2019 Missouri legislative overview
The 2019 Missouri legislative session has concluded and provides a sharp contrast to 2018. Last year, the construction industry saw significant issues debated: Right-To-Work, prevailing wage, historic preservation tax credits. With those off the table for a short while, the 2019 session, through the new governor’s insistence, concentrated on much needed workforce development, state government program efficiencies, economic development, and education/training assistance. For the construction industry, an A+ Program bill expanded its reach, low-income housing tax credits were left as-is, and prevailing wage rules were finalized.
Of course, there were some road bumps during the 5-month session. During the last two weeks, an abortion bill to ban abortions once a fetal heartbeat is detected was passed. Legislators also passed a bill that would allow General Motors to receive up to $50 million in tax credits over ten years if the company invests $750 million to expand its Wentzville plant. Both of these proposals drew filibusters that threatened to shut down any further business in the legislature for the session.
There were 1,990 bills filed this session and only 95 passed the General Assembly. Fifty of those passed were voted in the last two weeks.
Below are detailed summaries of the significant issues proposed that affected the regional construction industry this session.
WORKFORCE DEVELOPMENT A MAJOR FOCUS THIS SESSION
Workforce development saw the most attention of any issue this year. As everybody knows, businesses in most industries now have problems finding qualified workers. Governor Parson made workforce development a priority in his state of the state address earlier this year.
Taking the Governor’s lead, legislators filed several workforce bills this session. Rep. Derek Grier filed HB 469. The bill, as perfected, modified provisions relating to the Missouri Works Training Program and changed the name of the program to the Missouri One Start Program. Among other changes, the bill allowed the department to contract with other entities, including businesses, industries, other state agencies, and political subdivisions of the state for the purpose of implementing a training project under the program. In addition, upon appropriation of funds to the Missouri One Start Job Development Fund, the bill allowed a local education agency to petition the department to utilize the fund to create or improve training facilities, equipment, staff, expertise, programming, and administration. The department also could award moneys from the fund for reimbursement of training project costs and services as it deemed necessary. The bill also gave the department the discretion to determine the appropriate amount of funds to allocate to a training project from the Missouri One Start Community College New Jobs and Retained Jobs Training funds.
Rep. Grier also filed HB 470 which, as perfected, created the "Expanded Workforce Access Act of 2019." Beginning January 1, 2020, licensing authorities would be required to grant a license to any applicant that completed the 8th grade, completed a federally-approved apprenticeship program, and passed any necessary examination. The passing score for any examination could not be higher than the passing score required for any non-apprenticeship license, and there could not be an examination required for an apprenticeship license if there isn't one required for a non-apprenticeship license. For some types of apprenticeships, the number of working hours required could not be more than the number of educational hours required for a non-apprenticeship license.
In addition, Senator Wayne Wallingford filed SB 184. The bill was substantially similar to HB 469 mentioned above.
Senator Eric Burlison also filed workforce legislation. Senate bill 318 was identical to HB 470 talked about above and is its companion bill.
Ultimately, senate bill 68 passed with several of the above proposals included. The exception would be the language in HB 470, which nearly passed. SB 68 included the tax incentives for GM and its Wentzville plant, renamed the Missouri Works Training Program to the Missouri One Start Program, allows state officials to provide upfront tax breaks to other businesses that commit to expand in Missouri, and creates a new scholarship for adults to finish their college degrees.
A+ SCHOOLS PROGRAM EXPANDED
The Builders’ Association has enjoyed seeing such a concerted effort in state government to positively effect workforce development throughout Missouri. Your association has been working with Senator Lauren Arthur to make changes to Missouri’s A+ Schools Program to allow high school students the opportunity to further utilize the program. This will assist in our efforts to build construction industry partnerships with local school districts. We are happy to report that Senator Arthur’s legislation passed. The bill language (SB 205) was added to HB 604 filed by Representative Mike Henderson from Bonne Terre.
Among many changes in HB 604, the bill modifies the A+ Schools program by adding a requirement that high schools in the program shall demonstrate a commitment to ensure that all students earn credits toward any type of college degree while in high school. The Department of Higher Education is mandated to establish a procedure for the reimbursement of the cost of tuition and fees for any dual-credit or dual-enrollment course offered to a student in high school in association with a public community college or vocational or technical school. The bill provides that the student must have attended a high school in the state for at least two years. The department shall distribute reimbursements first to community college or vocational or technical school students, then to any dual-credit or dual-enrollment students, on the basis of financial need.
Senator Arthur’s legislation provides authorizing authority for the changes to the A+ Program. These changes come with a projected $15 to $17 million price tag. With budget issues always a concern, no funding was given for the changes. Staff will be working next year with Senator Arthur and other legislators to place some funding in the budget.
TAX CREDIT CAPS PROPOSED AGAIN, BUT DEFEATED
Legislation Did Not Pass
As has been the case for the last several sessions, tax credits are on the hot seat again. Last year, the historic preservation tax credit program incurred many constricting changes, including the lowering of its cap. This year the low-income housing tax credit program was under fire.
A few legislators over the past decade have wanted to lower the tax credits available to developers because officials did not like seeing the huge expenditure each year during the budget process. Staff at The Builders’ Association, working with other organizations in the state, continue working hard to educate legislators on the positive economic results these programs can have. Just look at what the historic preservation tax credit program has done to downtown Kansas City; the program is a major reason why such a revitalization has occurred.
For tax credits universally, two legislators this year were trying to place constraints on their growth. Representative Deb Lavender filed HB 1018. This bill specified that all new and existing tax credits shall be approved by the General Assembly as part of the normal budget process. This kind of legislation would severely handicap projects statewide. Representative Kathryn Swan filed the same legislation in House Bill 227, which was withdrawn in mid-February.
Representative Jeffrey Messenger filed another restrictive piece of tax credit legislation. HB 1243 would have placed a sunset on all tax credits that do not currently contain a sunset provision. All three of these bills were non-starters in the House this session.
The Senate had two tax credit bills filed, both of which pertained specifically to the low-income housing tax program. SB 269 was filed by Senator Bill Eigel. The act placed a cap of $130 million on the aggregate amount of tax credits that could have been authorized in a given fiscal year under the Missouri low-income housing tax credit program. The proposal was referred to the Senate general laws committee in early February, but did not have a hearing and died.
Senator Dan Hegeman, now for the second year, filed a bill to cap the tax credits allowed each year. SB 28, as amended, placed an aggregate cap on the amount of state low-income housing tax credits that could have been authorized in a fiscal year. Such a cap would have been 72.5% of the amount of federal low-income housing tax credits allocated to the state. The act also reduced the limit on tax credits authorized for projects financed through tax-exempt bonds from $6 million to $4 million. To the extent that such a limit was not reached in a fiscal year, the amount not authorized would, for such fiscal year only, be added to the amount of tax credits that may be authorized for projects not financed through tax-exempt bond issuance. SB 28 had the most attention paid to it. It passed both the Senate and the House, but the conference committee created to iron out the differences between the two chambers’ versions could not agree and the bill died.
Placing caps and other restraints on the low-income housing tax credit program is an effort that will not be going away soon. Staff expects similar bills to be filed next year and we will be ready. In the meantime, Governor Parson has stated that he might reinstate the issuance of low-income housing tax credits at the Missouri Housing Development Commission (MHDC).
OTHER BILLS OF INTEREST
Budget: Thirteen house bills make up the state’s budget. This year, nearly $30 billion was appropriated for state operations. The fiscal year begins July 1. Legislators included full formula funding for K-12 education.
Bridges: SCR 14 authorizes up to $301 million of bonds to repair 215 bridges on the state highway system. The bonds, though, are contingent upon the federal government approving a grant to Missouri to replace an Interstate 70 bridge over the Missouri River west of Columbia.
Term Limits: SJR 14 was filed by newly elected Senator Tony Luetkemeyer and was passed by the legislature. This constitutional amendment, if approved by the voters, prohibits any person from being elected to the office of Governor, Lieutenant Governor, Secretary of State, State Auditor, State Treasurer, or Attorney General more than twice. Any person who holds such an office for more than two years of a term for which another person was elected shall not be elected more than once to that office. Service in the offices of Governor and State Treasurer resulting from an election or appointment prior to December 3, 2020 shall count towards the term limitations.
P3: HB 1088, filed by Representative Dan Houx from Warrensburg and passed this session, modifies laws relating to the Office of Administration and state agencies. One piece of legislation included in this bill adds university projects to the list of public projects that may utilize P3.
The law specifies certain criteria for higher education institution concession agreements with developers. Such institutions may enter a long-term concession agreement with private developers to construct, maintain, and operate projects in exchange for annual payments that are subject to abatement if nonperformance occurs.
Legislation Did Not Pass
Prevailing Wage: Last year, the Missouri General Assembly passed legislation that significantly altered the state’s prevailing wage law. The changes were made in HB 1729. With the new legislation passed, prevailing wage as an issue has been taken off the table by leadership for now. Senator Bill White from southwest Missouri filed a bill this year anyway to further change the prevailing wage law. SB 239 permitted the governing body of any political subdivision to elect to not be subject to the prevailing wage requirements by passing an ordinance, order, or resolution to that effect. Upon passing such an ordinance, order, or resolution, the governing body would notify the Department of Labor and Industrial Relations. This bill was referred to committee in early February and did not have a hearing.
With the passage of HB 1729 last year, the Department of Labor & Industrial Relations worked on promulgating rules for the new prevailing wage law to help clarify new provisions and provide further guidelines for the changes. Your Builders’ Association government relations staff produced a few pages of comments and sent them to the department. Some members of the statewide coalition we worked with also submitted comments on the new rules during the comment period. The department accepted none of the major changes suggested. Ultimately, through the help of Senator Gina Walsh, one significant change was included in the new rules as mandated by the joint committee on administrative rules (JCAR). That change will allow the Division of Labor Standards (the state subdivision that publishes the prevailing wage rates and administers the program) to accept wage reports of projects priced under the $75,000 threshold.
Legislation Did Not Pass
Right-To-Work: Three Senate bills and one House bill were filed this session that again proposed to make Missouri a Right-To-Work state. Last August, statewide voters overwhelmingly overturned the state’s Right-To Work law signed into law by then-Governor Eric Greitens. Right-To-Work laws prevent unions from requiring employees to pay union dues even if those employees don't want to be part of the union. With the issue decided by Missouri voters, legislators left these bills alone this year. HB 259 was filed by Representative Jered Taylor. SB 63 and SJR 30 were filed by Senator Eric Burlison. SB 240 was filed by Senator Bill White. All of these bills died at the end of the session.
Legislation Did Not Pass
Prompt Pay: HB 91, filed again this year by Rep. Alan Green (D-St. Louis), shortened the time for payment. Specifically, the bill provided that when a contractor performed according to the provisions of a contract, the owner or owner's representative shall pay the contractor within 15 days of receipt of any payment request based upon work completed or service provided under the contract. A subcontractor who performed according to the provisions of a subcontract with a contractor or another subcontractor shall be paid within 10 days of receipt by the contractor or other subcontractor of any periodic or final payment. Payments may be withheld under certain specified conditions. In any action to enforce a claim under this bill, the prevailing party may recover interest and reasonable attorney fees. The provisions of this bill did not apply to improvements to real property of 12 or fewer residential units, or to contracts entered into prior to August 28, 2019. This bill did not have a hearing and died at the end of the session.
As always, if you have questions about any of the pieces of legislation above, or would like us to look into a bill or issue not listed, please contact Allen Dillingham, Government Relations Director for The Builders’ Association, at 816-595-4121 or [email protected]. We also encourage you to contact your elected representatives on these pieces of legislation and other issues important to you and your business.