HCS SB 827 -- ECONOMIC DEVELOPMENT

SPONSOR: Mathewson (Rizzo)

COMMITTEE ACTION: Voted "do pass" by the Committee on Commerce by a vote of 23 to 1.

This substitute clarifies that a refund of tax credits under the new business facility tax credit program is limited to employee-owned engineering firms, architectural firms, or accounting firms. The substitute also establishes an enterprise zone in Independence. Finally, provisions for the "Missouri Generation Zone Act" are contained in the substitute. Under this act, the Department of Economic Development is to designate during calendar year 1999 up to 4 zones, one of which is to be located in a rural area. The areas selected as a generation zone must meet certain poverty and unemployment criteria, not exceed 3,000 acres in size, and may receive the zone designation for up to 15 years. Local political subdivisions, in applying for the designation, must attach a resolution from the governing body indicating that all businesses within the proposed zone will be exempt from local taxation. In addition to local taxes, state taxes, including income taxes and sales taxes, are abated within each generation zone. Through state appropriations, businesses within the zones are to be reimbursed for their annual property taxes paid to local political subdivisions. Limitations on business relocation are outlined in the substitute. The Department of Economic Development is also authorized to issue infrastructure development, or improvement or infrastructure removal grants to local governmental entities within a generation zone. These grants may not exceed $1 million of the total allowable costs of an infrastructure project, and are payable from the Property Reuse Revolving Fund. A 7 member "Generation Zone Association" is established for each zone designated; the association has authority to provide crime prevention, education improvements, health services, and other community revitalization activities. Each business located within a generation zone and which receives the exemptions, abatement, or reimbursements is required to pay to the association an amount equal to 10% of the amount of incentives received. The department is required to submit an annual report to the Governor and the General Assembly on the economic effects of the Generation Zone program, including the number of new jobs created, the average wage of new jobs created, and the amount of private investment within each zone.

FISCAL NOTE: Estimated Net Cost to General Revenue Fund of $49,719 to Unknown in FY 1999, $51,167 to Unknown in FY 2000, and $52,509 to Unknown in FY 2001. Loss to Highway Funds, School District Trust Fund, Conservation Sales Tax Fund, Parks and Soils Sales Tax Fund, and Blind Pension Trust Fund of Unknown in FY 1999, FY 2000, and FY 2001. Cost to Property Reuse Revolving Fund of $1,000,000 in FY 1999, FY 2000, and FY 2001.

PROPONENTS: Supporters say that the technical correction on the new business facility tax credit program will save the state $2 - $3 million.

Testifying for the bill was Senator Mathewson.

OPPONENTS: There was no opposition voiced to the committee.

Debra Cheshier, Senior Legislative Analyst

Return to the Missouri House of Representatives