This article first appeared in the St. Louis Beacon, Sept. 20, 2011 - One of Missouri's architects of this summer's original agreement on an economic development package says that the new issues in dispute will likely have to be resolved by late Wednesday to rescue the General Assembly's special session, now in its third week.
State Rep. John Diehl, R-Town and Country, told reporters Monday night that it would be a waste of time to continue if the three parties -- the House, the Senate and Gov. Jay Nixon -- can't quickly settle their differences.
"We have to either get this fixed in the next 48 hours, or we need to go home,'' Diehl said.
He was standing in the hall outside a packed House committee meeting in the state Capitol where both sides spent more than five hours discussing the economic package in question.
Intentionally paraphrasing Nixon's comment earlier this year, Diehl added, "We're not going to participate in a taxpayer-funded debating society."
He was referring, in part, to reports that the special session already has cost Missouri taxpayers about $130,000.
In another reflection of the House's frustration, the House Economic Development Committee that held Monday's hearing cancelled this afternoon's formal meeting in which an official vote had been scheduled to be taken on an economic-development package. A meeting has been rescheduled for Wednesday afternoon.
Several members said privately that the panel needed more time to examine the competing House and Senate versions. The House version, said Diehl, reflects the original July agreement.
Senate leaders are holding a public meeting Wednesday afternoon, at 4 p.m. in the Senate Lounge, to highlight their package, which is dramatically different.
Diehl contended that the "biggest impediment'' to reaching a deal is the "Compete Missouri" provision in the Senate bill, which meshes six existing state tax-credit programs, including for job creation and job training.
Diehl said he wasn't opposed to streamlining the state's job-creation incentives, but he contended that Compete Missouri gives too much power to Nixon and his Department of Economic Development to decide which projects get funding -- and which ones don't.
Diehl said he was struck, for example, that Nixon's economic officials have said that tax credits could still be directed to the developers of warehouses near Lambert Field, even though the Senate version had knocked out the $300 million earmarked for these warehouses as part of the China Hub proposal.
Diehl noted that he supports the Hub and the proposed warehouses, but he believes the aid should be specifically earmarked by the General Assembly -- not the governor's staff.
While emphasizing that he wasn't disparaging any particular officials, Diehl said that Compete Missouri appeared to be "an economic development slush fund" with accountability "murky at best."
"It creates an environment where you can have 'pay for play' and corruption,'' Diehl said.
Department of Economic Development director David Kerr said in an interview, shortly after testifying before the House committee, that Compete Missouri offers the same safeguards and accountability that is in the existing six programs that would be merged.
The aim, he told committee members, was to make it easier for businesses and developers to apply for such incentives. They would only need to apply to one state program instead of several, Kerr said.
In any case, Diehl said, Compete Missouri was not part of the July agreement that prompted Nixon to agree to call a special session. The governor, said Diehl, "was told before he called us into special session that Compete Missouri was not acceptable."
Senate Leader Defends Changes
The dispute is among several that have emerged since the special session began Sept. 6. Diehl and House Speaker Steve Tilley, among others, have expressed frustration that the economic development agreement announced with much fanfare in July now seems to have fallen apart.
Diehl said that "the Senate did a lot of dismembering."
Senate President Pro Tem Rob Mayer, R-Dexter, was the chief architect of the Senate version that passed last week. He led off Monday's parade of witnesses before the House Economic Development Committee.
Mayer said that the aim of the Senate bill wasn't simply economic development. He also listed the numerous existing tax-credit programs that would be curbed or eliminated to save the state $1 billion over 15 years.
Those being eliminated include the credit for families who adopt children from foreign countries. The programs that would be curbed include tax credits for low-income housing and historic preservation, which now are among the state's costliest tax-credit programs.
The Senate narrowly voted to retain the tax credit for poor elderly and disabled renters, which had been eliminated in the original economic-development deal proposed this summer.
But the most contentious provision in the economic-development package, regardless of the version, involves tax credits for the proposed China Hub, also called "Aerotropolis." The project seeks to encourage China to locate a cargo hub at the underused Lambert-St. Louis International Airport.
The initial deal had called for $360 million in tax credits, but the Senate version eliminated the $300 million earmarked for warehouses and related infrastructure around Lambert. The Senate version retained $60 million as an incentive to freight-forwarders to direct international shipments to Lambert.
The House version calls for restoring the $300 million, but Diehl said House leaders were amenable to settling on a lower figure.
China Hub Not Just About China
Top state and regional political officials, business and labor leaders, testified Monday night -- as they did before a Senate panel last week -- that the China Hub could help revitalize the economy in St. Louis and the state.
Dan Mehan, chief executive of the Missouri Chamber of Commerce and Industry, candidly told the panel that that Hub supporters -- including himself -- should have done a better job of explaining the project.
Mehan and St. Louis Mayor Francis Slay, among others, emphasized that the tax credits do not go to the Chinese. Rather, they would be directed at American developers and freight forwarders.
The international trade being sought also isn't just from China. China would be "a spoke'' of the Hub, Mehan said, but trade from other countries, such as from South America and other areas of Asia, would also be encouraged.
Slay and others also emphasized that no credits would be awarded until a business actually created jobs, forwarded freight or constructed a warehouse.
That's true for other parts of the economic-development package as well. Aside from Compete Missouri, the Senate version includes tax incentives to attract sports events and to set up the Missouri Science and Innovation Reinvestment Act, also known as MOSIRA. The MOSIRA language is in a separate companion bill.
The opposition at Monday's meeting also mirrored last week's critics. Missouri Right to Life and the Missouri Catholic Conference called for stricter language in the MOSIRA bill to bar any research involving cloning or embryonic stem-cell research.
Various conservative groups and tea party activists also testified against tax credits in general, saying such assistance was unconstitutional and unfair to businesses who did not qualify for such aid.
David Linton, a lawyer from Fenton, told the House panel that tax credits for the China Hub were "a bad paradigm'' that the state of Missouri should avoid.
The five-plus hours of testimony had an effect on the House panel. Initially, many of the questions from the legislators on the committee hinted at opposition or a dislike of state tax credits. But by the time Linton addressed the panel, legislators openly questioned whether he was being realistic.
Committee members from the Kansas City, for example, told of the thousands of Missouri jobs that have been snagged by neighboring Kansas because of that state's tax incentives.
In any event, the House is expected to settle on its version of the economic-development package by Thursday at the latest. Diehl said the Senate's version was "DOA": Dead on Arrival.
And time is running out to resuscitate the package with a compromise.
