Chapter 100 Sales Tax Exemption Receives Initial House Approval

(March 26, 2007) Rep. Shannon Cooper (R-120, Clinton, pictured at left) today added MEDC's priority legislation exempting cities from sales tax liability in Chapter 100 lease and sale arrangements to a larger sales tax exemption bill (HB 131).

In December 2005, the Missouri Department of Revenue issued an opinion letter to the Department of Economic Development stating that leases and sales made by cities under Chapter 100 programs were subject to Missouri sales taxes. City governments and economic development professionals had believed such activities were consistent with the local governments' mission and that such transactions would be exempted under the constitution and Missouri statutes. As a result, cities did not collect sales taxes on these transactions. As news of the opinion letter circulated, our members found it more difficult to attract employers because of the sales tax liability and cities feared tax liability on projects already underway.

To resolve these questions, MEDC approached Rep. Cooper with legislation that would exempt sales and leases made by cities under Chapter 100 arrangements from sales tax, resulting in the amendment that was adopted today.

Rep. Cooper's actions have furthered MEDC's goal of passing the legislation this session and we sincerely thank him for his leadership and for his efforts on behalf of the MEDC.

To access more information about the bill, click here. The bill faces one more vote in the Missouri House before it may be sent to the Senate for further deliberation.

2007 Legislative Session Status Update

(March 16, 2007) The Legislature has adjourned for Spring Break, giving us a chance to assess the success of our legislative priorities so far in the 2007 Legislative Session, and the Missouri Economic Development Council is pleased with the progress! MEDC salutes all sponsors of our legislation and all Representatives and Senators that have supported our legislation this year. This is a brief synopsis of the status of legislation. You may find more information on these issues in earlier posts below and also in the “Blog Archive”, or you may click the link for each bill.

Our highest priority bills contain increases in the tax credit limits for the Missouri Quality Jobs and Enhanced Enterprise Zone programs and an extension of the New Jobs Training Program. The senate version of the legislation also contains a land assemblage tax credit. The House version of the bill removes the tax credit limits altogether. HCS HB 327, sponsored by Rep. Ron Richard, has already passed the House and has received a hearing in Senate committee. The committee is expected to take action on the bill soon after legislators return from break. The Senate version of the bill, SB 282, sponsored by Sen. John Griesheimer, is on the Senate Informal Perfection Calendar, meaning it could be debated at any time. The Senate version boosts the tax credit limits to $50 million for Quality Jobs and $25 million. Please contact your Senators and let them know one of these bills must pass to keep these most valuable programs alive. You may also let them know that a recent study by the Taxpayers Research Institute of Missouri shows the program creates a positive impact on state tax revenues because each state dollar invested produces an average of $3.18 in additional state tax revenue. For a copy of the report and a breakdown of projects in each county, you may visit www.motaxpayers.com and click on the “Reports” tab. The report was presented to the Senate Committee on Economic Development, Tourism and Local Government last week and has also been distributed to all senators.

Another high priority bill is the Missouri Economic Development Code, HB 741, sponsored by Rep. David Pearce. The bill was heard and approved by the House committee and has been referred to the House Rules Committee, a necessary step before full House debate. If approved by the Rules Committee, the bill would be eligible for debate on its own, or it may be combined with another economic development related bill.

Rounding out our top legislative priorities is our sales tax exemption for cities involved in Chapter 100 projects. HB 130, sponsored by Rep. Shannon Cooper, has been approved by the House Ways and Means Committee, and will likely be combined with several other tax issues in a larger tax bill following the legislative break.

The Missouri Regional Economic Development Districts bill, HB 688, sponsored by Rep. Darrell Pollock, was heard in the House committee and was approved as part of a committee substitute for HB 624, sponsored by Rep. Larry Wilson. The bill has also been referred to the House Rules Committee.

The Small Business Growth Act, HCS HB 365, 804 & 805 remains on the House Perfection calendar and contains MEDC’s Quality Jobs Lite legislation allowing smaller employers to reap benefits similar to the Quality Jobs program when adding new employees. The committee substitute also contains two other tax credits designed to stimulate investments in small businesses: the Small Business Investment Tax Credit and Missouri Technology Corporation Tax Credit. The bill may be debated by the full House after they return from the break.

As we noted in earlier posts, HB 131, sponsored by Rep. Shannon Cooper, would allow economic developers to promote Missouri as a “manufacturing-friendly” state by eliminating the sales tax on all manufacturing inputs. All utilities, chemicals, materials, machinery and equipment used in manufacturing and research and development would be exempted by the bill. The bill carries a relatively small price tag because most of these items are already exempted, but the bill eliminates the uncertainty faced by manufacturers due differences in interpretation of the current law by tax collectors and taxpayers. The bill would put Missouri on equal footing with other states, such as Kansas, that already exempt all manufacturing inputs from sales tax. The bill is scheduled for debate by the House soon after they return from break. A similar bill, SB 585, sponsored by Sen. Jason Crowell, has been referred to committee in the Senate.

Other bills of interest and their current status:

ADDITIONAL BILLS OF INTEREST 2007 SESSION
Bill Number(s)	Description	Status
HB 74	Allows Rural Empowerment Zones in counties with 16,000 or fewer inhabitants	PASSED HOUSE - AWAITING COMMITTEE REFERRAL IN SENATE
HB 360	Provides additional film production tax credits	HOUSE PERFECTION CALENDAR
HB 448	Tax credit for state sales tax paid on Missouri manufactured automobile purchased in Missouri	HOUSE PERFECTION CALENDAR
HB 768	Sales tax exemption for contractors performing contracts with MoDOT	HOUSE PERFECTION CALENDAR
HB 995	Tax credits for donations to regional economic development organizations	REFERRED TO HOUSE COMMITTEE
HB 1000	Eliminates the Corporation Income Tax for the first five years of a new manufacturer’s existence in Missouri	HOUSE COMMITTEE HEARING COMPLETED
SB 20	Tax increment financing law revision	SENATE PERFECTION CALENDAR
SB 199	Sales tax exemption for contractors performing contracts with MoDOT	PASSED SENATE - AWAITING COMMITTEE REFERRAL IN HOUSE
SB 376	Extends the sunset date for the Division of Tourism Supplemental Revenue Fund	PASSED SENATE – REFERRED TO HOUSE COMMITTEE
SB 389	Includes the Lewis & Clark Discovery Initiative (financed through the sale of MOHELA assets)	SENATE INFORMAL PERFECTION CALENDAR
SB 400	Provides additional film production tax credits	SENATE PERFECTION CALENDAR
SJR 22	Constitutional amendment to allow tax relief for economic development purposes	REFERRED TO SENATE COMMITTEE

You may also find additional bills of interest by clicking here. For more information on this or other economic development legislation, please contact Ray McCarty, MEDC Legislative Consultant, at raythetaxman@earthlink.net.

Final Week Before Break Could Be Busy One for MEDC Priorities

The legislative Spring Break begins upon adjournment of the Senate and House Thursday, March 15, and ends when the House and Senate reconvene on Monday, March 26. As usual, the week before the break promises to be a busy one again this year, particularly for economic development legislation. This is also a good time to evaluate the progress of our priority legislation.

The Senate version of our Missouri Quality Jobs and Enhanced Enterprise Zone bill has been laid over for now, but the Senate Committee on Economic Development, Tourism and Local Government will hold a hearing on the House version of the bill on Wednesday, March 14, at 2:00 p.m. in the Senate Lounge. Because this committee has already heard the Senate bill, it is not necessary for many people to attend the hearing, but it is imperative that you contact your senators now and let them know you support both the House and Senate versions of the bill: HB 327 and SB 282. These bills also contain the extension of the New Jobs Training program and the Senate version also contains a land assemblage tax credit.

NOTE: If you need to find your Senator, please use the "Legislator Lookup" link at the right.

As we reported earlier this week, the Missouri Economic Development Code legislation, HB 741, was approved by the House Special Committee on Job Creation and Economic Development. The bill will now be referred to the House Rules Committee and then will be eligible for floor debate by the full House.

Our Chapter 100 sales tax exemption that would exempt cities from sales tax liability when doing a Chapter 100 project, HB 130, has been approved by the House Ways and Means Committee. It will likely become part of a larger tax bill.

The MEDC’s Regional Economic Development Districts bill, HB 688, was heard in the House Special Committee on Rural Community Development on February 28 and may be approved by the committee as early as its next meeting on Tuesday, March 13. The Committee Chairman has requested, and we have provided, an amendment to the legislation to allow cities and counties to impose any sales taxes for the benefit of the districts rather than allowing the districts to impose the tax themselves. There was some concern raised in committee that a larger community could “bully” a smaller community into a sales tax, even if voters in that community opposed such a tax. The amendment relieves this problem by allowing each city or county that is part of the regional district to levy its own sales tax, if it desires, for the benefit of the district. This will provide more flexibility for funding the district, allowing a mix of sales tax and other local government funding. These districts would not use any state funding.

The Small Business Growth Act, HCS HB 365, 804 & 805, is on the House Calendar and is ready for full House debate. The bill contains the Quality Jobs Lite legislation that is a MEDC priority that allows small employers to retain withholding taxes if they are adding jobs at 85% of county average wage and provides additional benefits if the small employer offers health insurance to employees. The bill also contains a Small Business Investment Tax Credit and a Missouri Technology Corporation Tax Credit to stimulate investment in small businesses.

Also of interest to many MEDC members is the exemption of utilities, chemicals, machinery and equipment used in manufacturing from sales tax that is contained in HB 131. This exemption would make Missouri competitive with other states like Kansas that provide such an exemption for manufacturing operations. If you are interested in learning more about this or other tax-related legislation you may want to click here and follow the “News” link on the left side of the page.

Missouri Economic Development Code Bill Clears Committee

The House Special Committee on Job Creation and Economic Development heard and approved HB 741 on March 7, 2007. Sponsor Rep. David Pearce led the testimony and we thank Committee Chairman Rep. Ron Richard for his continued support of MEDC legislative priorities.

A special thanks to the following who invested their time and effort to appear in support of this legislation: John Bode, President of the Carthage Chamber of Commerce; Roy Hunter, Director of Marshall-Saline Development Corporation and Vice-Chair of the Public Policy Council of the MEDC; and Randy Allen, President of the Jefferson City Area Chamber of Commerce and Chairman of the Public Policy Council of the MEDC. We are extremely grateful for their contribution and for making this MEDC legislation a priority.

See more details on the bill in the article below. The bill will now be referred to the House Rules Committee.

Missouri Economic Development Code Hearing Scheduled

NOTICE TO ALL MEDC MEMBERS:

Our MEDCode bill, HB 741, will be heard on Wednesday morning, March 7, at 8:00 a.m. in the House Special Committee on Job Creation and Economic Development in House Hearing Room 7 in the basement of the Capitol. We are extremely grateful to our sponsor, Rep. David Pearce (R-121, Warrensburg, pictured at left) for filing this bill on our behalf.

This bill allows local economic developers to continue establishing voluntary agreements between taxing districts and developers to use a portion of the new tax revenue generated by a project to help finance the public infrastructure necessary for the project. Under the bill, all amounts donated to the project are voluntary - a taxing district may donate all, a portion of, or none of the new tax revenue to the project; the projects must be for public projects (streets, sidewalks, public infrastructure, etc.); and no eminent domain may be used for the project.

If you would like to attend the hearing and testify, please contact Ray McCarty at raythetaxman@earthlink.net.

Missouri Quality Jobs Results by County Now Available

The Taxpayers Research Institute of Missouri has added an appendix that shows the Missouri Quality Jobs program results, sorted by county. Now you can see projects within your county and the return on investment for each project. To access the appendix and the full report, just visit www.motaxpayers.com and click on "Reports" on the left side of the page.