Veto override of tax bill fails in House

Posted September 26, 2013 at 12:48 pm

by Jordan Shapiro and Christina Turner

The Missouri House failed to override Gov. Jay Nixon’s veto of a measure that would have gradually reduced income tax rates over the next decade.

Despite holding a two-thirds majority in the chamber, the Republican-controlled House could not muster the votes to override the Democratic governor. Republicans needed all of their 109 members to enact the measure, but the attempt failed on a 94-67 vote.

In front of a standing-room only crowd in the House galleries, lawmakers debated whether the bill would help the state’s economy or if it would deprive the state of necessary revenue.

“We have a problem in Missouri. We are growing at a much slower rate than our peers,” said bill sponsor Rep. T. J. Berry, R-Kearney.

Democrats countered that the measure would hurt state revenues and not help the middle class.

“It is a big tax giveaway for corporations and businesses but gives nothing to individuals,” said Rep. Jon Carpenter, D-Kansas City.

For individual income taxes, the measure would have reduced the rate for taxpayers with over $8,000 in income by one-twentieth of a percentage point annually over a 10-year period. The annual reduction would only have taken effect if state revenues increased by at least $100 million over the highest revenue point of the previous three years.

The bill would have reduced corporate income tax rates by three-tenths of a percentage point annually over 10 years. As long as state revenues increased annually by at least $100 million, the new corporate rate would have been set at 3.25 percent after a 10 year-period.

Nixon vetoed the bill in June over concerns that it would hurt education funding. He spent the past several months traveling the state to make his case and over 100 school boards passed resolutions supporting his veto.

Nixon also pointed out that the bill would remove a sales tax exemption on prescription drugs and textbooks. Rep. Chris Kelly, D-Columbia, cited these and other mistakes in opposing the override.

“Nobody read the bill … Not one of us did that, and that is a disgrace,” he said.

Retired investor Rex Sinquefield poured more than $2 million into the campaign to override the governor’s veto. The Missouri Club for Growth announced at a press conference last month that it would target at the next election any Republican voting against the veto override. Fifteen Republicans in the House voted against the veto override.

During the past legislative session, the measure had garnered the support of 103 House members — 100 Republicans and three Democrats.

Fifteen GOP House members voted against the override — exactly the number required to block sending the override motion to the Senate.

The tax-cut bill also would have required Missouri to join a compact with other states to help collect sales taxes from online transactions and would have allowed delinquent taxpayers to avoid penalties if they paid their full bill between Aug. 1 and Oct. 31.

As part of his campaign against the veto override, Nixon withheld about $400 million from this year’s budget. After his veto was sustained, Nixon announced the next day that he would immediately release $215.2 million.

The release includes funding for K-12 education, higher education, the Department of Mental Health, and programs at the University of Missouri and Missouri State University to train more health care professionals in southwest Missouri.

Of the remaining restricted funds, $175 million would have funded capital improvement projects, including construction for Fulton State Hospital and a new state office building.

The governor’s decision to continue withholding appropriated funds came under immediate attack from the House Budget Committee Chair. “Now that his political games have allowed him to deny substantive tax relief to all Missourians it is time for him to cease with his unconstitutional withholdings and release all of the money as he said he would do,” said Rep. Rick Stream, R-Kirkwood.

“The budget assumed we would receive a $130 million tobacco settlement and $51.8 million tax amnesty. The state didn’t receive either,” said State Budget Director Linda Luebbering.

The tobacco settlement money relates to a letter from Attorney General Chris Koster announcing that the state would have to refund $130 million to the tobacco industry under a decision involving charges by the tobacco industry that Missouri has not complied with a settlement agreement.