SCS SB 620 -- JOB RETENTION PROGRAMS

SPONSOR:  Loudon (Dempsey)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Job
Creation and Economic Development by a vote of 19 to 0.

TAX CREDITS FOR BUSINESS-USE INCENTIVES FOR LARGE-SCALE
DEVELOPMENT (BUILD)

This substitute:

(1)  Limits the amount of BUILD tax credits to $11 million
annually;

(2)  Removes the $75 million limit on revenue bonds the Missouri
Development Finance Board can sell;

(3)  Defines "essential industry" as a targeted industry located
in Hazelwood.  The industry must meet certain criteria including
having maintained at least 2,000 jobs in the four years prior to
applying for tax credits, retain a certain level of employment,
and invest a minimum of $500,000,000 by the end of the third year
following the issuance of these tax credit certificates; and

(4)  Allows existing jobs in an essential industry to be
considered new jobs.

MOTOR VEHICLE BODY MANUFACTURING FACILITY IN HAZELWOOD

The substitute:

(1)  Exempts from taxation 50% of Missouri taxable income
attributed to an approved retained business facility in
Hazelwood;

(2)  Allows the following tax credits for the facility for 10
years:

(a)  A $400 or $500 tax credit for each employee retained by the
facility;

(b)  A $400 tax credit for each year in which a retained employee
lives in Hazelwood.  This tax credit can be prorated for
employees who have not lived in Hazelwood for a full year;

(c)  An annual $400 tax credit for each retained employee who
fits the criteria for "a person difficult to employ."  This tax
credit can be prorated for employees who have not worked for the
facility for a full year;

(d)  A tax credit equal to 80% of the training expenses that are
in excess of $400 per trainee, if the trainee is a resident of
Hazelwood or is defined as "a person difficult to employ."  This
tax credit cannot exceed $400 per trainee; and

(e)  A tax credit equal to 10% of the first $10,000 of qualifying
investment, a 5% tax credit on the next $90,000 of qualifying
investment, and a 2% tax credit on all remaining qualifying
investments;

(3)  Allows a tax refund to be issued to the facility in
Hazelwood, but only if the certified tax credits exceed the
company's total Missouri tax liability by at least $1 million.
In this case, a portion of the tax credits earned will be
considered an overpayment of taxes and may be refunded to the
company.  The maximum amount of the refund cannot exceed $2
million a year;

(4)  Prohibits the facility from taking advantage of the tax
exemption for new businesses in enterprise zones, tax credits for
a new or expanded business facility in an enterprise zone, tax
credits for training employees, tax credits for new or expanded
business facilities, or the income tax refund for establishing a
new business facility in an enterprise zone if it uses the tax
exemption, tax credits, and tax refund in the substitute;

(5)  Allows the facility to participate in the New Jobs Training
Program; and

(6)  Requires any contract entered into between the facility and
the Department of Economic Development to include a requirement
that the company maintain operations at the facility for at least
10 years at a particular employment level.  The contract must
also include provisions for repayment of incentives upon breach
of contract.

TAX INCREMENT FINANCING

The substitute specifies how economic activity taxes and new
state tax revenues will be calculated for a national headquarters
that has moved from another state to Missouri.

The substitute contains an emergency clause.

FISCAL NOTE:  Estimated Net Loss to the General Revenue Fund of
$0 in FY 2004, $0 or Unknown Greater than $1,000,000 in FY 2005
and FY 2006.

PROPONENTS:  Supporters say that without the bill as it passed
the Senate there is no possibility that Ford will keep the plant
in Hazelwood.  If the plant closes, the effect will be felt
statewide because the state will lose $25 million per year in tax
revenue and 11,000 jobs.  The bill gives the Department of
Economic Development the best tools the state can offer for
negotiating with Ford.  If it does not pass, the state will have
no ability to negotiate with Ford.  The bill doesn't cost
anything if Ford decides to close the Hazelwood plant, and it
requires that Ford make a $500 million capital investment before
the state will contribute.  The legislation is narrowly drawn so
that it only applies to the Ford plant in Hazelwood.  Therefore,
there is no risk that another business will take advantage of
these incentives.

Testifying for the bill were Senator Loudon; Representatives Abel
and Spreng; Department of Economic Development; United Auto
Workers-Local 325; St. Louis Community College; United Auto
Workers-Missouri State CAP Counsel; Missouri AFL-CIO; and Ford
Hazelwood Task Force.

OPPONENTS:  There was no opposition voiced to the committee.

Alice Hurley, Legislative Analyst

Missouri House of Representatives
Last Updated July 25, 2003 at 10:13 am