Blunt OKs tax credits for jobs, development
September 5, 2007Blunt OKs tax credits for jobs, development
By David A. Lieb
THE ASSOCIATED PRESS
JEFFERSON CITY - Businesses looking to expand in Missouri gained access to tens of millions of dollars of tax credits Tuesday as Gov. Matt Blunt signed into law an economic development bill passed in a special legislative session.
Two parts of the bill took effect immediately, authorizing new tax credits for certain business investors and expanding the Quality Jobs tax breaks for businesses that add jobs with average wages and health benefits.
Other parts of the legislation will take effect later. Tickets to sporting events can legally be sold for more than their face value starting Nov. 28.
Expanded tax credits for movie makers kick in Jan. 1. And new tax credits for beef cattle producers will begin in 2009.
When the various pieces are all in place, the legislation will authorize an additional $66 million a year in tax credits.
Blunt called the special session after vetoing a broader bill passed in May that he claimed could have cost up to $200 million annually while providing tax breaks to some questionable causes.
He touted the legislation he ultimately signed as a responsible package that encourages people to innovate, invest their earnings and create additional jobs.
The most important part, Blunt said, is an expansion of the Quality Jobs tax credits from $12 million a year to $40 million.
State economic development officials say businesses participating in the program have added about 17,000 jobs since the program began in 2005, but the tax credit cap has become insufficient. An additional 7,373 potential new jobs have been on hold by businesses pending legislative approval of the expanded tax credit cap, according to the Department of Economic Development.
"This will result in a nearly immediate increase in family-supporting jobs in our state," Blunt said while signing the legislation at his Capitol office.
Officials in Mexico, Mo., also have expressed hope that a provision authorizing state tax credits for entrepreneurial investors could have an immediate effect by helping spur the redevelopment of the former A.P. Green brick manufacturing facility.
Missouri's investor tax credit will match one already offered by the federal government for community development firms, banks or organizations that invest in projects in economically distressed areas.
One of its biggest backers has been the St. Louis office of Advantage Capital Partners.
That firm had been allotted $230 million in federal tax credits and had invested about $130 million as of June, about 70 percent of which went toward Missouri projects, said senior managing director Scott Zajac. But unless Missouri provided a matching tax credit, the firm likely would have directed its remaining share of federal tax credit-financed investments to projects in other states offering their own matching incentives, he said.
"We can have more economic impact when we take more risk, and we can take more risk when there is a greater incentive," Zajac explained in June, before Blunt vetoed the original bill and called the special session.
Sponsoring Sen. John Griesheimer, R-Washington, described Blunt's veto as a "dark day" that caused supporters of the economic development legislation to think, "Oh no! What are we going to do?"
But the trimmed-down bill passed during the special session still is "probably the most comprehensive economic development bill in the state of Missouri," Griesheimer said.
The most contentious provision will create a new $10 million annual tax credit, beginning Jan. 1, for developers who buy up large swaths of land in impoverished areas. It's targeted especially for Old North St. Louis, were developer Paul McKee Jr. already has amassed hundreds of parcels of land. He also has contributed thousands of dollars to Blunt, Lt. Gov. Peter Kinder and other politicians who have supported his push for the new tax credits.
Blunt on Tuesday called it an innovative program.
"The goal of urban redevelopment must be to make life better for the people already living in the neighborhood," the governor said. "I believe the land assemblage tax credit could do just that by making a significant injection of resources to encourage private investment into areas that have been neglected and impoverished for decades."
Today, Blunt plans to sign another bill passed during the special session. That measure could allow the state to speed up repairs to hundreds of bridges. It would waive some of the conventional contractor requirements while awarding a single, 30-year contract for the repair and maintenance of all 802 bridges.
HIGHLIGHTS OF BILL
Missouri Gov. Matt Blunt on Tuesday signed economic development legislation passed during a special legislative session. Here's a look at some of its provisions:
QUALITY JOBS: Expands an existing tax incentive for certain businesses that add jobs paying at least average wages and covering at least half the employees' health insurance premiums. Raises the state's annual cap for Quality Jobs tax credits from $12 million to $40 million. Requires any business that knowingly hires illegal workers to repay the tax incentives they received under the program. Took effect Tuesday.
DEVELOPERS: Creates a new tax credit of up to $10 million annually, or a total of $95 million over time, for developers who buy large amounts of land in impoverished areas. Project areas must be at least 75 acres, 50 of which must have been acquired by the applicant. Income tax credits can cover half the purchase price, closing costs, demolition and maintenance for up to five years after the purchase. Tax credits can begin Jan. 1.
CATTLE RANCHERS: Creates a new tax credit of up to $3 million annually for farmers who fatten their beef cattle in Missouri. Tax credits of 10 cents per pound can apply only to farmers who put at least 200 pounds more weight on their cattle than the average weight at which they had sold cattle during the past three years. Tax credits apply only to that marginal weight increase and begin in 2009.
INVESTORS: Creates a new tax credit of up to $15 million annually for investors of projects in low-income communities. Program began Tuesday.
MOVIES: Expands an existing income tax credit for movies, TV shows and commercials filmed wholly or partly in Missouri. Raises the total annual cap from $1.5 million to $4.5 million of tax credits. Allows films with in-state budgets as low as $50,000 to qualify, instead of the current minimum expenditure of $300,000. Changes kick in Jan. 1.
ENTERPRISE ZONES: Expands an existing income tax credit for businesses that locate or add jobs in a locally designated enterprise zone from a statewide total cap of $7 million annually to $14 million. Change occurs Nov. 28.
TICKET SCALPING: Repeals a state law making it illegal to resell tickets to public sporting events for more than their face value. Bars local governments from outlawing ticket scalping. Change occurs Nov. 28.