AIM 2023 Session Report
By Ray McCarty, president/CEO, Associated Industries of Missouri (AIM)
May 18, 2023 - Four and one-half months of really hard work in the 2023 Legislative Session ended last Friday in anticlimactic fashion. Aside from the session shortened by the COVID-19 pandemic, this session was the worst on record in terms of bills passed. Nearly 1500 House bills and nearly 800 Senate bills were filed and Associated Industries of Missouri (AIM) monitored and took action on 518 of those bills. In the end, only 36 Senate bills and 7 non-budget House bills were passed!
We were successful in defeating some bills that would have been bad for business and had success with passing a couple of issues, including a once-in-a-generation achievement in securing funding to rebuild and expand Interstate 70 from Kansas City to St. Louis.
As we said in an earlier article, there were problems in this legislative session - many of them in the Senate, where a small group of Republican senators regularly filibustered, day after day, until the session ended with few accomplishments to show for the taxpayers' investment. In the end, taxpayers were shortchanged by this filibustering group of senators.
Here is a summary of bills affecting business we passed, defeated, or that failed in the 2023 Legislative Session.
Perhaps the bill with the greatest long-term impact is the passage of a budget item in HB 4 that would provide funding to rebuild and expand Interstate 70 to six lanes across the entire state, provide $20 million for preliminary work on I-44, and $100 million for rural routes. The appropriation bill provides approximately half of the $2.8 billion I-70 expenditure from surplus money, with the remaining half borrowed as needed. We have been told preliminarily that background work will begin immediately but actual construction won't start for nearly two years. Of course, as transportation advocates that led the effort to pass this critical infrastructure bill, Associated Industries of Missouri and the Missouri Transportation and Development Council, along with our partners in the Missourians for Transportation Investment coalition, will be watching this project very closely.
SB 138 and HB 202 establish a "Waterways and Ports Trust Fund," a revolving trust fund to consist of moneys appropriated by the General Assembly, providing an 80/20 match for port capital improvement projects. The Fund would expire December 31, 2033 unless extended by the General Assembly. The bills also increase biodiesel tax credits, a flood resiliency program to help protect against flood damage, and increased log truck weight limits.
SB 398 bans the use of electronic communication devices while driving unless the driver is using handsfree technology. The bill also requires motor vehicle dealers to collect and remit sales tax on vehicles they sell. Current law allows such collection and remittance but does not require dealers to collect and remit the sales tax.
Again this session, we defeated all attempts to reduce the impact of the motor fuel tax increase we supported. Some of the bills defeated would have repealed the increase outright, increased refunds of the increase by making refunds easier, and one defeated measure would have taken away the ability of the Missouri Highway and Transportation Commission to decide project funding.
SB 109 contains AIM language preventing the Missouri Department of Natural Resources from relying on guidance in punitive actions against regulated entities if they object to use of such guidance. Also, the process used to determine fees supporting various MDNR programs would be extended, "earthen basins" would be clearly exempted from requiring a permit, technical corrections are made allowing fair application of mining inspection fees to products similar to granite and other minerals, changes would be made to the makeup of the Industrial Minerals Advisory Council, and provisions regarding flood resiliency are included.
We defeated an attempt to move the maximum contaminant level of vinyl chloride from the EPA standard of 2 ppb to 0.2 ppb - a level so low special detection equipment is required. We remain concerned lowering the maximum contaminant level could affect cleanup activities across the state.
HB 202 and SB 138 allow farmers reporting income on Schedule F to utilize the "business income deduction" - the provision AIM passed in previous years that allows deduction of a percentage of business expenses when computing Missouri taxable income. A capital gains deduction for "beginning farmers" and a deduction for landowners renting to beginning farmers is also included.
SB 20 includes a deduction of capital gains realized when converting a business to an "Employee Stock Ownership Plan" (ESOP).
SB 25 allows a tax deduction for broadband grant money received.
Our effort to provide a sales/use tax exemption for brain cancer patients and other purchasers of durable medical equipment, an exemption of electricity transmission and distribution equipment from sales/use taxes (currently paid by all electricity consumers), and economic development rates for large gas users (benefiting all gas users) were unsuccessful due to the filibusters conducted in the final days of the session. Other efforts to further reduce individual and corporation income tax also failed.
SB 20 and SB 75 provide a state-run retirement plan option for small employers. Employers of fewer than 50 employees would be eligible for the plan. Current requirements that participants have common interests would be eliminated with the new law.
Earned wage access services would be regulated by provisions in SB 103. That bill also says non-compete agreements between owners and their businesses are enforceable provided they are reasonable and for no longer than two years regarding solicitation of employees or five years regarding competition with the business for the sales of goods or services following the sale of the business.
SJR 26 will place before voters a proposal that would allow the General Assembly to pass a future law exempting property used for childcare from property tax.
A tax credit would be available to companies providing the education necessary to upskill their workforce, and companies providing internships and apprenticeships under HB 417. The bill also adds one additional adult high school in Jackson County and contiguous counties. Currently, only four such adult high schools are authorized. HB 447 also contains the expansion of the adult high schools and provides early childhood education grants for childcare centers.
Efforts to expand the ability of employees to sue employers through expansion of the Mo. Human Rights Act;
Mandatory use of E Verify and onerous employer reporting of immigrant employment status to a government database with felony penalties for businesses; and,
Measures that would impede the ability of an employer to require vaccinations.
Also, multifaceted incentives to assist with childcare we supported failed due to the filibusters in the final days of the session.
Missouri will once again have a film production tax credit, thanks to passage of SB 94. The bill also authorizes a tax credit for rehearsal expenses and tour expenses for live entertainment tours and associated rehearsals conducted within the state.
Missouri Employers Mutual, a semi-private workers' compensation and safety company, would become a fully private company under the provisions of SB 101. AIM fully supports this change as the MEM may currently only write policies for workers' compensation within Missouri, but this change will allow MEM to write policies for companies with locations inside and outside Missouri.
The Second Injury Fund Surcharge is currently up to 2.5% of workers' compensation premiums, with the rate set to be the amount needed to pay claims, rounded to the nearest .5%. SB 24, negotiated by AIM with the Missouri Dept. of Labor and Industrial Relations, lowers the maximum supplemental surcharge to 1%, allows the Department to set the rate in .25% increments, and the surcharge is extended to December 31, 2026, at which time we will reevaluate the needs of the Second Injury Fund. This is a win for employers.
AIM-supported bills allowing stronger review of administrative law judges and requiring work be the primary reason for the need for medical treatment were not passed.
We want to take a moment to thank AIM's lobbying team, including Chuck Pierce, Trent Watson and David Overfelt. They are the best lobbying team in the Capitol and we very much appreciate their hard work on your behalf!
While all these bills have been sent to the Governor, he has the final say. He must veto bills by July 14 or they become law without his signature. We will report on the bills as he makes decisions. Stay tuned!