Greiten’s tax commission releases findings

In January of this year, Governor Eric Greitens issued an executive order establishing the Committee on Simple, Fair and Low Taxes.  The mission of the committee was to review the state’s tax code and tax credit system and to produce a report and recommendations by June 30, 2017.

The committee, which was comprised of ten members appointed by the Governor, Speaker of the House and President Pro Tem, began meeting in February and held a series of town halls to gather information and input from Missourians.

The full report can be read here and a summary of the report’s recommendations are below.

Missouri Works

As the state’s number one incentive tool for expansion and retention, this program helps businesses access capital through withholdings or tax credits to embark on facility expansions and create jobs.  This program can also help businesses purchase equipment to maintain its facility in Missouri.

Recommendations:

  • The Committee recommends maintaining current funding levels.  There is no annual limit on the retained withholding taxes.  Tax credits issued for the program are capped at $116 million annually.
  • The Committee recommends removing the distinction within Missouri Works Training between “new” and “retained” jobs.  Incentives would now be considered for all jobs seeking training assistance.
  • The Committee recommends giving the Director of the Department of Economic Development the discretion to deny an application for a project that does not have a positive fiscal return as measured by a REMI analysis.  Discretion would also be granted to deny applications for projects that fail the “but for” test – where the jobs would be created without the incentives.  Finally, discretion would be granted to deny an application for a project that could not reasonably be brought to fruition.
  • The Department would have 5 days to issue a rejection of an application.

Low Income Housing Tax Credit

Missouri’s Low-Income Housing Tax Credit (LIHTC) is designed to supplement the federal LIHTC and provides a state tax credit to investors in affordable housing.  The LIHTC can be used each year for 10 years and is allocated to the owner of an affordable housing development.  Tax credits must be used for new construction, rehabilitation, or acquisition and rehabilitation.

Recommendations:

  • The Committee recommends restructuring the program as a “soft loan” instead of a tax credit. The loans could be repaid, extended, or forgiven as needed to complete a project.
  • The program would have a $50 million annual cap.  The program issued $101 million in tax credits in Fiscal Year 2016.
  • The Committee recommends the creation of a tax credit clearing house to buy up existing tax credits from this program.
  • The Committee recommends that this program’s funding be subject to the annual appropriations process of the General Assembly.

Historic Preservation Tax Credit

This program incentivizes developers to maintain the integrity of Missouri’s historic buildings, giving them new life.

Recommendations:

  • The Committee recommends combining the Historic Preservation tax credit program with the Brownfield Remediation tax credit program.
  • The combined program would have a $50 million annual cap.  The annual cap for the Historic Preservation program is currently $140 million. The Brownfield Remediation program does not currently have a cap.  That program issued approximately $10 million in tax credits in Fiscal Year 2016.
  • The Committee recommends that this program’s funding be subject to the annual appropriations process of the General Assembly.

Budget advances in Missouri

The state’s $27billion budget was advanced out of the House Budget committee this week. While few changes were made, there was a bit of surprise when Kirkwood Democrat Deb Lavender offered an amendment, which was approved, that took more than $6million from Missouri Attorney General Josh Hawley’s office and gave it to the state’s Public Defenders. It is expected that there will be an effort to move the money back to the Attorney General’s office.

The House appropriations staff has announced the budget bills will be heard on the House Floor next Tuesday and third read and sent to the Senate on Thursday.

House Passes Bill Repealing Prevailing Wage

On Thursday, the Missouri House sent Warren Love’s (R-Osceola) bill that repeals Missouri’s prevailing wage law to the Senate. While House and Senate leadership have pledged to pass several bills that are viewed by democrats as anti-labor, the repeal of prevailing wage is widely viewed as the most contentious because repealing prevailing wage will directly impact the salaries of union members. Under current law, contractors and subcontractors working on public works projects are required to pay employees the prevailing wage for the particular locality in which the project is being completed. This bill changes the law to require contractors and subcontractors to pay employees state or federal minimum wage, whichever is higher. Contractors and subcontractors would be permitted to pay higher than the minimum wage, but that would not be a requirement.

The bill is expected to move through the Senate Committee process quickly, but will likely face a filibuster from pro-labor Senators.

House Sends Real ID Legislation to the Senate

After giving Congress and the President a month to repeal the Federal Real ID requirements, the House voted to send a bill that would give Missourians the option to choose a Real ID to the Senate. Missouri is one of a handful of states that has yet to comply with the Federal law. If the legislature does not approve this bill, Missourians will need a passport to fly domestically and will be unable to use their Missouri driver’s licenses to enter federal facilities.

Course Access is One Step Closer to the Governor’s Desk

This week the Senate Education Committee heard Representative Bryan Spencer’s (R-St. Charles) course access bill. This legislation would ensure that Missouri’s students would have access to the courses they need to be successful in college and career. This bill is a priority of both Governor Eric Greitens and Speaker Richardson. No action was taken on the bill.

Economic Development Legislation on the Move

The House committee on Local Government heard Senator Wasson’s (R-Christian County) bill that will modify the language relating to agreements that may be entered into by municipalities who participate in industrial development projects. The bill easily passed the Senate. No action was taken on the bill.

Additionally, the Senate Education Committee heard Representative Jeanie Lauer’s (R-Jackson County) legislation that will allow students to take the ACT WorkKeys assessments instead of the ACT Plus Writing Assessment. While no action was taken on the bill this week though the Senate Education Committee is expected to vote on it next week.

House and Senate Both Perfect Legislation Dealing with Time Limited Demands

Both House and Senate leadership pledged to pass significant tort reform legislation this year, and this week another part of the tort reform agenda advanced. Each chamber passed legislation that would ensure insurance companies have adequate time to review claims before deciding to settle. Both bills will now work their way through the committee process in the other chamber.

Electric and Water Utilities Infrastructure Bills Stalled

This week Senator Ed Emery (R-Barton County) presented two utilities bills on the Senate Floor, one dealing with rate stabilization for water and sewer corporations and another dealing with ratemaking for electric utilities. Much like similar bills in the past, a handful of Senators launched a filibuster and forced Senator Emery to lay the bills over. It is possible the Senate will give these bills some additional floor-time, but they both continue to face significant opposition.

Missouri momentum: tort reform, labor reform, and ed. reform

When the House and Senate return on March 27, there will be seven weeks left before the legislature adjourns for the year. In the first half of session, before spring break, there were 1,238 House Bills filed and 544 Senate Bills filed. Two House Bills, one relating to agriculture and one changing who can be certified as an expert witness in a jury trial have been sent to the Governor and are awaiting his signature. Additionally, one Senate Bill, Right to Work, has been sent to and signed by the Governor.

Traditionally, eighty percent or more of the bills that become law are sent to the Governor in the final two weeks of session. As such there is still time for legislative leaders to accomplish their priorities. Below is a recap of where the bills with the most momentum addressing those priorities currently stand.

Tort Reform

Several tort reform measures are moving through the process. As mentioned above, the first tort measure sent to the Governor was expert witness. Several others are moving through the process including:

Collateral Source, sponsored by Senator Ed Emery (R-Barton County), has been approved by the Senate and is currently awaiting a hearing in the House Committee on Special Litigation. This bill would allow parties involved in litigation to reveal the actual cost, rather than the actual value, of medical services rendered.

Time Limited Demand and Reservation of Rights, sponsored by Representative Bruce DeGroot (R-St. Louis County), has been approved by the House and is awaiting a vote in the Senate General Laws committee. This bill will ensure insurance providers have adequate time and information when making decisions about settling claims.

Venue and Joinder is a series of bills sponsored by Representative Glen Kolkmeyer (R-Lafayette County) that have been approved by the House and are awaiting a vote in the Senate. These bills attempt to prevent plaintiffs in a lawsuit from “venue shopping” and also require that some separate complaints against the same company not be allowed to join together in one lawsuit.

Labor Reform

The GOP majority has made no secret of its desire to enact wide ranging labor reform. As mentioned above, Right to Work was the first bill sent to and signed by the Governor. Republicans have tried for several years to pass right to work but were unable to come up with enough votes to over-ride a veto from former Governor Nixon. While Right to Work is perhaps the highest profile labor reform bill, there are several other labor reform bills moving through the legislature. Some of those include:

Paycheck Protection is sponsored by Representative Jered Taylor (R-Springfield) and being handled in the Senate by Senator Bob Onder (R-St. Charles). Representative Taylor’s bill has crossed chambers and has been debated on the Senate Floor for several hours though no compromise has been reached yet. The bill would change some reporting requirements for labor organizations and employees and change the way unions are certified and decertified.

Project Labor Agreements sponsored by Senator Onder (R-St. Charles) has passed the Senate and is awaiting a hearing in the House Economic Development Committee. This bill would change the law regarding how and when municipalities had to enter into project labor agreements.

Prevailing Wage is sponsored by Senator Dan Brown (R-Rolla) and is on the Senate informal calendar. It is widely expected that this will be the most contentious of the labor reform bills and it is likely that Senate leadership will tackle this priority after most other priorities have made it out of the Senate. There is also a House prevailing wage bill sponsored by Representative Warren Love (R-Osceola) that is on the House informal calendar with an amendment pending.

Education Reform

Charter expansion is sponsored by Rebecca Roeber (R-Lee’s Summitt) and has been approved by the House and is waiting to be referred to a Senate Committee. The version the House passed expands charter schools to all school districts that have one school building with an annual performance report of 60% or less and increases accountability requirements for charter schools.

Education Savings Accounts is sponsored by both Senator Ed Emery (R-Barton County) and Senator Andrew Koenig (R-Manchester). Both of these bills have been approved by committee and are on the Senate Calendar. Senator Emery’s bill provides an education savings account to any student in Missouri who has been enrolled in a public school for one semester in the previous twelve months. Senator Koenig’s bill provides an education savings account to any student who is in foster care or has special needs.

Economic Development

Several bills attempting to cut the state’s tax credit programs have been filed and received hearings. However, Governor Greitens has appointed a committee to study the state’s tax credits and make recommendations for the programs. As such, it is unclear whether any of the measures related to the state’s existing tax credit programs will advance.
Some of the other economic development ideas that are moving include:

Missouri Works and Missouri Works Job Training Program changes which was sponsored by Senator Jay Wasson (R-Christian County) and has been approved by the Senate and is waiting to be referred to a House Committee.

Tax Increment Finance Allocation Senator Wasson is also sponsoring a bill that is on the Senate calendar that would exclude any annual amount generated by a single plan or project which is estimated to create in excess of fifteen thousand new jobs with an average annual wage of more than $75,000 from the super TIF cap.

Budget

The Governor was forced to cut $580 million from the budget request he sent the legislature in February. As a result many existing programs saw the Governor’s request cut their line item completely out of the budget while other saw drastic cuts. There were also very few new budget items included in the Governor’s request.

When House Budget Chairman Scott Fitzpatrick (R-Shell Knob) presented his changes to the Governor’s recommendations, he included several changes. The most notable change was that he used cost savings from a bill being considered now that would remove senior citizens who are renting from a tax credit program to fully fund the foundation formula. The budget must be completed by May 5, as such the expected timeline for the budget is as follows:

Week of March 27 – House Budget Committee makes changes and votes on each budget bill

Week of April 3- Budget is debated by the full House and sent to the Senate

Week of April 10- Senate Appropriations committee has hearings on the House budget

Week of April 17- Senate Appropriations committee makes final changes and votes on its version of the budget bills

Week of April 24- Full Senate debates Senate Committee version of each budget bill

Week of May 1- House and Senate appoint conferees and reconcile differences and vote to send final budget to Governor Eric Greitens

Missouri supreme court, House spar over minimum wage preemption

Last week Missouri’s Supreme Court threw out a 2015 law that preempted Missouri’s cities from raising the minimum wage. This week, in an effort to prevent Saint Louis from raising its minimum wage, the House fast-tracked legislation that, once again, aims to preempt municipalities that wish to raise their minimum wage. The measure was approved by the House by a vote of 112-46 and will now be sent to the Senate.

HOUSE APPROVES TIME LIMITED DEMAND AND RESERVATION OF RIGHTS

On Thursday the House approved Rep. Bruce DeGroot’s (R-Chesterfield) measure that deals with settling tort claims. DeGroot’s legislation, which will now be sent to the Senate, includes two important provisions referred to as Time Limited Demand and Reservation of Rights which will ensure insurance providers have adequate time and information when making decisions about settling claims.

RIDE SHARING DEBATED IN SENATE

The Senate spent several hours debating a bill that would have created a statewide framework for ride sharing which would allow companies like Lyft to operate in all corners of Missouri. Proponents of the bill, including House Speaker Todd Richardson and Senate Assistant Floor Leader Bob Onder, are supportive because ride sharing will create thousands of jobs across the state and send a clear message that Missouri welcomes innovation. However, after several hours of debate, largely unrelated to ride sharing, the bill was laid over.

HOUSE SENDS VENUE/JOINDER LEGISLATION TO THE SENATE

The House approved several pieces of legislation that would limit a plaintiff’s ability to combine lawsuits and require plaintiffs to individually establish the county or district where a case is held. The controversial measure was approved by a vote of 100-54. Supporters of the measure claim that current law allows too many suits to be brought to Saint Louis while opponents of the legislation say the measure will prohibit Missourians from working together to fight deceptive practices.

HOUSE BUDGET COMMITTEE APPROVES BILL REMOVING RENTERS FROM THE CIRCUIT BREAKER TAX CREDIT

Amid a $580 million budget deficit, the House budget committee voted to save more than $60 million by repealing the “circuit breaker” credit for seniors and disabled renters. The legislators who support the repeal claim the tax credit was intended to offset property taxes paid by seniors who own their homes. Opponents of the repeal claim landlords pass the property tax on their rental property on to their senior residents. Budget chair, Scott Fitzpatrick, wants to use the money keep people in nursing homes or for meal programs for senior citizens.

HOUSE LITIGATION REFORM COMMITTEE ADVANCES SENATE BILL DEALING WITH ARBITRATION AGREEMENTS

A measure that provides that in an arbitration agreement between an employer and an at-will employee the arbitrator shall make all initial decisions was advanced from a House committee. The bill also establishes criteria for when the arbitrator shall determine that the arbitration agreement is valid, and that the arbitrator must be mutually agreed on by both parties. The bill will now be sent to the House Rules Committee where it must be voted on before it can be sent to the House Floor for debate.

THE COMMITTEE FOR SIMPLE, FAIR AND LOW TAXES HOLDS FIRST MEETING

Gov. Eric Greitens’ Committee for Simple, Fair, and Low Taxes met in Jefferson City yesterday. At this first organizational meeting, the committee defined its goal and outlined the structure they will use to achieve it. The committee aims to create a tax structure that is more business friendly and conducive to job creation. They will be organized into three subcommittees: tax credits, income tax, and sales/consumption tax. The committee will host four town hall style meetings across Missouri to gather public input. The committee has not released the date or location of its next meeting.

THE SENATE CONFIRMED THE FOLLOWING APPOINTMENTS FROM GOVERNOR GREITENS:

• Darryl M. Chatman, Democrat, as a member of the University of Missouri Board of Curators
• Jamie L. Farmer, Republican, as a member of the University of Missouri Board of Curators
• Jeffrey L. Layman, Republican, as a member of the University of Missouri Board of Curators
• Col. Sandra Karsten, as Superintendent of the Missouri Highway Patrol

Right to work, tort and ethics reform rise to top in new Mo. session

On January 4, 2017 at 12:00pm the 99th session of Missouri’s General Assembly began. There are now 117 republican members of the House of Representatives and 46 Democrats.  In the Senate, there are now 24 Republicans and 9 Democrats (there is one vacancy as Senator Mike Parson will be leaving his Senate seat to become Lieutenant Governor).

Senator Ron Richard (R-Joplin) was re-elected to his position as President Pro-Tem of the Senate and Representative Todd Richardson was also re-elected to his position as Speaker of the House.  Both men gave opening statements to their respective chambers.

Speaker Richardson used his speech to lay out his priorities for the upcoming legislative session which included:  regulatory reform, passing statewide regulations that would allow ride-sharing, school choice and tort reform.

Senate President Richard used his speech to set the tone for the 2017 legislative session.  He spoke of how the Capitol building should serve as a reminder to all members of the weight of the issues they are tackling on behalf of Missourians.

House and Senate Committees Named

On Thursday, January 5th, both chambers appointed committees.  There were some significant changes in the House Committee structure.  Rather than having standing committees that report bills to a larger select committee as has been the case for the last two years, the House will have roughly thirty committees that are divided into two groups.  One group will report bills to the Standing Committee on Administrative Rules and the other group will report bills to the Standing Committees on Legislative Rules.  The two rules committees will serve as a second hearing process to vet bills again before they are sent to the House floor. You can see the House Committee list and a list of committee members here.

The Senate also named its committee members on Thursday.  While there are a few new committees, the Senate structure remains largely the same.  As of the writing of this report, the committee assignments were not on the Senate website, but you can read the chairs below:

  • Agriculture, Food Production & Outdoor Resources- Brian Munzlinger
  • Appropriations-Dan Brown
  • Commerce, Consumer Protection, Energy & the Environment-Ryan Silvey
  • Economic Development- Jay Wasson
  • Education- Gary Romine
  • Fiscal Oversight- Mike Cunningham
  • General Laws-Bob Onder
  • Government Reform-Ed Emery
  • Health and Pensions-Rob Schaaf
  • Insurance and Banking-Paul Wieland
  • Judiciary & Civil & Criminal Jurisprudence- Bob Dixon
  • Local Government-Dan Hegeman
  • Professional Registration-Jeanie Riddle
  • Progress & Development-Gina Walsh
  • Rules, Join Rules, Resolutions & Ethics- Mike Kehoe
  • Seniors Families & Children- David Sater
  • Small Business & Industry- Doug Libla
  • Transportation, Infrastructure & Public Safety- Dave Schatz
  • Veterans & Military Affairs- Wayne Wallingford
  • Ways & Means-Will Kraus

Legislative Priorities

When Republican Governor-Elect Eric Greitens is sworn in on January 9, for the first time ever, there will be a Republican Governor and a supermajority of Republicans in both chambers of the legislature.  This line-up means many Republican priorities that were vetoed by Democratic Governor, Jay Nixon, are likely to become law this session.  Leadership in both chambers and Governor-Elect Greitens have made it clear they agree on several issues that the General Assembly is expected to begin working on as soon as session gets underway.

Those priorities include:

Right to Work– This measure guarantees that no person can be compelled, as a condition of employment, to join or not to join, nor to pay dues to a labor union.  While it is widely expected this measure will be one of the first, if not the first, measure to pass both chambers, it will have considerable opposition from national and local labor unions.

Tort Reform– Reforming Missouri’s judicial system has been a priority for Missouri Republicans for many years.  There are roughly fifteen different kinds of tort reform being discussed among interest groups, but Senate President Pro-Tem Ron Richard (R-Joplin) signaled his tort reform priorities when he filed two tort reform bills dealing with venue. (See them here and here)

Ethics Reform– When it comes to ethics reform, there appears to be consensus among legislative leaders and Gov. Greitens on two proposals: a complete ban on lobbyist gifts and placing an initiative petition on the ballot that would impose term limits on all statewide office holders.  A third proposal by Governor-Elect Greitens that is likely to meet some resistance in the legislature, includes lengthening the time elected officials must wait before becoming registered lobbyists.

Greitens’ Team Takes Shape

With his inauguration just days away, Governor-Elect Greitens’ team has begun to take shape with some familiar and some new names:

Cabinet positions:

Director Department of Corrections, Anne Precythe, North Carolina’s current Director of Community Corrections in the North Carolina Department of Public Safety.

Director Department of Agriculture, Chris Chinn , a fifth generation Missouri farmer.

Director Department of Public Safety, Drew Juden, Sikeston, MO Chief of Police.

Deputy Director of Public Safety, Greg Favre, Saint Louis Fire Department Captain.

Governor’s staff:

Senior Advisor, Austin Chambers, Greitens’ campaign manager and senior advisor to the Governor’s transition team.

Chief of Staff, Mike Roche, former Anheuser Busch executive and attorney at Armstrong Teasdale.

Deputy Chief of Staff, Caleb Jones, Republic State Representative from Boone County, MO.

General Counsel, Lucinda Luektemeyer, an attorney with Graves Garrett who has a lot of experience working with governments.

Legislative Director, Jennae Neustadt, former Chief of Staff to Senator Bob Onder (R-Lake Saint Louis) and Senator John Lamping (R-Saint Louis County)

Policy Director, Will Scharf, policy director of Catherine Hanaway’s gubernatorial campaign and Eric Greitens’ gubernatorial campaign.

In late December, Chambers did a press call in which he said the Governor-Elect is expected to roll out additional hires in the coming days.  One of those to be named shortly is that of Chief Operating Officer, a new position within the Governor’s office.  During his campaign, Greitens discussed that his COO would be someone who comes out of the highest levels of the corporate world and whose primary responsibility would be finding waste in government, cleaning up state departments and making state operations run more efficiently for Missourians.

Pre-filed Bills to Watch

Tort Reform- As stated above, tort reform is a priority for the Governor-Elect as well as House and Senate Leadership.  There have been several tort reform bills pre-filed including: two bills by Senator Pro-Tem Ron Richard that address venue issues, and others that include collateral source and expert witness legislation that was passed by the legislature and vetoed by Governor Nixon in the past.

Social Conservative Issues- Two bills (one in the House and one in the Senate) have been filed that would require all restrooms, that are not single occupancy, to be gender specific. Senator Ed Emery (R-Barton County) filed the bill in the Senate and Representative Jeff Pogue (R-Salem), in the House.

Tax Credits – There are, once again, several bills filed dealing with Missouri’s tax credit programs. The most discussed legislation is Senator Ron Richard’s (R-Joplin) that would cut the cap on Missouri’s Historic Tax Credits from $140 million to $120 million and use the additional funds to pay for upgrades to the capitol building.

Utility Regulation- There have been many bills filed, especially by Senator Ed Emery (R-Barton County), dealing with the regulation of utility companies.  Senator Emery’s bills primarily deal with what the utility companies refer to as “regulatory lag” and ratemaking.  Utility issues have been especially contentious in the last several sessions, and while many remain hopeful this year could be the year that rate-payers and the utility companies come together to reach an agreement, it is likely to still be a hotly debated issue.