State Assembly faces sticky issues as session closes

For a news conference intended to celebrate high points of the 2007 legislative session, the questions recently posed to Gov. Matt Blunt and House and Senate Republican leaders were jarring.

The Capitol press corps was intent on asking whether term limits—which led to enormous turnover in the 2002 election as they took their main effect—had eliminated the benefit of experience from the ranks of lawmakers.

Blunt would “absolutely not” agree with the assessment he termed “chatter in the hallways” in the final days of the session.

But the talk had been pervasive. First, the legislature had not read health insurance legislation it passed and accidentally enacted the legalization of midwifery inserted quietly by the Senate handler, John Loudon.

Then, the House spent much of the final week trying to undo provisions of House Bill 327, the governor’s and the Missouri Chamber of Commerce and Industry’s main economic-development priority. The legislation began as an attempt to expand Missouri’s Quality Jobs Act, which provides tax credits for jobs that pay more than the county average and includes health insurance coverage for which the employer pays at least half the cost.

The legislation had blossomed when the House and Senate piled tens of millions of dollars in tax credits—the same thing as state spending—onto the original bill, awarding hands full of cash to interest groups ranging from movie producers to beef farmers to inner-city real estate developers.

One business lobbyist referred to the voluminous final product as “War and Peace.”

The Senate then refused to accept a joint committee’s report on how to reconcile the two chambers’ differences. The House refused to renegotiate the deal.

In exasperation, the House finally passed the last Senate version, warts and all, without fine-turning and sent the lengthy bill to the governor—before the legislators blanched at what they had done and how they planned to spend at least $103 million a year.

For Boone and Cole counties, the major effect rests with the legislation’s centerpiece: the Quality Jobs Act, Missouri’s principal initiative to encourage the creation of higher-paying employment.

The statute, originally enacted in 2005, now rather quickly exhausts the $12 million lid on its annual tax credits. The new legislation raises that limit to $30 million.

Blunt made no promises as the session ended about whether he would sign the original bill. It faces “one of our most thorough reviews,” the governor said.

HB 327 also includes these programs, among many others:

• “Quality Jobs Light” for the first time makes available tax credits, equal to withholding taxes from employee checks, for smaller companies that create only a handful of jobs paying at least 85 percent of the county average.

• Tax credits under an “enhanced” enterprise zone program were raised from $7 million to $25 million.

• A small-business investment tax credit provides $10 million for investment in distressed communities or rural areas.

• The movie production tax credit increases from $1.5 million to $10.5 million a year and the $1 million lid on individual films is removed.

Associated Industries celebrates sales tax exemption for factories

In a third straight year of successes in the heavily Republican legislature, Associated Industries of Missouri (AIM), the state’s main manufacturing lobby, struck gold when it gained passage of its top tax priority, an exemption from state sales tax for utilities, chemicals and materials used for production.

Ray McCarty, head of AIM’s tax research arm, placed the value of the change at more than $8 million for state factories, but principally cited the elimination of the “hassle factor” as a major plus for such employers. Missouri now uses arcane methods to determine when a factory must pay those taxes, and all the states surrounding it exempt materials used in production except Illinois.

Michael Grote, the Missouri Chamber of Commerce’s general counsel and vice president for governmental affairs, said he expected the exemption’s actual value to mount to substantially greater sums.

Other major tax changes sought by business group died, including a five-year delay in corporate income taxes for new manufacturers, elimination of the franchise tax and a reduction in the corporate tax rate.

Chamber chastises House chair Hunter ?over workers’ comp

The chamber, despite an upbeat tally on the session’s results, ended it with a shot across the bow at a typical ally, Rep. Steve Hunter, a Joplin Republican who heads the House Workforce Development and Workplace Safety Committee.

Hunter had not scheduled a vote to forward legislation endorsed by the chamber, trial attorneys and even organized labor that would have nullified a January court decision made by Schoemehl. The ruling allowed an injured worker’s family to collect his partial disability payments for workers compensation from the Second Injury Fund after the worker’s death. Such payments account for the bulk of the rapidly rising payouts from the fund.

The fund, which makes awards to help workers who have pre-existing conditions when they are injured, was established in 1943 to help ensure that companies would hire partially disabled veterans and other workers with disabilities.

“It is disappointing that an issue that hits every employer’s bottom line would be overlooked by some lawmakers,” said Dan Mehan, chamber president.

Similar nullification of the Schoemehl decision was contained in another Senate bill that Hunter handled, but it died near the top of the House calendar for debate.

Hunter said that Tom Dempsey, the House majority floor leader who controls the flow of debate, refused to allow action on that measure.

Coming quickly to Hunter’s defense was AIM, which maintains a frosty relationship with the chamber. Gary Marble, AIM’s president, discounted the impact of Schoemehl because the Missouri Labor and Industrial Relations Commission had ruled in a half-dozen decisions May 2 that anyone who tried to collect similar funds would need to go to court and face long delays in collecting.

Hunter also believes that $600,000 a year would cover all possible ramifications of Schoemehl.

But AIM and Hunter said that the Second Injury Fund faces dire prospects. Because of an upsurge in settlements, a state audit indicated the fund will become insolvent next year. From 1997 to 2006, the payouts from the fund almost tripled, rising to $64 million.

Hunter said he already has the go-ahead from Jetton to hold interim committee hearings, possibly starting next month, to investigate the cause of the increased payouts.