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Many losers in failure of Missouri special session

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Many losers in failure of Missouri special session
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JEFFERSON CITY • Gridlock in the Missouri Legislature has cast a pall over St. Louis leaders' goals to turn the city's airport into a China trading hub, gain control of the city's Police Department and lure NCAA Final Four basketball games.

Those three proposals rank among the biggest losers in the special legislative session that is lurching toward a close this week because of sharp disagreements between the House and Senate over subsidies for developers.

The House is scheduled to return to the Capitol on Thursday, but the Senate went home Monday, saying further negotiations would be fruitless. So far, the session has cost taxpayers about $221,000, mainly for legislators' mileage and expense allowances, which rose to $104 a day on Oct. 1 under a federal formula.

If the session collapses as expected, it will mark the second defeat this year for the China hub and police proposals and the fourth year in a row that a state economic development bill has foundered.

St. Louis officials say they are frustrated and disappointed, though some of that angst is overshadowed, for the moment, by the Cardinals being in the World Series.

"Lots of good is going on, just none of it in Jeff City," mused Jeff Rainford. He is chief of staff to St. Louis Mayor Francis Slay, who made several trips to the Capitol to testify on and retool the measures.

The bill ending 150 years of state control of the St. Louis Police Department passed in the House but died in the Senate when it got tied to the tax credit dispute.

But Rainford noted that the local control issue won't go away; it could land on next year's statewide ballot through an initiative petition drive being financed by retired investment banker Rex Sinquefield.

St. Louis leaders say they won't give up on the China hub, either.

The second cargo flight between St. Louis and Shanghai took off Tuesday from Lambert-St. Louis International Airport, said Mike Jones, a St. Louis County official who has worked on negotiations to develop a hub.

"We did the impossible part. The impossible part should have been getting the Chinese, and we did that. The question is, how do you sustain that?" Jones said.

Hub boosters were counting on the bill's establishment of $60 million in tax credits for freight-forwarders, the companies that would arrange international freight shipments out of Lambert.

Lacking those incentives, Rainford said city officials "have started having discussions about how to keep it going until something gives in Jefferson City, whether that's in the next year or next two years."

He declined to elaborate on the options.

Trying to sound a positive note was Gov. Jay Nixon, who is leaving Friday on an eight-day trade mission to China.

When Nixon called the Legislature into special session on Sept. 6, legislative leaders predicted they would pass an incentive package within two weeks. Instead, Nixon is going empty-handed.

Nonetheless, speaking at a Kansas City soybean production facility, Nixon promised that his trip will feature the signing of agreements to sell "billions of dollars of Missouri goods to China over the next three years."

Nixon will be accompanied on the trip by his wife, Georganne Nixon, as well as Cabinet officials and business, agriculture and education leaders. The Hawthorn Foundation, a nonprofit group that helps with economic development, will cover the Nixons' travel costs.

The failure to rein in tax credits is a setback for Nixon, who has criticized the growing price tag of the subsidies amid budget cuts in other programs. A commission he appointed last year recommended many of the changes that legislators considered.

Republican legislative leaders agreed in July to annual caps and expiration dates, called sunsets, on most tax credit programs. That deal would have saved the state about $1.5 billion over 15 years, according to staff estimates.

But the sweeping bill drew fierce opposition from advocates for the poor, who objected to elimination of a tax credit for elderly and disabled renters; from the Show-Me Institute, a free-market think tank that questioned the China hub plan; and Tea Party activists, who objected to the government picking winners and losers by helping certain businesses.

While most of those problems were resolved by scaling back the bill, the House and Senate deadlocked over placing 2018 expiration dates on two tax credits that fund low-income housing development and historic preservation.

Said Rainford: "It came down to an issue that most people thought could easily be worked out, which is the sunset on historics and low-income housing. It's just hard to imagine that they couldn't get it worked out."

Sinking the bill dealt a blow to new tax breaks sought by numerous groups, including the St. Louis Sports Commission.

The commission backs a plan that would have provided up to $3 million a year in tax credits to underwrite the costs of amateur sporting events such as the NCAA Final Four basketball games, college wrestling and hockey championships and U.S. Olympics events.

An increasing number of states, such as Texas, Ohio, Kentucky and Indiana, offer incentives, said Marc Schreiber, vice president of marketing and development for the St. Louis Sports Commission.

"Without public sector support, our chances of being able to successfully bid for a Final Four are very slim," he said. If the bill is dead, "it's very unfortunate for the efforts to keep Missouri competitive in this industry."

The bill's demise also dooms efforts to renew a tax credit for food pantries and establish new tax breaks for computer data centers.

Capturing just 5 percent of the $27 billion invested in data centers would have resulted in 750 jobs paying $75,000 a year, according to the Missouri Coalition for Data Centers.

That Missouri lagged behind most states in job creation last year makes it hard to understand the Legislature's stalemate, said Richard Fleming, president of the St. Louis Regional Chamber & Growth Association.

But he isn't holding out much hope.

"It looks about as bleak as the end of August with the Cardinals 10 and a half down, and I'm not sure we have (Cardinals pitcher Chris) Carpenter or (third baseman) David Freese to pull it out," Fleming said.

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