Legislation could reduce Missouri revenue, increase sales tax for transportation funding
Gov. Jay Nixon expressed concern for bills that could reduce Missouri funding.
Jun. 04, 2014
Gov. Jay Nixon is denouncing legislation passed by Missouri lawmakers that would create tax breaks that could add up to $483 million in reduced revenue for the state.
“By going on a $776 million special interest spending spree, members of the legislature have broken their own budget, and I’m prepared to fix it,” Nixon said in a news release.
The Missouri General Assembly passed these tax cuts for about 17 items on May 16, though according to a May 28 news release, the tax cuts had not been accounted for in the Fiscal Year 2015 budget.
“Its far-reaching fiscal impact has thrown the budget dangerously out of balance,” Nixon said. “The only thing these giveaways have in common is that they were not accounted for in either the state budget or in the budgets of the cities, counties, and fire districts they would affect.”
A fiscal analysis done by the Office of Administration’s Division of Budget and Planning said the tax breaks would cut local and state revenues by more than $776 million annually — $425.1 million from state sales tax and $351.4 from local sales tax.
These reductions would affect county and city services and taxes that are acquired for K-12 schools, soil and water conservation programs, state parks, conservation and highways, according to the news release.
These tax breaks were approved on the last day of session for the Missouri General Assembly. This included House Bills 1296 and 1865 and Senate Bills 584, 612, 662, 693, 727 and 860.
“In the last eight hours of the 2014 session, this legislature went on a special interest handout spree, passing tax breaks for everything from fast food restaurants to power companies, with no plan to pay for them,” Nixon said in a May 16 news release.
These bills will throw the budget “severely out of balance,” Nixon said.
Additionally, a proposal for a sales tax increase to fund transportation, which will appear on the ballot in August, would increase sales tax revenue by $6.1 billion over ten years, according to a June 2 news release.
The proposal would raise the sales tax by three quarters of a cent per dollar, according to a Missouri House of Representatives news release.
The current sales tax rate for Missouri is 4.225 percent, which is below the national average of 5.95 percent.
Although funding and improving transportation is important, Nixon said that after the tax breaks, it’s not economically feasible.
“The burden of this $6.1 billion sales tax increase would fall disproportionately on Missouri’s working families and seniors by increasing the cost of everyday necessities like diapers and over-the-counter medication, while giving the heaviest users of our roads a free pass,” Nixon said.
He said this change in taxes and funding will shine a negative light on Missouri.
“If this effort is successful, Missouri will have the dubious distinction of being a state that, in a matter of months, cut taxes on lawyers and lobbyists, but hiked taxes on bar soap and baseball gloves,” Nixon said.
Nixon said the focus should be on education, while transportation infrastructure should take a back seat.