• Any municipality in St. Louis County, St. Charles County or Jefferson County to establish a county TIF commission similar to St. Louis County’s current TIF commission and requires municipalities in these counties and Franklin County to receive approval from the county TIF commission for TIF projects after January 1, 2008;

• Requires 2/3 majority vote of a city’s governing body to overturn a TIF commission’s disapproval of a TIF project beginning January 1, 2008;

• Requires the Joint Committee on Tax Policy to study the Missouri Economic Development Code as proposed by the MEDC that would allow voluntary participation by local taxing districts in an incremental financing plan, and to have the results of that study reported to the General Assembly by December 31, 2007 (provisions authorizing the Missouri Economic Development Code were removed from the bill);

• Allows locally owned small businesses in some rural communities to participate in the linked deposit program;

• Disabled person home modification tax credit;

• Makes changes to the Missouri Qualified Biodiesel Producer Incentive Fund program to allow the use of non-Missouri feedstock and other changes;

• Allows local governments to establish Regional Economic Development Districts and to finance projects in such districts with locally imposed sales taxes or TIF and requires reports to be made available to the public annually on the use of district funds;

• Establishes the Rice Certification Committee to control the production, transportation and receipt of rice products in Missouri and to encourage the development of new types of Missouri rice.

SCS HCS HB 795 – LOCAL ECONOMIC DEVELOPMENT (Signed by Governor June 30, 2007)

• Allows some cities and counties to impose transient guest taxes;

• Allows additional cities and counties to form theater, cultural arts and entertainment districts that are currently allowed only in St. Charles County.

CCS HCS SS SCS SB 22 – LOCAL GOVERNMENT (Signed by Governor July 13, 2007)

• Changes statute authorizing creation of Neighborhood Improvement Districts;

• Authorizes transient guest taxes in certain cities and counties and allows cities with a population of less than 7,500 to transfer 40% of tourism tax revenues to their general revenue fund ;

• Provides for an audit of tax collection and expenditures for tourism purposes in political subdivisions that do not currently have such audit procedures;

• Allows merger of certain Community Improvement Districts and makes other changes to the law authorizing such districts;

• Allows additional cities and counties to form theater, cultural arts and entertainment districts that are currently allowed only in St. Charles County;

• Revises the “Kansas and Missouri Regional Investment District Compact” to become the “Missouri Regional Investment District Compact” if Kansas has not enacted their part of the compact by August 28, 2007;

• Allows the City of Joplin to enact a local sales tax for the benefit of nonprofit museums and nonprofit organizations that operate or promote historic sites;

• Authorizes TIF in flood plains in the City of St. Charles in certain circumstances;

• Requires all affected taxing entities in Boone County to receive notice and PILOTs in industrial development project plans approved after May 15, 2005;

• Provides a sales tax exemption for contractors fulfilling contracts with MoDOT;

• Changes provisions regarding Transportation Development Districts;

CCS HCS SB 30 – TAX PROVISIONS (Signed by Governor June 13, 2007)

• Prevents sales taxes levied for Children Services Protection from being diverted to TIF projects after August 28, 2007;

• Authorizes additional transient guest taxes in certain counties and cities;

• Sales tax exemptions for common carriers used in intrastate commerce;

• Sales tax exemption for agricultural biotechnology and plant genomics utility and other purchases and for utilities used in pharmaceutical research and development;

• State sales tax exemption for all manufacturing inputs;

• Sales tax exemption for sales and leases made by cities and counties under a Chapter 100 arrangement, provided such exemption is approved by the Department of Economic Development;

• Family Development Account program changes;

CCS HCS SB 81 – LOCAL ECONOMIC DEVELOPMENT (Signed June 30, 2007)

• Allows some cities and counties to impose transient guest taxes;

• Allows additional cities and counties to form theater, cultural arts and entertainment districts that are currently allowed only in St. Charles County.

SS SCS SB 225 – HUNTING HERITAGE and TIF IN FLOOD PLAINS (Signed by Governor July 3, 2007)

• Establishes a protected area in 100 year flood plains of the Missouri and Mississippi rivers, protecting hunting in such areas with some exceptions;

• Prohibits new TIF projects in 100 year flood plains of the Missouri and Mississippi rivers except:

• Projects that improve flood or drainage protection; and

• Renewable fuel production facility projects as long as no other new development results from the project;
• Flood plain is area designated as such by FEMA and any change in the flood plain as determined by FEMA.

CCS SB 233 – LOCAL TAXES (Signed June 30, 2007)

• Prevents sales taxes levied for Children Services Protection from being diverted to TIF projects after August 28, 2007

• Authorizes the City of Gladstone to impose a local transient guest tax;

• Requires disbursement of excess funds in industrial development projects in Boone County to all affected taxing entities.

CCS HCS SB 376 – TOURISM SUPPLEMENTAL REVENUE (Signed by Governor May 3, 2007)

• Extends the expiration date on the Division of Tourism Supplemental Revenue Fund to June 30, 2015

SS#6 SCS SB 389 – HIGHER EDUCATION (Signed by Governor May 23, 2007)

• Establishes the Lewis and Clark Discovery Initiative, authorizing the transfer of assets from the Missouri Higher Education Loan Authority (MOHELA) to the Lewis and Clark Discovery Fund for:

• Construction of capital projects at public colleges and universities;

• The Missouri Technology Corporation to assist in the commercialization of technologies developed at these institutions;

• Additional scholarship programs;

• Allows public colleges and universities to increase tuition up to the annual change in the Consumer Price Index and provides that institutions that raise tuition above this limit must remit 5% of its state appropriation to the General Revenue Fund with certain exceptions, subject to final decision by the Coordinating Board of Higher Education.

For more detailed information on these bills, including their current status, please consult the actual text of the bills. You may access the text of the bills at: http://house.mo.gov/jointsearch/

Governor Blunt Vetoes Economic Development Bill

For those of you that have not already heard, please be advised Governor Blunt vetoed HB 327 on Friday afternoon, July 6, 2007.

Reasons for the veto as listed in the Governor’s veto letter were:

1. The definition of “employee” was changed in the Quality Jobs Act to create an absurd result had the new definition become law;
2. The Governor objected to the Small Business and Entrepreneurial Growth Act because incentives would be provided for jobs with no health insurance requirement and that paid less than county average wage;
3. The nexus provisions allowing distribution centers to be located in the state by affiliated companies outside the state without creating nexus was deemed “...bad public policy. The resulting effect could put businesses already operating in Missouri at a competitive disadvantage”, according to the Governor’s veto letter;
4. The regional railroad authority would have given eminent domain and taxing authority to unelected officials;
5. The fuel tax exemption for trans-oceanic flights would reduce money that supports regional airports, although such flights do not presently exist; and,
6. The local sales tax exemption for manufacturing inputs would conflict with SB 30. The letter says local government officials had expressed concern about the conflict between the two provisions because the manufacturing inputs would have been exempted from local sales taxes under HB 327 but would not have been exempted under SB 30.

The Governor said in a press release he would consider a special session if legislators were willing to move a bill with just a few of the economic development provisions, including Quality Jobs, Enterprise Zones and New Markets Tax Credits.

The MEDC is committed to working with the Governor and legislative leaders to pass our Quality Jobs and Enhanced Enterprise Zone legislation. We will need to wait and see if legislative leaders and the Governor can agree on terms for a special session.

Missouri Ranks High in Recruitment and Retention Rankings by "Expansion Management"

Missouri is the 13th best state for recruitment and attraction, according to the May/June 2007 edition of "Expansion Management" magazine. The ranking is based on data from the National Policy Research Council Proprietary Database, 2007.

Missouri was also represented in the top 20 of all cities and counties ranked in the article. St. Joseph ranked #1 in small metropolitan areas for recruitment and attraction successes, and Buchanan County was listed as the #1 small county for recruitment and attraction.

Springfield ranked 12th in the mid-size metropolitan area category. Greg Williams, Senior Vice President of Economic Development for the Springfield Area Chamber of Commerce commented on the rankings. "We're pleased to be recognized on a list with so many outstanding places across the country," he said. "Many of the cities on this list are those we consider 'peer cities' and to be mentioned in the company of Tuscon, Albuquerque and Des Moines is gratifying. Springfield is a great place and no longer a best-kept secret to business and professional organizations seeking a new location."

Kansas City ranked 12th in the large metropolitan area class and St. Louis County was 18th in the large county listing. Jackson County was 18th in the mid-size county category.

To see each listing, click on the links below:

Top 15 States for Recruitment & Attraction
Top 20 Large Metros for Recruitment & Attraction
Top 20 Large Counties for Recruitment & Attraction
Top 20 Midsize Metros for Recruitment & Attraction
Top 20 Midsize Counties for Recruitment & Attraction
Top 20 Small Metros for Recruitment & Attraction
Top 20 Small Counties for Recruitment & Attraction

Congratulations to the listed locations and keep up the good work!

Governor Matt Blunt Signs MEDC Regional Economic Development Bill

Warrensburg - June 26, 2007 - Governor Matt Blunt signed the MEDC Regional Economic Development District legislation into law before an attentive crowd of Girls State participants at the University of Central Missouri this evening. MEDC President Lisa Franklin holds a signed copy of HB 741 while Rep. David Pearce, Public Policy Committee Chair Randy Allen, President-elect Ben Jones, and Rep. Darrell Pollock pause for a photo with the Governor following the ceremony (above).



The legislation was originally sponsored by Rep. Pollock and was added to a broader economic development bill sponsored by Rep. Pearce (right). The new law will allow local governments to pursue a regional approach to economic development projects. Prior to passage of the new law, local governments had the ability to work together on regional plans, but had no statutory authority to fund joint projects. Rep. Pearce recognized the MEDC's work in bringing the legislation forward. He also explained the original bill contained the Missouri Economic Development Code, but through the legislative process, the legislature decided to further study that issue for possible action in the next legislative session.






Governor Blunt reiterated his commitment to job creation in comments to the Girls State crowd and commended the participants on their leadership.












The Missouri Economic Development Council thanks Governor Blunt, Rep. Pollock, Rep. Pearce, and the other members of the House and Senate for their support of MEDC's economic development legislation.

Quality Jobs Act Producing Results

I just read an opinion editorial entitled,"Economic development bill a formula for failure" by Joe Haslag, Michael Podgursky and Steve Bernstetter published in the Springfield News Leader. I was appalled that these educated people could appear so uneducated on the great benefit the State of Missouri has enjoyed from the proper use of economic development legislation.

While I agree with the general premise of the article that the best way to approach economic development is through true tax reform through the elimination or lowering of rates, the pathway to achieve that goal is not to reduce tax credits and incentives that are working. To put all tax credits and incentives in a box and declare all of them are failures is simply to be misinformed.

The Quality Jobs Act was passed after the Missouri Economic Development Council (MEDC) authorized a study of best practices in economic development at the state level. This study showed that similar programs in other states had been successful and could be successful in Missouri. The MEDC carefully drafted the plan, along with the experts at the Department of Economic Development, so only companies creating true quality jobs that paid greater than county average wage and that provided employees health insurance would be rewarded under the program. Further, the Quality Jobs Act only pays a dividend to the job creator if they actually create the job. In contrast to other incentive programs that require a benefit first and hope for a job to be created later, the Quality Jobs Act requires a job to be created before any benefits are awarded to the employer. This novel concept enjoyed great support from Governor Matt Blunt and the legislature. In fact, Representative Ron Richard from Joplin, Chairman of the House Job Creation and Economic Development Committee, sponsored the bill and, using his ability to drive bipartisan consensus, he was able to solicit the support of nearly all members of the Missouri House - Democrats and Republicans alike. Rep. Richard is correct when he says there are no Democrat jobs or Republican jobs – good paying jobs are good paying jobs, period. Liberal groups, usually at odds with business friendly legislation, were equally supportive because of the health insurance requirement. Business groups like the MEDC and Associated Industries of Missouri supported the concept because of the great potential to attract and retain good paying jobs.

And the results have been better than any of us could have imagined in 2005. According to a report issued earlier this year by the Taxpayers Research Institute of Missouri based on actual data from the Missouri Department of Economic Development, the first 104 Quality Jobs projects have stimulated Missouri employers to create 12,500 jobs with an average annual wage of $46,856. Estimated annual wages from jobs created under the program are anticipated to exceed $630 million by 2012 from these first 104 projects alone.

Concerned about the return to the state? The Quality Jobs program has returned $3.18 in new tax dollars for every state tax dollar invested in the program! And that does not account for any additional economic benefits that could be measured using respected economic modeling software - those are strictly tax dollars yielded from a great incentive program that actually works as intended.

I agree with the authors of the article that many of our tax credit and incentive programs should be reviewed for effectiveness and those that cannot prove results should be changed or eliminated to provide the most benefit from each tax dollar invested. In fact, when we originally passed the Quality Jobs Act, we did exactly that, taking money away from a program that had never used the full amount of allocated tax credits and using that otherwise wasted resource to fund this new innovative program. The state should look harder at available tax incentives and their benefits, both economic and social, and those that cannot be justified should be eliminated. But looking at the failure of some of these programs and somehow concluding that all tax incentive programs are ineffective is simply incorrect.

In addition, the health insurance requirement rewards companies that provide health insurance for employees, reducing the number of uninsured families that must be supported by the state's health care plan (Medicaid or its successor). By providing true quality jobs with health benefits, workers are able to afford quality health insurance for themselves and their families, reducing the amount that must be poured into government health care by all other taxpayers.

One final thought: those that decry the use of tax incentives should also realize that Missouri economic development professionals are in a daily competition with incentives available in other states and low wage rates in other countries. Any elimination of incentives that are producing results in Missouri without a corresponding elimination of incentives in other states will cause Missouri economic development professionals to lose this daily competition. Jobs will flow to other states while Missouri's economy lags if we use such a shortsighted approach to economic development. Rather, the responsible use of incentives to attract and retain quality jobs in Missouri should be reviewed and enhanced where appropriate so we may continue to win this competition. Remember, 12,500 jobs were created with the Quality Jobs program alone. That's 12,500 men and women that are employed in Missouri, making good wages for their families, enjoying the benefits of health insurance, paying taxes, supporting our schools with property taxes on houses they can now afford, and generally supporting our local economies all over the state. Missouri should continue to welcome job creation by Missouri employers and programs such as the Quality Jobs program that make such job creation possible.

The Quality Jobs program is the best economic development program Missouri has seen in a long time, perhaps ever. The "pay as you go" method of rewarding job creation that is embodied in the program should serve as a model for other tax incentives. We should support all efforts to enhance and expand the Quality Jobs program and continue to enjoy greater tax revenues from the jobs created through the use of the program.

Ray McCarty

MEDC Legislative Consultant

Governor Matt Blunt Signs MEDC Chapter 100 Sales Tax Exemption Into Law

Warrenton, MO - Governor Matt Blunt signed SB 30 into law on Wednesday, June 13. The bill contains an exemption from state and local sales taxes for sales and leases made by cities through Chapter 100 arrangements. This measure was a MEDC legislative priority.

Also included in the bill is a state sales tax exemption for machinery, equipment, utilities, and chemicals used in manufacturing, mining, producing or processing products in Missouri. This exemption, also supported by the MEDC, will help Missouri compete with states such as Kansas that have liberal manufacturing exemptions for high quality, good paying manufacturing jobs.

You may find the full text of the bill here and a link to the bill page with summary information here. The MEDC exemptions are on pages 30-31, section 144.054 of the bill. The law will be effective August 28, 2007.

Governor Attends Ribbon Cutting for Quality Job Recipient

June 8, 2007 - Governor Matt Blunt today issued a press release regarding a ribbon-cutting ceremony for Express Scripts' new headquarters on the campus of the University of Missouri - St. Louis. The release credits the Quality Jobs Act for the new facility. The Quality Jobs Act was first suggested by the Missouri Economic Development Council and heavily supported by Governor Blunt and his administration.

We look forward to more success stories from the Quality Jobs program that will result from raising the tax credit limits on the program.

For the full press release, please click here .