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Missouri gives sales tax exemption to feds, public contractor in KC tech project

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(The Center Square) – Missouri Republican Gov. Mike Parson kicked off bill-signing season on Monday by exempting a federal agency and its public contractor from paying state or local sales taxes.

The National Nuclear Security Administration, managed by Honeywell FM&T, will have all sales and purchases of tangible personal property, building materials, equipment, fixtures, manufactured goods, machinery and parts for constructing all or any portion of its operation exempt from state and local sales tax. The exemption will expire in 10 years.

Last year, the federal government purchased a 450,000 square foot building in Kansas City for $38.8 million, according to the fiscal note of Senate Bill 1388. The building will be used for manufacturing space to expand nuclear weapons building and testing.

The Kansas City National Security Campus employs approximately 7,000 people, according to its website. The other National Security Campus is in Albuquerque, NM. The administration is under the U.S. Department of Energy. The Kansas City facility manufactures 80% of non-nuclear components for the nuclear stockpile, according to its website. The Missouri Department of Revenue estimated the facility will annually spend $121.6 million on the project.

“We’re proud to sign this legislation today to help pave the way for nearly $2.5 billion in investment and thousands of high-paying jobs in the coming years at the KC NExT campus,” Parson said in a statement. “This legislation is a testament to the success our state can achieve when government removes roadblocks and works alongside our business and industry partners.”

The loss of state revenue is estimated to be $1.2 million in tax year 2024, $5.1 million in 2025 and $11.2 million for the next three years, according to the bill’s fiscal note. The loss in local tax revenue is estimated to be $1.4 million in tax year 2024, $5.8 million in 2025, and $12.6 million for the next three years.

Greg Razer, who resigned from the Senate before the end of this year’s legislative session to become the only Democrat on the three-person Missouri State Tax Commission, sponsored the bill. It passed unanimously in the Senate on April 30 and by a vote of 141-2 in the House on May 17, the last day of the session.

Honeywell Federal Manufacturing & Technologies (FM&T), serves as a management and operations contractor with both the Kansas City campus and several locations on or around Kirtland Air Force Base in New Mexico, according to the National Institute of Standards and Technology website. It oversees multidisciplinary engineering and manufacturing operations specializing in electrical and mechanical engineering along with engineered material for national defense systems.

The bill’s fiscal note estimated the cost to bring the facility online between now and 2028 will be approximately $647 million with the cost to retrofit the building at $608.2 million.

The ongoing project at the facility, called Kansas City Nonnuclear Expansion Transformation or “KC NExT,” will add millions of square feet of new buildings for specialized engineering and secure manufacturing. It is expected to be built during the next 10 to 15 years at a cost of $2.42 billion.

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