St. Charles, Missouri — Senator Chuck Gross, R-St. Charles, succeeded this year in passing a measure to protect state highway funds and jobs for Missourians who work for companies that manufacture highway construction materials. Senator Gross's provision in House Bill 327 extends the sales tax exemption on construction materials for local roadways to state highway projects beginning July 1, 2005.

"When I learned from a local company that they were losing bids on state highway projects left and right to out-state competitors and traced the problem to the sales tax differential, I was shocked to discover that only local road project materials were exempt from sales tax," said Senator Gross. "Dave Horstmeyer of Tulley Equipment graciously made the trip to Jefferson City and helped me to make a strong case before the Senate Ways and Means Committee on the need for this legislation."

Currently, Missouri contractors bidding on state highway projects in Missouri must add sales tax on materials to the bids they submit to the state Department of Transportation. Not only does this increase the taxpayers' cost on highway projects, but it also causes local contractors to lose significant highway project work to out-state competitors.

"There is no reason that the state should be required to pay this tax when other public entities, like cities and counties, are exempted," said Senator Gross. "When we are so short on critical state transportation dollars, there is no reason to be siphoning off $8 million to $12 million to cover sales tax. We also need to keep our people employed, and sending much of this work out of Missouri and to Illinois and Iowa contractors instead is unacceptable."

The effective date for implementing the exemption was pushed forward because of the state's current general revenue situation. Overall any loss to the state from decreased sales tax revenue will be more than offset by the savings in the state road fund.