Wednesday, January 9th the Missouri Legislative begins their legislative session.
Lawmakers continued preparing for the upcoming legislative session, which begins on Jan. 9. Many legislators prefiled bills earlier this month. Committees also met throughout the last month of the interim, and the Missouri Tax Credit Review Commission released its updated report on the state’s various tax credit programs.
Lawmakers are allowed to prefile legislation as early as July 1. However, as bills aren’t assigned numbers until Dec. 1, most members wait until the last month of the year to prefile their measures for the next session. More than 95 measures—Senate bills and resolutions—have already been filed for the 2013 legislative session.
Second Injury Fund
Missouri’s Second Injury Fund (SIF) compensates injured workers when a current work-injury combines with a previous disability to create an increased, combined disability. SIFs were created as a way to encourage employers to hire workers with disabilities by shielding them from the increased liability. Missouri’s SIF was established by lawmakers in 1943.
The SIF is funded by a surcharge employers pay on workers’ compensation insurance premiums. This surcharge rate was periodically adjusted to cover the SIF’s yearly costs. By 2005, however, the SIF had a surplus of $25 million. The General Assembly passed legislation that year permanently capping the surcharge rate at 3 percent.
Now, seven years later, the SIF is underfunded to the point of insolvency, due in large part to high unemployment rates stemming from the 2008 recession. As unemployment rose, workers’ compensation premiums fell, bringing in less revenue for the fund. The SIF collected around $40 million in 2011; the total cost of the program that year was $77 million. According to Missouri Attorney General Chris Koster, the total liability against the Second Injury Fund—including around 28,000 pending claims as of October 2012—exceeds $100 million.
Senator Scott T. Rupp, R-Wentzville, prefiled legislation in December to fix the ongoing SIF shortfall. Senate Bill 1 modifies the laws regarding the SIF. Under the bill, the surcharge rate which funds the SIF could be increased to 4.5 percent in the instance of a shortfall, and up to 6 percent if agreed to by the Second Injury Fund Commission, which would be composed of the governor, attorney general, President Pro Tem of the Senate and Speaker of the House. The legislation also requires an actuarial study of the fund every year, versus the previous study held every three years, among other provisions.
In 2010, Missouri lawmakers approved ethics legislation that required public reporting of campaign contributions more than $500 within a limited time frame and strengthened the Missouri Ethics Commission’s ability to investigate complaints. The law, however, was tossed out by the Missouri Supreme Court earlier this year for violating the single subject provision law that requires acts within a bill to be connected.
With that law now invalidated, Missouri is one of only four states without limits on campaign contributions, according to the National Conference of State Legislators.
This month, lawmakers signaled their intent to address ethics reform in the upcoming session with a handful of prefiled bills. Senate Bill 4, sponsored by Sen. Brad Lager, R-Savannah, bars members of the General Assembly from acting as paid political consultants. The bill also imposes a two year “cooling-off period” before members of the Legislature can become lobbyists. If approved, the measure would implement stricter limits on ex-lawmakers becoming lobbyists than those that exist at the federal level, where congressional rules only prohibit retired legislators from lobbying former colleagues for one year.
Senator-elect Scott Sifton, D-St. Louis, who will be sworn in on the first day of session on Jan. 9, 2013, has also prefiled legislation to strengthen Missouri’s ethics laws. Senate Bill 38 bans all lobbyists’ gifts to members of the Missouri Legislature and their family, employees and staff. The bill also prohibits lawmakers from reimbursing lobbyists for gifts with campaign funds.
Missouri lawmakers have indicated economic development will be one of their top priorities during the 2013 session. As part of that goal, Sen. Eric Schmitt, R-Glendale, prefiled Senate Bill 11 in December, a measure aimed at making Missouri’s business climate more welcoming to new and existing companies.
The bill would create a tax deduction for business income, beginning at 10 percent in 2013. The act would be fully phased in at 50 percent by 2017, and would apply to all businesses reporting income on individual returns, such as sole proprietorships, S corporations, limited liability corporations (LLCs) and limited liability partnerships (LLPs). During the same five-year period, the corporate income tax rate would also be reduced by 50 percent.
Senator Schmitt, who chairs the Senate Jobs, Economic Development and Local Government Committee, sponsored a similar measure in 2012. The session ended, however, before the bill was approved by the General Assembly.
Traffic fatalities in Missouri have been on the decline in recent years, falling from 1,257 in 2005 to 782 in 2011. That trend may be coming to end, however. According to the Missouri Highway Patrol, traffic fatalities in 2012 are set to exceed those in 2011, the first time figures have increased from the previous year in nearly a decade.
Of those who died from traffic fatalities this year, more than 60 percent were not wearing seatbelts.
In an effort to get more Missourian’s to buckle up, Sen. Joseph Keaveny, D-St. Louis, prefiled Senate Bill 62 in December to increase the fine for seatbelt violations from $10 to $50. However, the bill does not go so far as to create a primary seatbelt law in Missouri, which would allow law enforcement to stop drivers solely for not wearing a seatbelt.
Benevolent Tax Credits
During the 2011 special session, the Missouri Senate approved legislation that would have drastically reformed Missouri’s tax credit system. Among the provisions, the bill would have sunset, capped and eliminated a number of tax credit programs. The move was intended to rein in the continuing growth of the incentives, whose redemptions cost the state more than $500 million in Fiscal Year 2011. The legislation passed by the Senate was projected to save taxpayers nearly $1 billion over the next 15 years.
The measure ultimately died in the House. Since then, tax credit reform measures have been filed in both chambers, but few have seen more than slight progress towards passage, including legislation debated during the 2012 session to extend the expiration date of what are known as benevolent tax credits. These tax credits are often issued for charitable contributions to places such as food pantries or pregnancy resource centers. Despite broad support, the bill was not passed before the end of session.
Lawmakers indicate they will address tax credit reform during the 2013 session, including extending the sunset on certain benevolent tax credit programs and reauthorizing those that have expired.
Senate Bill 15, sponsored by Sen. Ron Richard, R-Joplin, modifies provisions regarding certain benevolent tax credits. Specifically, the bill extends the sunset on the Public Safety Officer Surviving Spouse tax credit and reauthorizes the Children in Crisis, Food Pantry and Pregnancy Resource Center tax credits, among others.
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