Missouri Gov. Matt Blunt Wednesday signed legislation exempting manufacturers from state sales taxes on electricity, natural gas, water, coal and other utility commodities/services in addition to chemicals used in manufacturing processes. The exemption extends to machinery, equipment and materials used for research and development related to manufacturing.

The Missouri Chamber of Commerce said the measure will save the state’s employers “millions of dollars annually.” The legislation, SB 30, was introduced to help stem the decline in manufacturing jobs in Missouri. From 2000 to 2006 the state lost nearly 18% of its manufacturing jobs for a decline to fewer than 300,000 jobs.

Tracy Weddle, director of taxation and fiscal affairs for the chamber, told NGI the legislation was a priority for the chamber last year. In 2006 the state did not have a budget surplus, as it does this year. The surplus of about $300 million helped to ease passage of the bill, she said. The Missouri Chamber claims lost tax revenue will be nearly offset by taxes derived from increased economic activity by manufacturers.

High prices for natural gas and electricity were not the driver for the bill, Weddle said. However, “that’s definitely a contributing factor to why we decided to support the legislation,” she said.

Missouri’s neighboring states, excluding Illinois, offer tax breaks for utility commodities/services used in manufacturing, according to the Missouri Chamber. “Manufacturing is a vital part of our diverse economy, and this legislation will help level the playing field for Missouri manufacturers,” Blunt said in a statement.

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