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Economic development topics dominate proposed legislation at Capitol

Economic development topics dominate proposed legislation at Capitol

February 11th, 2019 by Bob Watson and Joe Gamm in Business

Missouri Gov. Mike Parson on Jan. 17 laid out his plans to stimulate economic development in the state. Those plans included executing a list of executive orders aimed at streamlining and adjusting how state agencies — like the Division of Energy, Division of Workforce Development, Public Service Commission and others — work together to match other states’ efforts in economic development.

The governor has set the tone for overcoming issues in the state associated with economic development, education and health care, according to state Rep. Rudy Veit, R-Wardsville.

Veit, who has not proposed any legislation yet in his freshman session, said he’s looked at hundreds of bills already filed and sees a number of proposed tax credits for entities.

House bills

House Minority Whip Rep. Brandon Ellington, D-Kansas City, offered House Bill 164, intended to create a Small Business Equality Act — giving small businesses access to any state tax credit, deduction or other exemption corporations use. It is similar to 2018’s HB 1785.

Travis Fitzwater, R-Holts Summit, has introduced HB 560, which would modify what property is included in the definition of “new business facility investment.” The bill would include rights to use purchased, leased or licensed software in the definition.

One bill, HB 286, would create a “distressed communities tax credit.” state Rep. Bruce Franks Jr., D-St. Louis, sponsored the bill, which is the same as 2018’s HB 1775. The bill creates an income tax credit equal to 50 percent of costs associated with development of a business in a distressed community (so long as 50 percent of the employees of the business live within the same county as the distressed community).

State Rep. Alan Green, D-Florissant, has offered up a number of bills aimed at stimulating some economic development. HB 92, for example, would create a first-time business owner savings account that would allow an income tax deduction of 50 percent of funds put in the account. The amount of contributions to the account would be limited. The account could only be used for eligible expenses associated with the startup of a new business. The bill is identical to a bill offered in 2018.

Green also offers two bills that would support minority-owned businesses.

HB 93 would create a state minority business loan program. The bill would allow the Department of Economic Development to loan or grant funds to planning and development districts, small-business investment corporations, bank-based community development corporations and others that would then provide loans to minority businesses. Among other things, the loans are intended to assist minority businesses in guaranteeing bids, performance or payment bonds necessary to contract with federal agencies or states’ political subdivisions. This bill is the same as 2018’s HB 1706.

Green also offered HB 102 this year — the same as HB 2639 in 2018 — which would require the DED to develop a program to provide training and assistance to minority business enterprises to help them secure bid, performance and payment bonds necessary to meet contracts with federal, state or local entities.

Workforce development — and creating a workforce that is prepared for jobs the state hopes to attract — is a priority of the governor’s administration. The administration has said incentives and tax credits are the last things companies considering Missouri ask about.

State Rep. Dave Griffith, R-Jefferson City, another freshman lawmaker, said he shares the governor’s focus on improving the state’s infrastructure and workers.

In addition to the bill to expand which assets small businesses can claim as deductible property, Fitzwater sponsored HB 255, which would modify the Missouri Works Program, which gives businesses tax credits for expansion of facilities with their promise of creating a certain number of jobs. The bill would modify the program to allow a qualified company a tax credit of up to 9 percent of new payroll issued within one year following the company’s acceptance in the program.

Even before the governor laid out his plan in the State of the State Address, state Rep. David Wood, R-Versailles, was in agreement with the concepts.

“I spend most of my time thinking about education and workforce development,” Wood said. “We need to concentrate our money where we’re going to get the most bang for our bucks.”

The unprepared workforce is “a big factor in companies’ decisions” whether or not to locate in the state, he said.

“We’ve spent way too long telling people the only way to success is through a four-year degree. There aren’t a lot of people stepping up behind older people in trades,” he said. “If schools concentrate on college degrees more than they are the workplace, we’re hurting ourselves.”

Veit agreed and said the state needs to adapt to changing times and technical developments. Businesses’ demand for skilled workforces is currently being met by few states, he said. By getting in front of that demand, Missouri could pull ahead in meeting the nationwide problem.

“We must continue … working with industries that are developing in our area and meeting a skilled workforce that will fulfill their needs and offer financially rewarding jobs for those individuals who become skilled in those trades,” Veit said. “I am looking forward to the bills put out by our leaders on economic development and the building of a skilled workforce.”

Employees take pride in being able to support and provide for their families, he said. Legislation can change the environment in schools and the mindset that students must have a college degree to earn a good wage.

“We need to change the mindset that if (a student) goes to college and gets a degree, there is going to be a job (waiting) and it’s going to be a well-paying job,” Veit said. “College educations, four-year degrees, seven-year degrees, are great assets to have only if they result in a marketable, usable skill. Otherwise, the costs can be so burdensome that they become overwhelming.”

Senate bills

With only 34 senators instead of 163 House members, fewer bills have been introduced affecting Missouri’s economic conditions.

State Sen. Gary Romine, R-Farmington, wants lawmakers to pass a “Fast-Track Workforce Incentive Grant,” to provide grants for Missouri citizens to attend an approved Missouri post-secondary institution of their choice.

The proposal, Senate Bill 16, is one of Parson’s legislative priorities.

To be eligible, a student would have to meet specified criteria — including having an adjusted gross income of less than $80,000 and being at least 25 years of age.

Grant funding may be renewed for a limited time, but the student must continue to meet the eligibility requirements and must demonstrate a grade-point average of 2.5 on a 4.0 scale.

The Coordinating Board for Higher Education would have to designate eligible programs of study by Jan. 1, 2020 — and those eligible programs must be reviewed and updated each year by the CBHE.

Grants shall be awarded in an amount equal to the actual tuition and general fees charged of an eligible student — after all other federal and state aid has been applied.

State Sen. Mike Cierpiot, R-Lee’s Summit, has proposed a modification of the existing “Missouri Works” tax credit program.

If lawmakers pass SB 56, the state Economic Development Department would be able to offer tax credits to some companies in an amount equal to, or less than, 9 percent of new payroll — if that company creates 10 or more new jobs, and the average wage of the new payroll equals or exceeds 90 percent of the average wage in the county where the company is located.

The bill also would require the DED to reserve up to 21.5 percent of the state’s limit on Missouri Works tax credits — currently $116 million a year.

In a separate bill, SB 57, Cierpiot also has proposed allowing the state — and any other public body — to spend funds to help with a land-clearance project intended to improve “tourism infrastructure facilities” which already exist as of Aug. 28, 2019, and for which an application is made and approved by the DED, by Aug. 28, 2020.

State Sen. Andrew Koenig, R-Manchester, has proposed several changes to state laws that could affect economic activity.

The current law sets a top income tax rate of 5.5 percent, after a period of phased-in tax cuts. Koenig’s SB 46 would drop that ceiling to an eventual 4.8 percent.

The bill also would allow the state to collect sales taxes on many — but not all — internet sales, after Jan. 1, 2020.

And the proposal would have the state join the national Streamlined Sales and Use Tax Agreement which deals with online sales taxes.

Koenig’s bill also would end cities’ and counties’ ability to opt-out of the school and “Show Me Green” sales tax holidays.

Koenig’s SB 108 proposes several changes in local tax increment financing projects, by:

• Requiring a study, conducted by a party other than the redevelopment plan proponents, detailing how the TIF area meets the definition of an area eligible to receive tax increment financing.

• Modifying the definitions of “blighted area” and “conservation area.”

• Prohibiting some retail areas from receiving a TIF unless the financing is used exclusively to pay for infrastructure projects.

Koenig’s SB 149 would, for all tax years beginning next Jan. 1, 2020, combined rate of local sales taxes for any given taxing jurisdiction at 7.275 percent, and would exclude transient guest taxes from local sales tax calculations.

Two senators introduced bills to allow “sports wagering” in the state, after a U.S. Supreme Court ruling said that was possible.

State Sen. Denny Hoskins, R-Warrensburg, is handling SB 44 and state Sen. Lincoln Hough, R-Springfield, filed SB 222.

Both proposals would authorize sports betting only on excursion gambling boats.

Both bills also would allow the betting through an internet-based, interactive sports wagering platform that was created only after the individual — who must live in Missouri — appeared in-person to activate the account.

Hough’s bill would limit the sports betting to a designated area on the boat, and would prohibit those under 21 from betting.