Sawmills seek tax relief after years of legislative failure

JEFFERSON CITY, Mo. -- Missouri's sawmills have for years tried to convince lawmakers to provide property tax relief. And for years the state's school districts have resisted the millers' efforts, decrying the effects the lost revenue would have on local education.

The industry, already battling to maintain its core against a flood of cheap imports, is reeling under the sustained blows befalling housing and construction. Missouri lost 90 sawmills between 2006 and 2009, according to statistics kept by the Missouri Department of Conservation.

A peak at sales figures reported to the Missouri Department of Revenue illustrates the fiscal realities facing the industry. In 2010, the state's sawmills reported $2.2 million in sales, a 60 percent drop from 2008. The industry reported sales of $4.9 million in 2000.

The millers are back at the legislature this session, determined to convince legislators that the gravity of their financial situation warrants relief. And this time, the Missouri Association of School Administrators says the parties arrived at a compromise that everyone, for the most part, can live with.

Commercial property taxes are assessed at 32 percent. The millers seek to a reclassification as agricultural property, which is taxed at 12 percent.

After House Bill 112's introduction, proponents and opponents worked out a compromise to narrow the industry types eligible for the lower tax rate.

"From our association's perspective, we thought that would provide some assistance to those small facilities struggling to stay open, yet not broaden that classification of agricultural property to include many of the manufacturing facilities," said Penny Rector, MASA's legal counsel.

The bill's original fiscal note estimated local governments would lose over $4 million if the measure passed. The fiscal note on the compromise agreement does not reflect any change, though many less entities would shift to the lower tax rate.

"Our sawmill folks down in the area that I'm from and even further into the central and southern part of the state, they're struggling," Darrell Pollock, R-Lebanon. "They're not trying to get away from paying taxes. They're just trying to be classified as they should be -- as agriculture."

The House has passed the measure in the past, but it's failed in the Senate. Because the issue is most felt in areas of sparse population, far off the radar of urban legislators. With a challenged budget and term limits paving entry for a bevy freshman legislators, bill proponents again face obstacles. A similar effort, Senate Bill 55 received a hearing from that body's agricultural committee, but it was yet to be advanced. The House measure passed the Rural Community Development Committee, but it must pass the Rules Committee before advancing to the floor.

"We're not very responsive, if this takes three or four years," Pollock said. "Maybe this is the year we can finally get this and help the family-owned businesses in our area.

"Some of these places, this is the sole income they have... there's not even a McDonalds's down there... not a gas station to get a secondary income from, so what they make is off the saw mill. And if demand is low, it's  low and they can't make extra income.

"People are kind of saying 'We're done' and they're leaving the areas, and I don't think that's what we're wanting for our rural communities in Missouri."