It’s still early in the current Missouri legislative session (which started Jan. 5 and runs through May 13), and those in the business world are closely following the activities in Jefferson City. This is shaping up to be an interesting year, and many pieces of legislation, if enacted, could redefine how companies and consumers approach business.
And if businesses aren’t aware of what’s happening at the state capital, they may miss some significant changes.
“There’s a lot to watch in 2011, both in Missouri and across the U.S.,” says Dale E. Hermeling, an attorney with The Stolar Partnership LLP. “With a significant Republican majority in both the House and the Senate in Jefferson City, the Republican agenda supporting business and smaller government will be pushed forward. It will be interesting to see how it all plays out.”
Smart Business learned more from Hermeling about possible legislative actions in Missouri and how they could affect businesses.
What is happening with tax credits in Missouri?
Last year, Gov. Jay Nixon commissioned a group of 25 business, community and legislative leaders to study the various tax credits that exist in Missouri. This Tax Credit Review Committee held public hearings and generated a report with various recommendations relative to the efficiency and effectiveness of the state’s 61 tax credit programs.
There has been a lot of concern over the budget in Missouri and the impact that the tax credits have on state revenue. A number of bills have been introduced in the Senate to restructure or eliminate some of the tax credit programs. Other bills call for establishing annual caps or requirements for legislative appropriation on the amount of the tax credit.
The most significant focus has been the challenges to the historic tax credit program and low-income housing tax credits that have been used so effectively on local projects here in St. Louis.
What other issues should employers be watching?
The first bill filed in the Senate this year involves an effort to establish Missouri as a right-to-work state. Right-to-work laws prohibit agreements between labor unions and employers that make membership or payment of union dues or fees a condition of employment, either before or after hiring.
Proponents of right-to-work feel that it would increase business opportunities in Missouri and make Missouri more competitive relative to some of our neighboring states. Opponents of right-to-work feel that these laws weaken unions, thus creating lower wages and endangering worker safety and health. They also argue that establishing Missouri as a right-to-work state would reduce the quality of the local work force.
If the bill passed, it likely would force a showdown with the governor, who opposes the measure.
There are also efforts to try to amend portions of the workers’ compensation law to eliminate what were likely unintended consequences of certain reforms passed in 2005. For example, courts have interpreted some of these changes to allow a worker who suffers a work-related injury to sue a fellow employee for negligence in a civil action. This exposure presents risk to supervisors, who may then look more and more to their employers to provide indemnity or some other protection.
In addition, there is a proposal to eliminate the state income tax and replace it with an expanded sales tax. No one knows how much revenue will be gained or lost if a sales tax is used instead of an income tax, and the sales tax will likely impose a greater burden on lower-income taxpayers than higher-income taxpayers. Businesses should be concerned that consumers could just avoid the sales tax altogether by shopping out of state.
Another concern is that the sales tax could be imposed on services that are not currently taxed, such as professional services and insurance premiums. I am not sure this kind of reform will gain a lot of traction. Proponents argue that replacing the income tax with a sales tax would help create jobs, promote economic development and make state revenue less volatile. Opponents feel that it could hurt the middle class and force cuts to government services.
What other legislation should be monitored?
Another item to watch in Missouri is whether the legislature will return control of police departments to the cities of St. Louis and Kansas City. There is a bill that has passed through the House and is currently in the Senate that would return control of the police departments back to the cities. Currently, police boards, whose members are appointed by the governor, control the operation of these police departments. This is a big issue if the city of St. Louis is ever to be reinserted into St. Louis County.
How will the makeup of the House and Senate impact pending legislation?
We all recognize the majority that Republicans have in both houses of the legislature, but one thing that isn’t talked about much is the level of experience that these legislators have. With the term limits that have been put into place in Missouri, there are a lot of legislators in both the House and the Senate who haven’t been there before and need to learn the ropes.
It’s a Catch 22: No one wants career politicians, but, at the same time, everyone wants politicians with experience. The bottom line is that we need cooperation among all of the legislators if any progress is going to be made.
Dale E. Hermeling is an attorney with The Stolar Partnership LLP. Reach him at (314) 641-5135 or [email protected].
