Tax breaks, lawsuit liability left for Missouri Legislature in final week

With next year's budget plan finalized and an income tax cut passed, Missouri lawmakers now will turn their attention to resolving differences over tax credits and liability lawsuits before their mandatory adjournment on Friday.

One of the biggest, most divisive issues for lawmakers in the upcoming week will be familiar from years past – whether to scale back several existing tax breaks as part of a plan to create new incentives for certain businesses.

The Senate has pushed for significant cuts to existing tax credits for historic buildings and low-income housing while authorizing new incentives for international exports at airports, computer data centers and investors in high-tech businesses. But the House has resisted cuts to the existing programs and also wants to reauthorize a tax credit for developers purchasing large tracts of land in distressed areas.

A similar standoff never was resolved during a 2011 special session.

“We are not as close as I'd like, but I think we are getting closer,” said Senate President Pro Tem Tom Dempsey, R-St. Charles.

Last fiscal year, Missouri waived more than $629 million in revenue through tax credits and is projected to forgo even more this year. House leaders were cautiously optimistic about bridging the gap with the Senate and passing a tax credit overhaul.

“We're running out of time,” acknowledged House Economic Development Chairwoman Rep. Anne Zerr, R-St. Charles. But she added: “There's better than a 50-50 chance” of passing legislation.

Democratic Gov. Jay Nixon also has called for a “broad-based and balanced” overhaul of Missouri's many tax credit programs. Lawmakers sent Nixon a bill Thursday that would curtail one tax credit program, which offers up to $750 annually to low-income seniors and disabled residents who live in rental housing. But Nixon has said he will veto that bill if it is not accompanied by a more comprehensive tax credit bill.

The Republican-led Legislature, which has its largest majorities since the Civil War era, already has passed several high-profile bills. Those include an income tax rate cut for businesses and individuals that would be phased in over 10 years, an extension for tax credits on charitable donations, and the creation of incentive designed to attract amateur sporting events. Nixon already has signed the charitable donations and sporting events measures but indicated on Friday that he would likely veto the income tax cut.

Among the priorities for Republican lawmakers still pending are bills that would limit liability lawsuits against businesses and doctors. But both of those efforts have hit roadblocks in the closing weeks.

Last year, the Missouri Supreme Court struck down the state's cap on non-economic damages in medical malpractice cases, causing lawmakers to move quickly in an attempt to reinstitute the limits. But a Senate filibuster stalled that effort, and Senate Majority Leader Ron Richard, R-Joplin, said he thinks the issue is “dead” this year.

Leaders are a bit more optimistic about cutting a deal to replenish an insolvent fund for injured workers. The Second Injury Fund has $28.1 million of unpaid obligations, according to a recent state audit. But that issue has been bogged down by being connected to a proposal that would prevent some people from filing civil lawsuits by instead covering claims for occupational diseases under the workers' compensation system.

During their final week, House members are likely to approve bills restricting drug-induced abortions and the ability of unions to deduct fees from members' paychecks.

House Speaker Tim Jones said the chamber may also vote on a proposed transportation sale tax.

But at least one other Republican leadership priority will probably not be up for discussion during the Legislature's last week.

Education issues have seen crushing defeats this year despite being pushed by Jones, R-Eureka. The House rejected a plan to evaluate teachers based partly on student achievement and it also defeated a scaled-back version that would only have subjected principals and other administrators to the new evaluation criteria.

Many Democratic leaders have already dubbed the session a failure for what lawmakers were unable to pass – an expansion of the state's Medicaid program for about 260,000 adults championed by Nixon. Republican leaders rejected expansion efforts this year but pledged to create a joint legislative committee to study the topic before next year's session.

Having already dismissed his top legislative agenda item, Nixon is looking forward to the Legislature's last week in the Capitol.

“It's getting about time for these guys to wrap it up and get back to their districts,” he said.

Associated Press writer David A. Lieb contributed to this report.