JEFFERSON CITY • As the Missouri General Assembly heads into the final week of the legislative session, what major issue is still hanging? Tax credits, of course.
Despite four years of trying, Republican leaders in the House and Senate remain far apart on whether to rein in subsidies that go to housing developers and historic rehabbers.
Other far-reaching issues on this week’s agenda include a massive rewrite of the criminal code, a 1-cent sales tax increase for highways and a liquor industry turf war.
Plenty of high-priced lobbyists will be tracking those matters. Even so, the early settlement of some marquee bills portends a calmer rundown than usual to the 6 p.m. Friday adjournment.
Legislators dispensed with one of their top priorities Thursday by passing a bill that would cut state income taxes by an estimated $700 million a year. They also wrapped up work on the $25 billion state budget, a day before the constitutional deadline.
That makes tax credit reform the No. 1 priority left.
The state has 61 tax credit programs that cost Missouri more than $620 million last year. Nearly half of the money went to rehab historic buildings and develop low-income housing.
“We’ve got to get some savings on that before we move forward” with new economic development programs, Senate Majority Leader Ron Richard, R-Joplin, told reporters last week.
In 2010 and 2012, a commission appointed by the governor recommended sharp cuts in the development programs. The Senate bill takes that approach, for example, capping historic credits at $60 million a year, with an additional $10 million available for smaller projects.
The program’s current cap is $140 million a year, with no cap on smaller projects.
House leaders have refused to cut the programs. Under the House-passed bill, historic preservation projects would be capped at $135 million, plus $10 million for smaller projects.
Majority Leader John Diehl, R-Town and Country, leads the House negotiators. He was upbeat about the talks, noting the lack of rancor compared to previous years when personality disputes flared.
“I think pretty clearly in the hallways you can sense that there are not bombs being thrown back and forth between the two chambers,” Diehl said. “Anytime you have that environment it does make for more productive discussions behind the scenes.”
His counterpart in the Senate, Sen. Eric Schmitt, R-Glendale, was less optimistic given the huge difference in the two chambers’ bills.
Overall, the Senate bill would save the state more than $1 billion over 15 years. By contrast, the House version would increase the state’s costs by about $197 million by the 15th year.
“I haven’t given up hope,” Schmitt said. “Hopefully those conversations will continue. It’s going to be hard to get to a yes.”
In fact, in a new wrinkle last week, the House General Laws Committee voted to expand real estate subsidies. An amendment by the committee chairman, Rep. Caleb Jones, R-California, would broaden the New Markets Tax Credit to allow those incentives — which now go to small businesses in Missouri — to go to developers.
That idea won’t fly in the Senate, said Sen. Brad Lager, R-Savannah.
“The whole idea was to facilitate long-term job creation,” he said. “The redevelopment of real estate doesn’t do that.”
Gov. Jay Nixon has promised to veto a separate bill — eliminating a tax credit for low-income seniors and disabled people who rent their homes — if the Legislature doesn’t send him a broad-based tax reform measure. He told reporters Friday that he sees little chance that the four-year stalemate will be broken.
“At the beginning of the year, I think folks were talking about serious, thoughtful, significant tax credit reform,” Nixon said. “They were talking about putting economic requirements in programs. They were talking about real and serious caps on a myriad of programs. That’s just no longer in the discussion in the building.”
If the tax credit overhaul dies, developer Paul McKee could be the biggest loser.
McKee hopes to tap about $50 million left from the $95 million in land assemblage credits originally allotted for his massive NorthSide Regeneration project in St. Louis. But that tax credit program will expire in August. Any chance of renewing it is tied to the overhaul.
While tax credit negotiators huddle behind closed doors, revision of the state’s criminal code has been the subject of more public hearings than any other bill.
Prosecutors and public defenders forged compromises and presented their recommendations to a joint legislative committee during six sessions last year. This year, each chamber’s Judiciary Committee held numerous hearings.
Proponents say that over time, the current code has become disorganized and confusing, with duplicate crimes and “designer crimes” cluttering the statutes as legislators responded to the latest problem.
The code was last revised “when I graduated from law school in 1979,” said attorney Pat Starke, president of the Missouri Bar. “The world has moved on since then.”
The House passed the 643-page bill; the Senate Judiciary Committee is expected to vote on it Monday.
Richard, the Senate majority leader, said the bill may be too complex to take up so late in the session.
“I’m not really ready to throw a 1,000-page bill on the desks the last week,” he said.
Senate Minority Leader Jolie Justus, D-Kansas City, is handling the bill. She said controversial provisions, such as lessening the penalty for first-time marijuana possession, have been removed to improve its chances.
Given the size of the bill, “if there’s absolutely no chance of it getting across the finish line, I’m not going to have them print it out. But I have asked the staff to get everything ready electronically.”
The House could take up the 1-cent sales tax for highways, which the Senate has already passed. The proposed constitutional amendment would raise the state rate to 5.225 percent from 4.225 percent.
The increase, which would be on the November 2014 statewide ballot, would raise an estimated $8 billion to rebuild a 200-mile stretch of Interstate 70 and finance other state and local transportation projects. It would expire in 10 years unless renewed by voters.
House Speaker Tim Jones, R-Eureka, has been waiting to see whether the proposal has at least 82 votes — a constitutional majority of the 163-member chamber — in the 110-member Republican Caucus. Asked Thursday whether he had reached that threshold and would move the bill to the floor, he said, “I’m not sure.”
Senate President Pro Tem Tom Dempsey, R-St. Charles, said legislators wouldn’t be increasing taxes — they’d just be placing the question on the ballot.
“It’s worth putting before voters and letting them make the decision about investing in our transportation system,” he said.
Other issues — such as legislation that sought to reinstate limits on awards for “pain and suffering” in medical malpractice lawsuits — are already on the scrap heap.
The Missouri Supreme Court struck down the damage caps last year, ruling that the law violated a patient’s right to a jury trial. Republicans said it was a priority but shelved it when senators couldn’t agree where to set the new cap.
Richard said the Senate would make time to debate a liquor issue that has been the topic of intense lobbying and several recent lawsuits.
That bill, which the House approved last week, would make it more difficult for alcohol suppliers to sever their relationships with distributors by deeming those relationships as “franchises.”
Supporters of the bill say it’s necessary to prevent consolidation in the industry and save Missouri jobs, while opponents say the bill interferes with practices that should be left to the free market.
St. Louis-based Major Brands, the largest distributor in the state, says the bill would return the state to a system that operated from Prohibition until a 2011 court ruling .
Another St. Louis-oriented bill would let judges set up a special court docket to focus on gun offenses. St. Louis Mayor Francis Slay is pushing that bill.
Schmitt, the sponsor, said the proposal got a late start and he doubted there’s time to pass it.
“There could be a hail Mary,” he said. “Nothing’s impossible, but at this point it looks like it won’t happen this year. ”
Overall, there may be fewer headline-making bills than usual to watch in the final stretch.
“It is a little bit of a quiet last week,” said Tim Fischesser, who lobbies for the St. Louis County Municipal League. Rather than pushing big initiatives, he said he’ll spend much of his time reading a flood of amendments, “watching out for mistakes or unintended consequences.”
Elizabeth Crisp of the Post-Dispatch contributed to this report.