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Incentives scaled back: Senate gives initial approval to air cargo bill

Incentives scaled back: Senate gives initial approval to air cargo bill

September 14th, 2011 in News

Missouri Senate leaders significantly scaled back a tax credit proposal intended to spur international trade at the St. Louis airport on Tuesday, acquiescing to colleagues concerned about pouring hundreds of millions of tax dollars into the construction of warehouses without a firm guarantee it would benefit the state.

Senate President Pro Tem Rob Mayer said his revised legislation - given initial Senate approval later Tuesday - still could spur job creation. But it also could set up a special session showdown with the House by breaking the outlines of a deal struck earlier this summer between Senate and House leaders.

Gov. Jay Nixon praised the Senate for advancing the legislation. But St. Louis Mayor Francis Slay said the Senate legislation now is insufficient to achieve one of the primary goals of the special legislative session: transforming Lambert-St. Louis International Airport into a hub for Chinese cargo planes and other international shippers. Slay said he will keep talking with lawmakers in hopes that the so-called aerotropolis tax credits can still be expanded. Another Senate vote is needed later this week to move the bill to the House, where more changes can be made.

As originally proposed, the legislation offered up to $60 million in tax credits for companies that handle the logistics of exports and up to $300 million of tax credits for the construction of warehouses and manufacturing facilities near the Lambert-St. Louis International Airport.

But debate on the legislation was delayed last week as some Republicans threatened to filibuster the bill. And concerns about the "aerotropolis" tax credits remained evident Monday night among both Republican and Democratic senators as they publicly reviewed a cost-benefit analysis of the proposal prepared by the state Department of Economic Development. Majority Republicans then held a closed-door, late Monday night meeting at which they decided to pare back the incentives associated with the St. Louis airport.

The version debuted Tuesday by Mayer keeps the incentives for export handlers but eliminates the $300 million in tax credits earmarked for warehouses and manufacturing facilities built near the airport to handle products shipped into and out of the country. Mayer said those businesses still could apply for state incentives through other, existing state tax credit programs. But they would have to meet standard job-creation thresholds intended to ensure the state gets a positive return on the tax breaks.

"We're tying things to actual job creation - not betting on the come on some kind of activity that it may create jobs," said Sen. Jason Crowell, R-Cape Girardeau, who turned from a chief critic to supporter of the legislation primarily because of the changes to the airport cargo incentives.

Sen. Eric Schmitt, R-Kirkwood, a leading proponent of the incentives, said the slimmed down bill still is a good first step toward luring international cargo flights away from airports in other cities such as Chicago. But Slay said it remains essential for the long-term success of the plan to also offer incentives for warehouses and the other infrastructure needed to handle the freight.

"We're still trying to find a way to make sure that, in the end, we have a bill that will do what we need done - and that is create a viable, meaningful, sustainable international trade hub that will help create jobs in Missouri," Slay said.

Senators further pared back the bill Tuesday by eliminating part of the funding source for the new tax credits.

As originally proposed this summer by Senate and House leaders, the legislation would have repealed a tax credit for low-income elderly and disabled residents who live in rented homes. That move would have saved the state about $58 million annually, which could have been poured into the state budget or the creation of new business incentives. But senators voted 17-16 Tuesday to pass an amendment by Sen. Rob Schaaf, R-St. Joseph, that keeps the tax credit intact for senior citizens and the disabled. All eight of the chamber's Democrats joined Schaaf and eight other Republicans in voting for the amendment.

Other potentially revenue-saving measures remain in the bill.

The legislation would set an $80 million annual cap on historic preservation tax credits for large renovation projects and a $10 million annual tax credit cap on smaller projects. Current law sets a $140 million annual cap on historic tax credits for large projects but exempts smaller projects from the cap.

The latest version of the legislation also would set a $110 million cap next year on the state's main tax credit program for the developers of low-income housing, with that cap gradually falling to $70 million by the 2015 fiscal year. A secondary such tax credit program would be entirely phased out. Both of those provisions go further than originally agreed upon this summer by House and Senate leaders.