HCS SB 215 -- TAXATION

SPONSOR:  Shields (Flook)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Job
Creation and Economic Development by a vote of 11 to 0.

This substitute changes the laws regarding taxation.

PORT AUTHORITIES (Sections 68.025, 68.035, 68.040, 68.200 -
68.260, and Sections 1 - 2, RSMo)

The substitute:

(1)  Authorizes every local and regional port authority to:

(a)  Establish a port improvement district;

(b)  Carry out any of the projects specified in the newly
established Port Improvement District Act;

(c)  Levy, upon voter approval, a sales and use tax, a real
property tax, or both within the boundaries of the district for
the purpose of paying project costs.  The sales tax must be
levied in increments of 0.125% but cannot exceed 1%; and

(d)  Pledge all revenues generated by any port improvement
district and any other port authority revenue source to the
repayment of outstanding obligations;

(2)  Specifies that any matching grants awarded by the Highways
and Transportation Commission under the Port Capital Improvement
Program must be transportation related;

(3)  Authorizes every local and regional port authority that is a
political subdivision to issue revenue bonds to finance port
improvement projects;

(4)  Establishes the Port Improvement District Act which allows a
port authority to establish one or more port improvement
districts within its boundaries for the purpose of funding
qualified projects.  The substitute specifies the procedures for
forming a district, the notification process of public hearings,
and the procedures for terminating a district;

(5)  Requires the board of port authority commissioners to submit
an annual report regarding the district.  The substitute
specifies the requirements of the report and when it must be
submitted to the municipal or county clerk and the Department of
Transportation;

(6)  Allows the State Auditor to audit any port authority within
the state in the same manner in which any other state agency is
audited; and

(7)  Requires any expenditure that is more than $25,000 to be
competitively bid by the port authority.

BUSINESS USE INCENTIVES FOR LARGE-SCALE DEVELOPMENT PROGRAM
(Sections 100.710, 100.760, 100.770, and 100.850)

The substitute:

(1)  Reduces from 500 to 100 the minimum number of new jobs an
eligible industry with an economic development project that is an
office industry must create for the purposes of the Business Use
Incentives for Large-Scale Development (BUILD) Program;

(2)  Removes the provisions which require the board in order to
approve an application to find that there is at least one other
state that the applicant verifies is being considered for the
BUILD project and that there is a significant disparity in the
project's costs based on the incentives offered by the competing
state; and

(3)  Increases the amount of tax credits that can be authorized
annually for this program from $15 million to $25 million.

RESEARCH AND DEVELOPMENT TAX CREDITS FOR SMALLER BUSINESSES
(Section 620.1039)

The substitute:

(1)  Authorizes a tax credit of up to 10% of a taxpayer's
qualified research expenses, or up to 25% if the expenses are
incurred in a distressed community.  The taxpayer cannot employ
more than 225 workers, 75% of whom must be based in Missouri.
The taxpayer must also be engaged on a for-profit basis in the
development of medical instruments and devices, medical
diagnostics or therapeutics, plant science products,
pharmaceutical, or veterinary products with agricultural
applications;

(2)  Specifies that no more than $3 million in tax credits can be
authorized annually, beginning in Fiscal Year 2010, and no tax
credits may be authorized after June 30, 2015;

(3)  Requires at least $2 million to be made available each
fiscal year for research expenses incurred in a distressed
community; and

(4)  Specifies that no more than $500,000 in tax credits can be
issued annually to any taxpayer for qualified research expenses,
or up to $1 million if the expenses are incurred in a distressed
community.

RESEARCH AND DEVELOPMENT TAX CREDITS (Sections 620.1039 and
620.1041)

The substitute:

(1)  Authorizes the Department of Economic Development to
authorize a tax credit to a taxpayer based upon the amount by
which the taxpayer's qualified research expenses exceed the
average of the taxpayer's qualified research expenses within this
state over the three preceding taxable years as follows:

(a)  3% of the increase in qualified research expenses paid or
incurred during the taxable year that is less than $2.5 million;

(b)  5% of the increase that is between $2.5 million and $5
million; and

(c)  7.5% of the increase that exceeds $5 million;

(2)  Specifies that no tax credits will be allowed on expenses
that are greater than 200% of the taxpayer's average qualified
research expenses from the three preceding tax years;

(3)  Limits qualified research expenses to those incurred in the
research and development of agricultural biotechnology, plant
genomics products, diagnostic and therapeutic medical devices,
prescription pharmaceuticals consumed by humans or animals,
electronic patient health record technology or qualified research
expenses incurred in the research, development, or manufacture of
power system technology for aerospace, space, defense,
alternative energy, alternative energy vehicles, or implantable
or wearable medical devices;

(4)  Allows these credits to be carried forward five years or
transferred;

(5)  Specifies that no more than $7 million in tax credits may be
authorized, beginning in Fiscal Year 2010, and no tax credits may
be authorized after June 30, 2015;

(6)  Specifies that no one taxpayer may be issued more than 30%
of the total tax credits authorized in any calendar year; and

(7)  Prohibits taxpayers from simultaneously receiving these tax
credits and the research and development tax credits for smaller
businesses.

QUALITY JOBS PROGRAM (Sections 620.1878 and 620.1881)

The substitute:

(1)  Revises the definition of "project facility" as it relates
to the Quality Jobs Program to include separate buildings located
within 15 miles of each other.  Currently, the buildings must be
within one mile of each other;

(2)  Allows a company which has filed or announced its intention
to file for bankruptcy between January 1, 2009, and January 1,
2011, to be a qualifying company for the program.  Currently, any
company which has filed for bankruptcy or has publicly announced
its intention to file for bankruptcy protection is prohibited
from being deemed a qualifying company for the purposes of the
program.  The company will be eligible if it:

(a)  Certifies to the Department of Economic Development that it
plans to reorganize and not to liquidate; and

(b)  Produces proof after its bankruptcy petition has been filed,
that it is not delinquent in filing any tax returns or making any
payments due to the state including, but not limited to, all tax
payments due after the filing of the bankruptcy petition and
under the terms of the plan of reorganization;

(3)  Revises the definition of "technology business project" as
it relates to the Missouri Quality Jobs Act to include certain
clinical molecular diagnostic laboratories;

(4)  Specifies how the department must apply the definition of
"project facility" when a business that has already received an
approved notice of intent later files another notice of intent;

(5)  Eliminates the per-company annual cap on technology business
projects within the program.  Currently, the per-company cap is
$500,000;

(6)  Eliminates the per-company annual cap on high impact
projects within the program.  Currently, the per-company cap is
$750,000 or $1 million under certain conditions; and

(7)  Increases the annual cap on the tax credits that may be
issued under the program from $60 million to $100 million.  This
cap will not include tax credits issued for premium employment
projects.

MISCELLANEOUS PROVISIONS

The substitute:

(1)  Allows business headquarters to receive tax credits for new
or expanding businesses.  Expansions at headquarter facilities
will be considered separate business facilities and entitled to
the credits if at least 25 new employees and $1 million of new
investment are attributed to the expansion.  Buildings on
multiple non-contiguous properties will be considered one
facility if they are in the same county or municipality.  No
headquarters will receive the credits for facilities commencing
or expanding operations after January 1, 2020 (Section 135.155);

(2)  Increases the fiscal year cap for tax credits for qualified
equity investments under the New Markets Program from $15 million
to $25 million.  Currently, no qualified equity investments can
be made under this program beyond Fiscal Year 2010.  The
substitute extends the date through Fiscal Year 2012 (Section
135.680);

(3)  Reduces the amount of tax credits that can be authorized
annually for the Family Development Account Program from $4
million to $300,000 beginning July 1, 2010 (Section 208.770);

(4)  Specifies that, under certain conditions, an out-of-state
wholesale drug distributor that is a drug manufacturer which
produces and distributes from a facility inspected and approved
by the federal Food and Drug Administration will not be required
to be licensed but must register its business name and address
with the Board of Pharmacy within the Department of Insurance,
Financial Institutions and Professional Registration and pay a
$10 filing fee.  This applies to wholesale drug distributors
located in a foreign country if they are authorized and in good
standing to operate as drug manufacturers within that
jurisdiction (Section 338.337);

(5)  Authorizes the Department of Economic Development to
allocate up to $5 million in tax credits per year to encourage
equity investment in technology-based early stage Missouri
companies, commonly known as angel investments.  Investors who
contribute the first $500,000 in equity investment to a qualified
Missouri business may be issued a tax credit equal to 30% of the
investment or 40% if the qualified business is in a rural area or
distressed community.  An investor can receive a credit of up to
$50,000 for an investment in a single, qualified business or up
to $100,000 for investments in more than one qualified business
per year.  Credits can be carried forward for up to three years
and sold (Section 348.274); and

(6)  Increases the total amount of all tax credits that can be
authorized for the Small Business Incubator Program from $500,000
to $1 million in any taxable year (Section 620.495).

The substitute contains an emergency clause for the provisions
regarding the Business Use Incentives for Large-Scale Development
Program, the New Markets Tax Credit Program, tax credits for
research and development for smaller businesses, the Quality Jobs
Act, angel investments, and audits of port authorities by the
State Auditor.

FISCAL NOTE:  Estimated Cost on General Revenue Fund of $0 to
Unknown exceeding $100,000 in FY 2010, FY 2011, and FY 2012.  No
impact on Other State Funds in FY 2010, FY 2011, and FY 2012.

PROPONENTS:  Supporters say that allowing the Kansas City Port
Authority to create a redevelopment district is critical for them
to redevelop several sites.  The redevelopment will focus on
environmental factors, which is important since the district will
be in an industrial area and on historic preservation.  Many
cities began where their port was located, and the port is often
the oldest part of the city.  The intent is to promote new
commercial properties to utilize the site post-remediation.
Only owners of property within the district will pay the taxes
associated with the redevelopment, and approving the tax requires
a super-majority of 60% of the voters in the district.

Testifying for the bill were Representative Flook; Greater Kansas
City Chamber of Commerce; Vincent P. Gauthier, Port Authority of
Kansas City; and Missouri Port Authority Association.

OPPONENTS:  There was no opposition voiced to the committee.

Missouri House of Representatives
95th General Assembly, 1st Regular Session
Last Updated November 17, 2009 at 9:26 am