Missouri governor to sign Ford tax break bill

[boeslap]

Missouri governor to sign Ford tax break bill
By DAVID A. LIEB and CHRIS BLANK | Posted: Wednesday, July 14, 2010

Gov. Jay Nixon plans to sign legislation Thursday offering incentives to Ford Motor Co. and other automakers.

The bill won final approval Wednesday by votes of 101-40 in the Missouri House and 20-7 in the Senate.
That came only after Republican Sen. Chuck Purgason ended a more than 20-hour filibuster.

The legislation allows automakers to keep employee withholding taxes they normally
would pay Missouri if they improve their factories for new or expanded product lines.

It's targeted at Ford's Claycomo plant near Kansas City, which employs about 3,700 people.

Nixon plans to sign the bill Thursday at a union hall near the Claycomo factory.

A Ford spokeswoman says the company will consider the incentives as it decides where to build future vehicles.

www.stltoday.com/news/state-and-regional/missouri/article_5d124a2c-5ec6-5b2c-8217-ca8e0f30be96.html

[TonyV]

Missouri governor today will sign bill for $150 million in automaker tax breaks
By JASON NOBLE


JEFFERSON CITY | Gov. Jay Nixon today will sign into law $150 million in tax breaks for automakers that are aimed at Ford Motor Co.’s assembly plant in Claycomo and intended to save thousands of jobs.

After a tortured, four-week process that culminated in a 20-hour filibuster, Missouri lawmakers finally approved the measure Wednesday, ending a special legislative session called by Nixon. He will join automotive workers to sign the bill during a ceremony this afternoon at UAW Local 249 in Kansas City.

“With the sharper, stronger economic tools provided by this jobs bill, Missouri can make sure that our automotive industry remains vibrant for generations to come,” said Nixon, a Democrat, in a statement Wednesday.

“The legislature also passed a fiscally responsible measure to modernize the pension system for future state employees and ensure the solvency of this retirement system.”

Reforms to the pension system could save state government $660 million over 10 years, lawmakers said, with the savings expected to offset the costs of the automakers’ tax incentives.

A Nixon spokesman said Wednesday that the governor had a “positive and productive” conversation with Ford CEO Alan Mulally following the bill’s passage. In the telephone call, Nixon reiterated the importance of Ford and its supplier network to Missouri’s economy.

“The governor looks forward to working with Alan and Ford in the days to come,” spokesman Sam Murphey said.

The tax incentives would allow automakers and their suppliers in the state to keep up to $15 million a year in employees’ withholding taxes in exchange for retaining jobs and upgrading facilities.

It’s designed to save the 3,900 jobs and two assembly lines currently in operation at Claycomo. The plant is expected to lose one of those production lines next year.

“With this act we have a realistic opportunity to do something to stop the bleeding of jobs out of Missouri,” said Sen. Luann Ridgeway, a Smithville Republican whose district includes the plant. “To add to that another 3,000 lost jobs would be devastating to Missouri…It would make Kansas City a black hole of unemployment.”

With the tax breaks, lawmakers hope Ford will upgrade a line so that it can produce the next generation of vehicles.

Ford officials were appreciative Wednesday, but didn’t elaborate on their plans.

“We thank Governor Nixon and the Missouri legislature for the passage of the Missouri Manufacturing Jobs Act,” said Ford spokeswoman Marcey Evans. “We believe this will be a great benefit to the future of auto manufacturing in the state of Missouri.”

For all the talk about the bill’s potential as a lifesaver for manufacturing jobs it contains no guarantees, but industry analysts said the measure should be helpful.

“The incentive is necessary in that companies are expecting states to provide the help,” said Alan Baum of Baum & Associates, an auto industry consulting firm in West Bloomfield, Mich. “But the bottom line is that it will be one of several factors that Ford will consider. The most important is whether there is enough demand in the market so that Ford needs to maintain production at all its existing plants.”

Local economic development and union officials are convinced that Ford plans to end building the Escape SUV at Claycomo in late 2011, shifting the redesigned version to a Louisville plant. The Claycomo facility currently has three shifts making Escapes and one shift producing F-150 pickups.

Many in the local auto industry are hoping that the incentives passed Wednesday will sway Ford to retool Claycomo’s Escape line and bring in a new vehicle.

“It’s a big step in the right direction,” said Rick Klingenberg, vice president of United Auto Workers Local 710, which represents more than 800 area workers at supplier plants to Ford.

Baum, the industry analyst, said he does not believe all of the production of the next-generation Escape will be confined to one assembly plant. As a slightly smaller version of the current Escape, the new model also will have a Lincoln version as well as a version for the European market, Baum said.

“Whether Louisville is the main Escape plant or whether it’s Kansas City, I think another plant will be needed for additional volume,” he said. “The good news for your local plant is that Ford is looking at demand for the next three to five years, not the current sales levels.”

The incentives bill was at the center of dramatic legislative gamesmanship that played out over the session’s final two days.

Caulfield Republican Sen. Chuck Purgason initiated a filibuster about 12:30 p.m. Tuesday and held the floor for most of the next 21 hours in an attempt to kill the bill and encourage a different approach to economic development. He gave up Wednesday morning.

Purgason called tax incentives aimed at specific large employers an ineffective misuse of state resources and said government instead should cut taxes and ease regulations for all businesses to “level the playing field” and encourage growth.

He was joined throughout the filibuster by a handful of other fiscal conservatives, and passed the time by sharing e-mails received from supporters, reading history and economic texts and telling stories from his life.

A subtext to the drama was Purgason’s candidacy for the U.S. Senate seat being vacated by Kit Bond. Purgason is challenging U.S. Rep. Roy Blunt for the Republican nomination, but has flown well under the radar and trailed the congressman since the race began.

“I believe this is a core Republican principle, and to be fighting my own party on it was frustrating,” Purgason said while seated in his office shortly after the Senate vote.

The pension reform bill’s path through the final days of the session, which began June 24, was less dramatic but contentious nonetheless.

The reforms raise the retirement age for most state workers from 62 to 67; require a 4 percent contribution from employees toward their pension funds; and require them to work 10 years before becoming eligible for retirement benefits, instead of the current five years. The reforms apply to employees hired after Jan. 1 of next year.

Supporters have said the changes are necessary not only to finance auto-industry tax incentives but to help stave off a future insolvency for Missouri’s main pension funds, which currently are financed exclusively by investments and state subsidies.

Opponents, however, called it inappropriate to divert employees’ benefits to corporate subsidies and said lawmakers missed other sources of revenue — such as a sales tax on Internet purchases — that could have softened the blow to workers.

“We just did some brutal, brutal revisions to the pension system,” said Rep. John Burnett, a Kansas City Democrat.



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Ford Claycomo
Founded: 1951

Employees: 3,900

Annual payroll: $225 million

Products: One line making F-150 pickups; three lines making the Escape SUV

Prospects: Escape phasing out late 2011; F-150 production likely to rise then; just-passed tax incentives designed to persuade Ford to revamp for some new product