Big idea of China Hub is big issue in special legislative session
This article first appeared in the St. Louis Beacon, Sept. 5, 2011 - As state Sen. Eric Schmitt paints it, St. Louis would be a different city -- and still among the nation's largest -- if only it had built the Eads Bridge 20 years earlier.
Steamboat operators, he says, forced the Eads' delay, prompting railroads in the mid-1800s to head to Chicago instead. The upshot is obvious.
Now, says Schmitt, the region and the state face a similar seminal moment in the debate over $360 million in proposed tax credits to encourage the Chinese to build a cargo hub at Lambert-St. Louis International Airport. Most of the credits would be used to encourage needed infrastructure development, such as warehouses, around the airport.
"For me, the stakes can't be higher,'' said Schmitt, R-Glendale, as he took a break from working the phones in preparation for next week's start of the special legislative session.
"This time, we can get it right. We can be the 'Bridge to the Rest of the World,''' he said.
If legislators walk away, says Schmitt, the Chinese will too -- and build their Midwest hub elsewhere, perhaps Cincinnati or Indianapolis.
"This is going to happen somewhere,'' he added.
Schmitt is the leader of an unusual coalition of the region's politicians, business and labor leaders -- coupled with rural agricultural interests -- who have made the China Hub effort the special session's marquee issue within the broad-based economic development package that is the centerpiece of the session.
Most of the package had been assembled during the last regular session, but it died during a legislative dispute over various provisions. This summer, Schmitt was among the players who resurrected it.
Gov. Jay Nixon, a Democrat, now also is aboard the bandwagon for the China Hub, also known as "the Big Idea'' and officially dubbed "Aerotropolis.''
Supporters are heartened by the latest news, rumored for weeks, that a Chinese cargo plane will fly into Lambert later this month for a maiden flight. "This is a critical step forward for St. Louis and for the entire state's economic development," said U.S. Sen. Roy Blunt, R-Mo. "I applaud this important partnership, which will help create more private sector jobs in Missouri and increase domestic exports throughout the region."
But that bipartisan army of advocates faces high-profile opposition, in a rare marriage of legislative progressives with conservative tea party activists.
St. Louis area tea party groups are planning a "rolling tea party'' event, via vehicles, to the state Capitol on Wednesday for a late morning rally against the China Hub. A similar event is being considered for Thursday.
State Rep. Rory Ellinger, D-University City, was among the wary Democrats who showed up this week, along with tea party leaders, at an anti-Aerotropolis forum hosted by the region's best-known conservative think tank, the Show-Me Institute.
The institute and its legislative allies -- most notably state Sen. Jason Crowell, R-Cape Girardeau -- object to using state tax credits (which they also philosophically oppose) as incentives to build new warehouses they say that Lambert doesn't need. They contend the tax breaks would also benefit a handful of prospective developers.
Show-Me analyst Audrey Spalding questioned backers' assertions that the China Hub would create tens of thousands of new jobs and contends that the proposal is written in such a way that tax credits could be awarded even if no international trade is involved.
Spalding also asserted that the legislative provisions would improperly give "kingmaker'' powers to St. Louis County Executive Charlie Dooley and St. Louis Mayor Francis Slay, whose administrations would oversee the awarding of the tax credits.
The event even attracted Republican congressional candidate Ed Martin, a tea-party enthusiast who declared that the hub effort was "a terrible idea."
Sharing the podium was state Rep. Sylvester Taylor, D-Black Jack, who said he had no objection to the hub itself -- but was distresssed with how the tax credits will be assembled.
"We are taking money from people who don't have money to give to people who have money and want more,'' Taylor said. "We are kicking our seniors in the mouth."
Tax credits are key
The credits for the China Hub and the other proposals in the economic-development package would be amassed by reducing or eliminating other state tax credit programs. The key losers: the state's tax credits for low-income housing and historic preservation, and the so-called "circuit-breaker” credit, which offers an annual tax break for low-income elderly and disabled who rent.
The circuit-breaker credit for renters, which now costs the state about $52 million a year, would end. The credits for low-income and historic preservation would be capped at about $200 million a year, combined --- a trim of about a third, compared to a few years ago.
Slay, a big backer of the historic credits, is willing to take the cut because he agrees with Schmitt that the China Hub could be transformative, if it comes to pass.
Schmitt points out that the annual allocation for the historic and low-income credits will still be roughly six times the amount earmarked for the China Hub.
Nixon said he's supporting an end to the tax break for low-income renters because he believes it is fairer to shift money into broader programs that benefit the elderly, such as the Missouri Rx program, which aids low-income elderly facing high prescription drug costs.
The governor emphasized that the circuit-breaker benefit for low-income homeowners will remain in effect, and he questioned whether renters should have been getting such a tax break.
The governor also opposes a proposal by a cadre of House Democrats, including Ellinger, to raise money for the economic-development package of tax credits by increasing the state's cigarette tax, now among the nation's lowest.
State Rep. Chris Kelly, D-Columbia, is among the Democrats who want the circuit-breaker credit for renters to stay.
"This is a tax increase for 100,000 old people and veterans, and a money transfer to a dozen rich guys in Chesterfield,'' said Kelly, a former chairman of the House Budget Committee.
But Kelly emphasized that his stance dealt with the funding, not the vision. "I'm for Aerotropolis,'' he said.
Richard C.D. Fleming, chief executive of the Regional Chamber and Growth Assocation, sought to counter such concerns with a warning that the future could look grimmer, if the China Hub isn't in it.
"If we don't find a way to change the trajectory of our economy, we are going to face continuing choices that are negative choices,'' Fleming said.
Nixon offered up a similar argument by saying that expanding employment in the state is the best way to raise the money to pay for social-service programs that many fellow Democrats seek.
Funding for Science, Sports and Job Training
The pro and con buzz over Aerotropolis has all but drowned out the debate over a long list of other proposals in the same economic development package, known officially as "Made in Missouri," which is now a bill more than 350 pages long.
The highlights of the other economic provisions include:
- Creating the long-sought Missouri Science and Innovation Reinvestment Act, known as MOSIRA, to encourage the growth of science-related businesses, including those involving the life sciences.
- Approving special tax breaks to encourage the deveopment and construction of high-tech data centers;
- Enacting the proposed "Compete Missouri Initiative,'' that includes tax breaks and incentives to attract and retain businesses and improve the state's job-training programs.
- Authorizing tax breaks to attract amateur sporting events to Missouri.
- Imposing "sunsets'' and restrictions on a variety of state tax credit programs.
- Granting "amnesty" to errant taxpayers who owe unpaid back taxes. They won't face penalties or interest if they pay their unpaid state taxes in full between August 1, 2012 and September 30, 2012.
Anti-abortion groups, including Missouri Right to Life, are threatening to oppose MOSIRA because of opposition to provisions that they say would allow types of research -- notably embryonic stem-cell research -- that they oppose.
During a conference call this week, state business and labor leaders sought to make the case that the package must be approved in its entirety -- because of the delicate behind-the-scenes negotiations all summer that led to the unusual alliances in favor of it.
Dan Mehan, chief executive of the Missouri Chamber of Commerce and Industry, has cautioned that the whole package could fall apart if legislators try to peel off pieces of it. That warning appeared aimed, in part, at those who may be tempted to cut the China Hub out of the bill because of the battle over it, or to propose different sources of funding.
The aim of the whole package, Mehan said, was to "move Missouri to the top." He added, "I don't think you can go small and win."
The state Senate will take action first, instead of the usual route favoring the state House, because backers want the time to counter Crowell, who is threatening to lead a filibuster over the China Hub.
Schmitt's counter-message will likely be short and simple: Remember the Eads.