Associated Industries of Missouri releases Mid-Session Report 2023
ASSOCIATED INDUSTRIES OF MISSOURI
2023 MISSOURI LEGISLATIVE SESSION
MARCH 15, 2023
The 2023 Legislative Session is now at the mid-point. We want to let you know highlights of the work we are doing on your behalf, representing employers in the Missouri Capitol.
The session so far has been very interesting, with new leadership in both the House and Senate bringing new views and fresh approaches to the progression of legislation through both chambers.
New rules in the House created three “rules” committees instead of the previous two, and the process changed to allow more flexibility. “Rules” committees consider bills passed by the original House committees and have the power to limit the time a bill is considered on the House floor and may re-refer a bill to committee if it needs more work before consideration by the full House. It also gives leadership a process to control the flow of legislation. Last session, the rules committees each received bills from a defined list of committees, but this year any bill coming from any committee may be referred to one of the three rules committees. This makes our job a bit more difficult as the process moves very quickly and the ability to educate legislators serving on a particular rules committee about the issues they will be considering is more difficult.
In the Senate, new President Pro Tem Caleb Rowden and Majority Floor Leader Cindy O’Laughlin are working to keep legislation moving. Already this session, filibusters have threatened to cripple the legislative process again, following a trend over the last several years, but these leaders have generally found ways to move forward. That said, the situation in the Senate changes every day, and some of the debate immediately before adjournment for Spring Break were at an impasse, causing the Senate to adjourn for the break one day early.
Filing for bills has ended (unless special leave is granted). There have been a total of 2.268 bills and resolutions filed in 2023, just slightly more than usual. More bills were filed in the Senate this year than last and fewer House bills were filed this year compared to last year.
In this mid-session report, we will list some of the bills that have received the most attention so far this session. If your company is a member of Associated Industries of Missouri and you have questions about other issues or topics, please contact us and we will be happy to help you. You may send such inquiries to Ray McCarty at email@example.com.
Thank you for your support. Without your support, we could not have served as the Voice of Missouri Business® since 1919 and we greatly appreciate your support and our collective success.
Fee Process and Guidance Document Reliance
At Associated Industries of Missouri, we have consistently led the discussion to encourage a shift in the role of the Missouri Department of Natural Resources (MDNR) from a purely regulatory agency to one that helps regulated facilities and the public comply with federal and state statutes and regulations. As part of this effort, we passed legislation in previous sessions that prevented the MDNR from being stricter than federal laws and regulations in a couple of the programs at MDNR. By many accounts, the current leadership at the MDNR is doing a good job of helping businesses comply with environmental laws and is following the spirit of this “no stricter” approach for the Department overall.
The stakeholder process used to set the fees that support the various MDNR programs is set to expire in 2024. Unless legislation is enacted, the fees developed through the stakeholder process will revert to levels in place before the process was enacted. We support legislation to extend the stakeholder fee-setting process and to ensure if the process expires fees do not revert to 2013 levels. But our support is contingent on the final bill including language that protects the regulated community by prohibiting punitive action by MDNR based solely on guidance from the Environmental Protection Agency.
Guidance documents are useful in helping regulators “fill in the blanks” of statutes and regulations but must be treated as simply advisory documents. They should not be used in enforcement measures as they have not received full public input and review by elected officials that is required when enacting statutes and regulations. This is why we have insisted on including language stating the MDNR may not take any permitting or regulatory action based solely on guidance that has not been promulgated as a regulation unless such use of guidance is agreed to by the permittee or person subject to such regulatory action.
This language was adopted in HB 779 (Bromley) in committee and the bill awaits approval by the Regulatory Oversight Rules Committee. Similar language is planned for SB 395, the Senate version of the bill filed by Sen. Mike Bernskoetter.
Silica Sand Mining
HB 982 (Rep. Rick Francis) was voted out of committee just before the legislative break. The bill is an attempt to block a proposed silica sand mine in Ste. Genevieve County. The bill would protect existing mines but would block any new mines, presenting possible constitutional issues. During testimony, it was discovered the local government had enacted zoning previously to block another facility, but then repealed the zoning and now is asking the state to do the job of the local government in stopping the mine. AIM opposes the bill.
TORT REFORM & LEGAL ISSUES
Statute of Limitations
The business community’s top tort priority lowering the statute of limitations for civil cases from the current five years to two years is currently stalled in the Senate. Several hours of debate, while unsuccessful in moving the bill forward, served to identify those senators that will stand in the way of the bill by filibustering, including the following Republicans stood with Democrats to block the bill: Senator Bill Eigel, Senator Jill Carter, Senator Mike Moon, Senator Denny Hoskins, Senator Ben Brown and Senator Rick Brattin. During a hearing for the bill, plaintiffs’ attorneys were the only group to oppose the change, no doubt fueled by the advantage the current long statute of limitations gives their clients. Sen. Eigel, who has announced an exploratory committee to run for governor in 2024, even suggested increasing the statute of limitations from the current five years to six years. Missouri is already an outlier with a longer statute of limitations than all but three states. As AIM pointed out in testimony for SB 117 (Senator Tony Luetkemeyer), the longer the statute of limitations, the more likely evidence will be lost, witnesses' memories can fade, witnesses may retire or pass away, etc., making it difficult to defend against a lawsuit. Missouri should bring our statute of limitations in line with the majority of states that have a statute of limitations of two years or less. The House version is HB 272 (Rep. Alex Riley) which was just referred to committee.
CROWN Act – Protected Class for Hair Styles & Textures
Three House bills filed to protect school children from discrimination and unfair treatment because of their natural hair styles were combined into one substitute bill. Although two of the original bills also would have modified the definition of “race” to include hair styles and textures for purposes of the Missouri Human Rights Act (MHRA), the substitute House bill, HCS HBs 930, 361 & 326 does not include this provision. Although intended to prevent discrimination against African Americans, AIM testified that modifying the “race” definition could have unintended consequences of being abused by people that were not of African American ethnicity and the sponsor of one of the bills, Rep. Raychel Proudie echoed that concern. Rep. Proudie noted the Human Rights Act definition change was not included in her bill and it was not included in the committee substitute House bill. The House bill has been referred to the House Rules - Regulatory Oversight Committee. The Senate version of the bill, SB 424 (Sen. Barbara Washington) contains the modified MHRA “race” definition again this year. AIM will oppose any bill containing this provision. A hearing on the Senate bill was scheduled and then canceled but will likely be held soon.
Firearms in Places of Business
SB 225 (Sen. Nick Schroer) contains a carrot and a stick for business owners. The stick is that businesses that prevent persons authorized to concealed carry firearms to carry such firearms would be liable for damages to such person if they are the victim of criminal or harmful acts committed by a third party. The carrot is if a business allows lawful carrying of firearms, they are provided liability protection. The bill received a hearing in a Senate committee.
TAX AND ECONOMIC DEVELOPMENT
Income Tax Reduction
AIM supports lowering the corporation income tax rate. Corporations don’t pay tax: their customers do. Sen. Denny Hoskins has filed SB 93 which, in its most recent form, would lower the corporation income tax from the current 4% to 3.75% in 2024, then allow additional reductions based on increases in such tax collections to a rate as low as 2.25%. The bill would also allow additional reductions in the individual income tax to an eventual rate of 4%. The bill has been debated but faces more debate by the full Missouri Senate.
HCS HBs 816 & 660 (Rep. Dirk Deaton) has cleared two House committees and is awaiting floor debate. The bill would lower the individual income tax from 4.95% to 4.5%, reduce the corporation income tax rate from 4% to 2% and allow additional corporate tax cuts in the future dependent upon increased revenues. Social security income would be exempt regardless of filing status or income.
Medical Device Sales/Use Tax Exemption
AIM has worked for nearly a decade to correct a position of the Missouri Department of Revenue (DOR) holding durable medical equipment, including devices used to treat terminal brain cancer, taxable for sales and use tax purposes. Despite passing laws to this effect, the DOR has failed to recognize this exemption. This session, the DOR is supporting our legislation to provide an exemption for this durable medical equipment. HB 154 (Rep. Dr. Lisa Thomas) has passed the House and awaits referral to a Senate committee. SB 173 (Sen. Andrew Koenig) has been approved by a Senate committee and the language has also been added to the current version of SB 131 (Sen. Rick Brattin) which is still subject to further amendment by the Senate.
Electricity Transmission and Distribution Exemption Clarification
AIM believes Missouri electricity consumers should not be paying sales and use taxes on the poles, transformers, wire and other items used in the delivery of electricity to customers. Currently, such taxes are initially paid by utility companies and then passed on to consumers in the rates we pay for electricity. SB 275 (Sen. Curtis Trent) would exempt such purchases by utility companies and coops from sales and use taxes. The bill has been heard in Senate committee and a vote is expected soon. Two other bills would exempt only the state portion of the tax: SB 300 filed by Sen. Denny Hoskins (also heard in Senate committee), and HB 258 (Rep. Doug Richey).
Property Tax Reform
Personal property tax values skyrocketed this year, especially the tax on used vehicles as prices soared due to the lack of available new vehicles. Real and personal property tax has been a target in recent years as house prices soared following COVID and property taxes increased as a result. It is no surprise constituents’ dissatisfaction with property tax has resulted in many bills to lessen the impact of property taxes, especially when they suddenly increase. A number of proposals are moving that freeze the value of property for some groups, phase in the impact of large increases, or reduce property taxes outright. Here are the bills on this topic that have the best chance of moving and that affect businesses (directly or indirectly):
HB 1078 (Rep. Darin Chappell) – Freezes value of property unless it is sold or dramatically improved (50% or more increase in value) – Approved by House committee;
SB 8 (Sen. Bill Eigel) – Lowers assessment percentage for personal property from 33% to 31% and requires assessors use the MSRP and ten-year depreciation schedule to determine vehicle value for property tax purposes – Perfected in Senate but currently in Fiscal Oversight Committee;
SB 95 (Sen. Andrew Koenig) – Upon appeal of a taxpayer, if real property value is more than overall level of assessment as defined in the bill, the real property value is lowered. Also, current law requires a taxpayer to file a written protest at the time the property taxes at issue are paid and this bill removes that provision. The bill has been approved by a Senate committee;
SB 104 (Sen. Mike Cierpiot) – Current personal property assessment percentage is 33.3% of true value in money. This bill reduces it by 1% annually until it reaches 20% in 2036 – The bill has been approved by a Senate committee;
SB 105 (Sen. Mike Cierpiot) – Reduces residential real property assessment percentage (currently 19% of true value in money) by 0.5% per year until it reaches 15% - The bill has been approved by a Senate committee; and,
SJR 35 (Sen. Rick Brattin) – Allows the commercial surcharge that was put in place when the merchants and manufacturers tax was eliminated to be reduced by the elected governing body of the county. This is a constitutional amendment that would be subject to voter approval at a statewide election. The bill is on the calendar for work by the full Senate.
Pipeline Depreciation for Property Tax Purposes
HB 349 (Rep. Phil Christofanelli) would reclassify pipelines used for transportation or storage of liquid and gaseous products from real to personal property. The bill would impact natural gas, water and sewer pipelines and would specify the property is to be depreciated on the same schedule as business personal property is depreciated . HB 349 passed two House committees and is ready for debate by the full House of Representatives. SB 533 (Sen. Mary Elizabeth Coleman) was also filed on this topic, but the bill has not moved.
HB 589 (Rep. Jim Murphy) prohibits application of the earnings taxes to remote work outside the city and requires residents of the full counties in which the city levying the earnings tax is located to approve the earnings tax rather than only the voters inside the city. The bill was referred to a House committee.
Used Property Exemption from Sales/Use Taxes
HB 1141 (Rep. Dean Van Schoiack) would exempt used property (except titled vehicles) from sales and use taxes. The bill has been heard in a House committee.
A new “regulatory sandbox” that would allow new and existing companies with new processes, products and services to become established without regulatory burden would be established by HB 268 (Rep. Alex Riley) and SCS SBs 3 & 69 (Sen. Denny Hoskins & Sen. Travis Fitzwater). These bills would create the Regulatory Relief Office within the Department of Economic Development. The Regulatory Relief Office would identify state laws or regulations that could potentially be waived or suspended for participating businesses during a two-year period in which the participating business demonstrates an innovative product offering to consumers. State agencies must sign off on any such waivers and if they object, the regulation would not be waived. The Senate version contains additional provisions regarding reporting of state contracts awarded to businesses that have been in operation less than three years (Right to Start), creation of an Office of Entrepreneurship, and repeal of the non-functioning Small Business Regulatory Fairness Board.
Entertainment Industry Incentives
Two incentives to encourage development of the entertainment industry in Missouri have been making progress this session.
One incentive is a revival of the film production tax credit that expired many years ago. The credit provides a rebate of some of the expenses incurred when producing a motion media production in Missouri.
The other is a credit that would encourage touring artists to rehearse for tours in Missouri. Rehearsal space is being developed in the St. Louis metro area to provide space for such rehearsals. The credits could only be used if the artist also performed two concerts in Missouri and the credits would go away if similar credits in other states expire because the purpose is to allow Missouri to compete for this business.
Here are the bills that have made the most progress at this time:
SS SCS SBs 94, 52, 57, 58 & 67 (Sen. Denny Hoskins) Rehearsal and tour expenses credit and film production tax credit revival – Passed the Senate and awaiting committee referral in the House;
HB 133 (Rep. Brad Hudson) Rehearsal and tour expenses credit – Passed the House and awaiting committee referral in the Senate;
HB 675 (Rep. Kurtis Gregory) Film production tax credit – Passed initial House committee, awaiting hearing in Rules – Regulatory Oversight Committee.
HCS HB 939 (Rep. Travis Wilson) Increases the program cap on the Missouri Works program from $6 million to $10 million and allows additional retail businesses to participate in the program. The bill has been approved by one House committee and must be approved by another before consideration by the full House.
HB 870 (Rep. Brenda Shields) provides four different tax credits to provide incentives for employers to provide or pay for childcare for employees. The bill has been approved by the initial House committee.
SB 151 (Sen. Travis Fitzwater) would enact a property tax exemption for property used for childcare if a constitutional amendment (such as SJR 26) is approved by voters. The bill is on the calendar for debate by the full Senate.
SJR 26 (Sen. Travis Fitzwater) provides the constitutional authority for a property tax exemption for property used for childcare. The bill has received initial approval and will receive one additional vote before moving to the House for further consideration.
AIM and the Missouri Transportation and Development Council (MTD) finally achieved an increase in fuel tax to provide funding for roads and now is defending the tax against legislators that are upset with some of the expenditures of the money and decisions made by current MoDOT leadership. The timing of salary increases, and the fact that MoDOT has sued the state claiming they do not need appropriation authority to spend the fuel tax money are the chiefest concerns. AIM and MTD have also expressed our displeasure with these decisions, but we realize we must protect this funding as it is crucial to improving our highways that are necessary for our economy.
AIM, MTD and a group of transportation advocates met with Governor Mike Parson to discuss using some of the budget surplus money to fix and widen I-70 and to do some preparatory work on I-44. The Governor asked the legislature to approve $895 million in funding to widen the most congested parts of I-70, anticipating future state or federal funding would be available to finish the remainder of the work.
Because of the current backlash expressed by legislators, multiple bills have been filed to either reign in MoDOT, gut their funding, change their leadership structure, etc. We continue to work for additional funding for the interstates.
EV Charging Stations Mandates
If a local government mandates installation of electric vehicle charging stations at non-automotive businesses, the local government would have to pay for the installation, maintenance, and operation of such stations under SB 233, an AIM-supported bill filed by Sen. Ben Brown. The bill has been heard in a Senate committee.
SB 21 (Sen. Mike Bernskoetter) would reduce the number of weeks of unemployment benefits as the state unemployment rate is reduced and would eliminate the current ability of an ex-employee to receive unemployment benefits while still receiving the equivalent of full pay through a termination or severance agreement. AIM is fully supportive of this and is actively negotiating with organized labor on a compromise. SB 21 is on the calendar for debate in the Senate. HB 726 (Rep. Jeff Knight) has not been referred to committee in the House.
AIM supports HB 275 (Rep. Alex Riley), that would ensure a work accident must be the prevailing factor in the need for medical treatment if workers’ compensation benefits are to be paid for such medical treatment. The bill has not yet received a hearing.
Second Injury Fund
AIM has negotiated with the Missouri Department of Labor and agreed to an extension of the supplemental Second Injury Fund surcharge at a maximum of 1% through 2026. The two bills on this topic have not yet been referred to committee in either chamber and do not yet reflect this agreement: HB 1017 (Rep. Terry Thompson) and SB 521 (Sen. Sandy Crawford).
Missouri Employers Mutual
AIM supported proposals that would make Missouri Employers Mutual (MEM) a fully private company in hearings in the House and Senate. Missouri Employers Mutual’s current structure as a public corporation means the company may only write policies for companies that operate solely in Missouri. Allowing MEM to become a private company will allow them to write policies for companies that operate in Missouri and other states. We believe this will only strengthen MEM’s ability to serve their customers and our members. HB 277 (Rep. Alex Riley) received a hearing in the initial House committee. SB 181 (Sen. Sandy Crawford) has advanced from Senate committee and is on the calendar for full Senate floor debate.
EDUCATION & WORKFORCE
Several bills have been filed related to increasing awareness of and increasing opportunities for education needed to be successful in a career. The bill that is furthest in the process at present is SB 136 (Sen. Karla Eslinger) that requires career planning for students. The bill is on the calendar for debate by the full Senate.
Job Training Incentives
SB 163 (Sen. Mary Elizabeth Coleman) authorizes the Dept. of Higher Education and Workforce Development to contract with private entities that train individuals and allows 50% of the increased tax liability of the worker after training to be paid to the training entity for 12 years. SB 163 has received a hearing in a Senate committee.
HB 417 (Rep. Mike Henderson) would provide a credit to employers of up to $30,000 per employer for supporting upskill credentials for their employees. The bill has received initial approval in the House and is awaiting action in the Senate. SB 53 (Sen. Karla Eslinger) has been referred to a committee but has not yet received a hearing.
Internships and Apprenticeships
HB 1038 (Rep. Brad Christ) allows employers a tax credit of $1,500 per employee (up to $9,000/tax year) when employing interns and apprentices and paying minimum wage or more, with other conditions and requirements. The House bill has been approved by the initial House committee and will be considered by a second House committee before being eligible for debate by the full House of Representatives. SB 637 (Sen. Nick Schroer) has not been referred to a Senate committee.
Employer Protection for Hiring Ex-Offenders
Nearly every employer is having trouble hiring and retaining good employees, leading to employers looking to non-traditional sources of potential employees. Hiring ex-offenders makes sense because without gainful employment, ex-offenders have nothing to rely upon but a life of crime. Yet hiring ex-offenders carries a degree of risk for employers. HB 720 (Rep. Alex Riley) and SB 352 (Sen. Curtis Trent) would provide a degree of protection for such employers by blocking causes of action against employers for hiring employees or independent contractors that have been convicted of certain offenses (excluding some violent and sexual offenses). Both bills have been referred to committees in their respective chambers.
Mandatory Use of EVerify
HB 188 (Rep. Jim Murphy) would burden small employers by requiring the use of the federal EVerify system when hiring employees. While the vast majority of employers that regularly hire people use the system, those that do not hire on a regular basis must complete a new educational session and test before they may use the system, requiring time and establishing a barrier for employers that do not hire on a regular basis. This is particularly problematic for smaller employers. AIM opposes making it even more difficult for employers that are trying to hire people. HB 188 has been heard by a House committee and a recent vote was scheduled, then canceled. SB 130 (Sen. Rick Brattin) has been referred to a Senate committee.
Workplace Retirement Plans
HB 155 (Rep. Michael O’Donnell) would establish a voluntary retirement savings plan operated by the state for employees of participating employers. The bill was approved by the initial House committee and has been referred to a second House committee.
Employer Vaccination Requirements
Last year, multiple bills were filed seeking to block an employer’s right to request employees receive a COVID vaccination. AIM has consistently opposed such bills because we believe employers should make that decision. Again this year, many bills have been filed on the topic, although far fewer than last year. The bill that is furthest in the legislative process is HB 700 (Rep. Bill Hardwick) that provides multiple ways for employees to refuse an employer’s request for an employee to receive a vaccination. The bill is currently on a calendar for debate by the full House of Representatives. Another bill that specifically allows employers to be sued for damages resulting from a required vaccination is HB 336 (Rep. Mitch Boggs). HB 336 has been approved by a House committee.
Local Shutdown Orders
HB 1263 (Rep. Chris Brown) would allow businesses shut down by any political subdivision during a declared emergency after 1/1/24 for 21 consecutive days or 45 cumulative days to have their business license fees waived for six months or the length of the shutdown (whichever is longer) and their real and personal property taxes reduced based on the number of days the business was closed. The bill was heard by a committee just before the break.
Any Willing Pharmacy
Several bills have been filed to require insurers to honor the same price for in-network pharmaceuticals whether or not the drugs are purchased from a pharmaceutical company that is in the insurer’s network. AIM opposes these bills that eliminate the ability of insurers to negotiate pricing based on volume, resulting in higher healthcare costs. HB 197 (Rep. Dale Wright), the bill that has made the most progress this session, has been approved by a House committee.
Certificate of Need
Bills have been filed to eliminate the “certificate of need” process that is used to prevent overbuilding of healthcare facilities. AIM supports the “certificate of need” process and opposes these bills, including SB 204 (Sen. Mike Moon, voted out of committee), HB 168 (Rep. Brian Seitz, referred to committee) and SB 303 (Sen. Bill Eigel, hearing scheduled but canceled).
Construction Work in Progress (CWIP)
HB 225 (Rep. John Black) would eliminate the current ratepayer protections requiring a piece of equipment purchased by a utility to be placed in service before assigning the cost to ratepayers through the electricity rates. The goal is to pave the way for development of small modular nuclear reactors. SB 333 (Sen. Curtis Trent) has been filed on the same topic. AIM is opposed to the original legislation but is working with the sponsors and has asked for language we could support that provides refunds to ratepayers if the equipment is never placed in service, limits the size of the reactor to one that would be considered a small modular reactor, and removes other renewable energy sources from the provisions of the bill.
Workforce Development Costs
SB 140 (Sen. Jason Bean) requires the Public Service Commission to allow electric and gas companies to recover workforce development investments in rates. The bill has been approved by a Senate committee and is on the calendar for debate by the full Senate.
FOREIGN OWNERSHIP OF LAND
Several bills have been filed to prevent or limit the amount of real estate controlled by entities in foreign countries, particularly by those in China that have a close relationship with the Chinese Communist Party. One bill that has advanced from the House and is awaiting referral to committee in the Senate is HB 903 (Rep. Mike Haffner). The bill reduces the amount of farmland that may be owned by such foreign interests. We have worked to ensure legitimate ownership of land used for research and development by Missouri agricultural product manufacturers that are owned by companies with headquarters in other countries is protected.
HB 668 (Rep. Dan Houx), creates a grant program for employers to be used to enhance cybersecurity. The bill has received initial approval in the House. The bill will be considered by the House Fiscal Review Committee and then a second vote of the full House will occur before the bill moves to the Senate. SB 380 (Sen. Brian Williams) was referred to a Senate committee.
SB 185 (Sen. Mike Bernskoetter) would remove mandated industrial inspections of certain factories, warehouses, office buildings, freight depots, machine shops, garages, laundries, tenement workshops, bakeshops, restaurants, bowling alleys, pool halls, theaters, concert halls, moving picture houses, or places of public amusement, and all other manufacturing, mechanical and mercantile establishments, and workshops. The language being deleted is outdated and was originally placed in statute in 1909 and 1939. OSHA has been doing such inspections for more than 50 years.
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