|This week, legislators moved towards passing a set of bills aimed at job creation and retention in the Show Me State. While legislators all understand the importance of creating jobs and keeping them in Missouri, how that is done is the question.Two economic development bills were filed in the Senate and both have passed, but with stipulations. After a set of filibusters halted the bill for over a week, Senate Bill 7 and 8 have moved from the Senate to the House of Representatives. The Senate drastically scaled back portions of Senate Bill 8 by reducing the state assistance for warehousing at the St. Louis Lambert Airport from $360 million to $60 million. The bill, along with its SB7 counterpart, moved to the House.
Last night, the House Economic Development Committee completed a hearing on both bills and passed only Senate Bill 7 out of committee. That bill was passed on the House floor today. Senate Bill 7 contains the Missouri Science and Innovation Reinvestment Act (MoSIRA) which will invest Missouri revenue into high-tech, high-paying jobs. HOWEVER, the MoSIRA bill is contingent on passage of the economic development bill, Senate Bill 8. A compromise between Senators and Representatives has not yet emerged on Senate Bill 8. That bill includes: COMPETE Missouri, St. Louis Aerotropolis legislation, data center tax incentives, and more. Since a compromise has not yet been found, the committee did not take any action on this bill.
Associated Industries of Missouri President Ray McCarty is in the Capitol today to monitor both sets of legislation. Included in McCarty’s priorities today is ensuring that the 2007 Manufacturing Inputs Exemption is not touched. A move by another business group drastically scaled back the 2007 provision and would have increased costs for Missouri manufacturers – the industry that has suffered the most job loss throughout the recession – into the millions of dollars per facility.
“We were successful in removing the section that would have narrowed the manufacturing inputs exemption from the most recent House version of the economic development bill,” McCarty said. “I believe we may have finally defeated this for good, but we will continue to monitor the situation and let you know if it creeps back into any future versions.”
State Tax Collection Bill
In addition to the economic development packages being heavily debated, Missouri legislators are considering legislation that will bring more revenue into the state’s coffers. A measure that would allow tax amnesty for Missouri companies behind on tax payments almost passed last year and the revenue generated from the bill was included in the state budgeting process. Ultimately the bill was one-day shy of passing.
Governor Nixon and legislative leaders agree that the bill is necessary and have included it in the list of priorities to discuss this special session. House Bill 2, sponsored by Representative Tom Flanigan (R-Carthage), is in the Senate Ways and Means Committee. A committee vote is expected at a hearing today at 1 p.m. AIM President McCarty is watching this bill as it progresses through both chambers and will keep the AIM Tax Committee informed of its progress (if your AIM member company would like to have your tax professional included on the AIM Tax Committee list, please contact AIM at 573-634-2246).
AIM President Ray McCarty was recently quoted in an AP article regarding the Association’s support for data center incentives. Click here for the article: http://www.thehostingnews.com/missouri-build-your-data-centers-here-20507.html
September 14, 2011: The Missouri Senate today passed a version of Senate Bill 8, the economic development and tax credit reform legislation. The bill includes:
- Dramatically scaled-back China Hub legislation that provides air export tax credits for freight forwarders in the amount of $60 million. The $300 million that was to have been targeted for new warehouse construction has been removed from the bill;
- New sales tax exemptions for data centers and authorization for municipalities to enter into leaseback agreements with data centers (which may include property tax exemptions);
- COMPETE Missouri: a program that combines several existing tax credit programs into one program, establishes retention tax credits, and revises job training credits;
- New tax credits for groups that are attracting sporting events;
- New tax credits for donations to providers of care for the developmentally disabled; and,
- A number of changes and restrictions on various tax credit programs, including subjecting some to appropriations, adding expiration dates, and extending some tax credit programs.
We are pleased to announce that the provision that would have dramatically limited the manufacturing sales tax exemption was removed from the bill at AIM’s request. You may click here for more information regarding the omnibus economic development bill, Senate Bill 8.
Today, the Senate also gave second-round approval to a bill authorizing the Missouri Science and Innovation Reinvestment Act (MOSIRA). Under the bill, the Missouri Technology Corporation would receive additional funding from existing employment taxes received by the state from workers in certain types of jobs. The additional funding would be used to promote innovation in manufacturing and other business pursuits and advancements in life sciences. You may click here for more details on the MOSIRA bill.
We will continue to update you as we more thoroughly review the bill.
Senators last week gave first round approval to Senate Bill 8, the omnibus economic development legislation. After hard work by AIM staff and our members, the version taken up by the Senate did NOT include the erroneous language that would have dramatically reduced the benefit of the manufacturing inputs exemption passed in 2007. We thank our Senate leadership and members and colleagues for helping us turn back this language.
The Senate made several changes to the economic development bill, including eliminating around $300 million for the China Hub project.
During the 2011 legislative session, a coalition of 10 business groups, including Associated Industries of Missouri, successfully defeated a proposal supported by the Missouri Chamber of Commerce and Industry and the Missouri Association of Trial Attorneys that would have dramatically increased the amount employers pay into the Second Injury Fund. The Second Injury Fund is funded with a surcharge on worker’s compensation premiums that is currently capped by statute at 3%. The Chamber/trial attorney plan would have allowed this surcharge to more than double and, more importantly, would have allowed non-work related claims to be compensated through the worker’s compensation system. The same non-work related claims that have bankrupted the Second Injury Fund would be covered by employers’ workers compensation, causing these costs to skyrocket! In recently filed court documents, the Missouri Chamber also admits increasing the surcharge would harm Missouri businesses: “This economic harm will be long lasting and detrimental to the business community in Missouri.”
Associated Industries of Missouri polled our membership and found nearly unanimous opposition to this failed plan and we vigorously fought the plan, along with our 9 partners representing every major business group in Missouri. Our members indicated they would be favor of reforms to the current system or elimination of the Fund altogether, but were not in favor of additional funding for the Second Injury Fund.
Since adjournment of the legislature in May, this broad coalition of business groups has further developed a responsible solution for addressing the Second Injury Fund problem. Our plan: either terminate the Second Injury Fund without a surcharge increase; or continue the Second Injury Fund to minimize the impact on worker’s compensation premiums, but do NOT increase costs for employers. In other words, our members believe we should address the real problem with the Fund – the amount being paid from the Fund, rather than increasing the amount employers must pay into the fund. Currently, workers with pre-existing conditions and ailments that have nothing to do with their employment are able to get large settlements from the Second Injury Fund – including those with diabetes, obesity, sports injuries, etc. This must stop!
So what is our plan? Our plan is a common sense, responsible approach to addressing the Second Injury Fund problem:
Eliminate Permanent Partial Disability Claims
Eliminate permanent partial disability (PPD) claims from the Second Injury Fund (SIF) system. Of the 29 states that have some form of a SIF, the vast majority allow claims solely for permanent total disability. Missouri’s SIF PPD annual payments (before the Attorney General stopped settling claims) were about $18 million. The PPD system has been exploited by plaintiffs’ attorneys over time, allowing claimants to file repeated claims against the Fund. The current system allows employees to receive compensation totaling more than 100% disability. Recently manufacturers have told us of cases where workers that are 150% disabled are still working at their jobs!
Limit Future Claims to Previous Injuries or Conditions Resulting From Work or Military Service
Only allow pre-existing conditions or injuries to augment a work-related injury claim when the pre-existing condition or injury is due to work or military service. This would greatly reduce the number of claims against the SIF while maintaining benefits for the few that need it the most. The recent Iraq and Afghanistan wars have increased the number of injured veterans with amputations and other injuries that could cause barriers to their entering the workplace and also increase employers’ Workers’ Compensation liability. Current types of claims that would no longer qualify for SIF awards would include conditions such as diabetes, obesity and sports injuries.
Establish a Priority Order for Payment of Claims
If there are insufficient funds to pay claims, a priority order for payment of claims should be established in statute. We suggest the available funds should be used to pay claims in the following order:
- Expenses related to the legal defense of the fund. In 2010 89% of SIF claims were dismissed, but dismissal is only possible with adequate defense of the fund by attorneys in the Office of Attorney General. If the current attorneys are no longer able to defend the fund, these 89% of claims could potentially add to the cost of the SIF system;
- Permanent Total Disability awards in the order settled or finally adjudicated;
- Permanent Partial Disability awards in the order settled or finally adjudicated (for claims settled or adjudicated prior to the effective date of the bill); and,
- Medical expenses.
Coordinate Second Injury Fund Awards With Social Security Disability Benefits
Claimants against the Second Injury Fund are usually also eligible for SSDI benefits under current law. Federal law provides that the amount of benefit received from other sources, such as the Second Injury Fund, result in a reduction of SSDI benefits for the claimant. This should be reversed: awards from the Second Injury Fund should be reduced by the amount of Social Security Disability benefits received by the claimant. This results in no financial loss for the injured worker, but would reduce the amount awarded from the Second Injury Fund.
We believe this plan will address the real problem with the Second Injury Fund – the payout of claims for non-work related injuries – and bring sensibility back to the system. Every business group in Missouri that has expressed an opinion, except one, have endorsed this plan. We will keep you posted of any developments.
If you are a member of Associated Industries of Missouri and would like to weigh in with your opinion on this subject, please send an email to Ray McCarty at email@example.com .