The Missouri Senate approved Senate Bill 120 this week. The legislation is a combination of economic development measures and tax credit reform, two issues that have become inseparably linked in recent years. This bill makes much-needed changes to our tax credit programs while creating a handful of new tax incentives to spur job growth in Missouri.

Senate Bill 120 contains a number of provisions aimed at encouraging economic development, including an incentive to help freight forwarders export more Missouri goods out of the St. Louis airport.  Businesses throughout the state regularly send their goods to countries across the world. Expanding this area of our economy would benefit all of Missouri. We don’t want to encourage the importation of more foreign goods, but we do want to support the exportation of Missouri goods, which is what this provision does.

The bill also creates tax incentives for “angel investors” in start-up companies. “Angel investors” are individuals or groups who put up the capital to start a business. What often happens is a new business will have a great idea, but doesn’t have the funds to carry it out. If an idea is too new or innovative, banks won’t always make loans to these companies. This is where angel investors step in and provide the funds needed to help get the business off the ground. The Missouri Angel Investment Incentive Act will encourage more investors to support start-up businesses.

Additionally, the bill contains a tax incentive to bring more data centers to Missouri. These centers are basically huge climate-controlled warehouses that hold hundreds of computer servers that store digital information for various companies. Due to our climate, geography and relatively cheap cost of energy, our area is an excellent location for these centers. In Branson, the Mountain Data Center is currently under construction, and the Springfield Area Chamber of Commerce has indicated it’s interested in bringing more of these centers to our area.

The other main component of this bill is tax credit reform. Senate Bill 120 places caps on two of the largest tax credit programs in the state, Low-Income Housing and Historic Preservation, and ends a couple of smaller, outdated credits.

I’m not in favor of completely eliminating our state’s tax credit programs. Many of them are very beneficial to the citizens of Missouri, particularly the benevolent tax credits. Since 2008, however, we have had to make a lot of tough decisions regarding our budget. Nearly every department and program has seen some reduction in funding. Tax credits have been completely removed from that debate, though, because they’re outside the appropriations process. This isn’t right. We spent more than $600 million on tax credits last year. That’s larger than the entire annual budget of some state departments.

It’s only fair that tax credits be held to the same level of fiscal scrutiny that we use for all other state funding obligations. We’ve asked almost every other department to make sacrifices for the good of the state. It’s time for these programs to do the same.

The legislation now goes to the House for possible debate. It’s likely that the bill will change as it continues through the legislative process, but we’ve made an important first step in finally addressing tax credit reform and economic development in the General Assembly.

If you have any questions or comments about this or any other matter regarding your state government, please feel free to contact me at (573) 751-1503; you are also welcome to e-mail me at jay.wasson@senate.mo.gov.