"The Voice of Missouri Business®" Weekly Report February 17-21, 2025

By Ray McCarty, president/CEO, Associated Industries of Missouri

February 21, 2025 - Here is a quick recap of some of our activities working for you this week. Although we were active on many more bills, recapping all our activity would take you until this time next week to read, so we will hit the highlights.

Proposition A - Minimum Wage and Paid Sick/Domestic Violence Leave Revisions (AIM supports)

Associated Industries of Missouri joined other business groups in supporting two bills (HB 567 - Gallick, and HB 555 - Lewis) aimed at reducing the burden on employers due to the passage of Proposition A. That measure increases the state minimum wage and requires employers to provide paid sick and domestic violence leave while hampering employers' ability to control the use of such leave and allowing lawsuits against employers. AIM president Ray McCarty told the committee members who expressed concern with "overturning the will of the people" that it was impossible to know what the will of the people was because three questions were combined into one: increasing minimum wage, requiring paid sick leave, and requiring paid domestic violence leave (which was not even included in the ballot summary voters saw when voting). The fact that this combination of all three separate subjects into one ballot question violated the Missouri Constitution is the subject of a lawsuit currently pending in the Missouri Supreme Court: Raymond McCarty, et al. vs. Missouri Secretary of State, et al., Case #SC100876. Oral arguments are scheduled for March 12 at 9:00 a.m.

Elimination of Local Manufacturing Exemption (AIM opposes)

HB 321 (Wolfin) would reapply local sales taxes to all items used in the manufacturing process! Not only would this be a dramatic tax increase on Missouri manufacturers, miners, processors and producers, the bill would endanger the ability of the state and local governments to collect sales/use taxes on internet purchases. We are meeting with Rep. Wolfin and Rep. Harbison (who filed a similar bill) prior to a scheduled hearing on HB 321 on Monday. This week, Ray McCarty was invited to address the Mo. Assn. of Counties board and explained the impact the bill would have on the ability of the state and local governments to collect sales/use taxes on internet sales, pointing out many counties supported the Wayfair bill that provided the full exemption when it passed four years ago. The exemption has been a full exemption for the last two years.

Statute of Limitations (AIM supports)

We told you previously we supported HB 68 (Overcast) that would reduce the statute of limitations for personal injury claims from Missouri's unusually long five years to two years. This week, the bill was taken up by the full House of Representatives. Language lengthening the statute of limitations for sexual assault civil cases was added to the bill and it was approved by the House on a 92-42 vote. The bill now moves to the Senate for further action.

Expert Witnesses (AIM supports)

SB 238 (Burger) was the subject of a hearing in the Senate General Laws Committee. HB 263 (Hovis), the House companion bill, was also heard in the House Judiciary Committee this week. AIM testified in support of both bills that will align Missouri's law regarding evaluation of "experts" in court cases with federal rules.

Pesticide Labeling (AIM supports)

We previously told you we supported HB 544 (Diehl), providing that federal pesticide labeling requirements will be sufficient. The bill was taken up by the full House of Representatives this week and passed by a vote of 85-72. This bill also moves to the Senate.

Utility Omnibus (CWIP, Future Test Year, Integrated Resource Plans) and Pipeline Property Tax Depreciation (AIM supports)

We previously reported about SB 4 (Cierpiot). That bill was taken up and passed this week in the Missouri Senate, but only after language clarifying pipeline depreciation for property tax purposes was removed. This week, the House version of the pipeline depreciation bill, HB 531 (Hausman), was passed by the House Ways and Means Committee on a 6-2 vote. Ray McCarty, president and CEO of AIM, previously testified the language is necessary to prevent a tax increase on all Missouri utility users of at least $24 million. 

The State Tax Commission (STC) changed the form used to calculate depreciation without input from legislators, the public, or utilities, establishing a 50-year depreciation schedule with a 20% residual value at the end of 50 years. If allowed to stand, this would dramatically increase property taxes due from the utilities that are directly passed through to consumers through utility rates. The only serious testimony against the bill in the House hearing, as in the Senate hearing, came from Kenny Mohr, Boone County Assessor, in his role with the Missouri State Assessors Association.

This week, McCarty was invited by the STC to provide information on the topic. Following McCarty's appearance before the Commission, the STC issued a ruling in one of the pipeline cases on appeal, holding the 20-year methodology was appropriate for older periods. Other communication from the STC indicates they would like to use a longer duration depreciation methodology for future assessments, but may look to stakeholders to try to negotiate an appropriate depreciation process. More on that as we learn more.

SB 4 was passed by the Senate and will now face one final Senate vote before moving to the House for further deliberation. During the perfection process, language allowing costs of utility generation projects to be included in rates to lower interest costs of such projects was included, but not until ratepayer protections drafted by AIM were added to the bill. That language provides if costs are dramatically more than originally estimated or projects are not placed in service in a reasonable amount of time as determined by the Public Service Commission, amounts previously included in rates would be subject to refund with interest in a future rate case. This should help prevent the type of abuse we have witnessed in other states without such protections. In some cases, amounts were included in rates as construction projects progressed and the projects were never placed in service.

Tax Reform (AIM opposes and supports)

The Senate Economic and Workforce Development Committee this week combined multiple bills into one that would cut Missouri's individual income tax to 4% and provide for further reductions if a constitutional amendment is passed authorizing further reduction in the rate by expanding sales and use taxes to services and digital products. AIM supports reducing the individual income tax and supported all the bills that would accomplish that goal, but opposed the constitutional amendments that would expand the sales/use tax base to include services and digital products. AIM president Ray McCarty told the committee that the sales/use tax rate necessary to offset complete elimination of the tax would be extremely high, particularly if the legislature exempted some higher cost services such as home sales, healthcare such as doctor and hospital visits, and other services that may not be popular with Missourians. Despite AIM's testimony, the Senate Economic and Workforce Development Committee voted this week to pass the bills out of committee along party lines with Republicans supporting and Democrats opposing the bills. The combined bills are SB 151 and SJR 31, both of which are sponsored by the committee chairman, Sen. Ben Brown.

Broadband Equipment (AIM supports)

Last week, AIM supported two bills dealing with broadband equipment. The first clarifies that equipment used to provide broadband service is exempt from sales and use taxes. Most of this equipment is already used to provide telecommunications services and is already exempt, but HB 743 (Baker) would ensure a future tax auditor does not attempt to apply tax to equipment that is used for broadband internet service. That bill was approved by the committee this week. An identical bill in the Senate, SB 185 (Cierpiot) was heard this week. Also, AIM supports HB 661 (Keathley), a bill that provides if the state or a local government requires relocation of a non-regulated utility such as broadband, the state or local government requiring the relocation must pay for the relocation as part of the project cost. That bill was voted out of committee also on a 15-1 vote this week.

We intend to provide these legislative updates to you on a weekly basis on Fridays as we track the progress of these and other bills affecting Missouri businesses.