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Battle lines drawn over Missouri governor’s veto of tax cut

Updated: 2013-08-14T22:19:49Z

By JASON HANCOCK

The Star’s Jefferson City correspondent

— Whether or not Missouri fires the next shot in an ongoing economic border war with Kansas may come down to a battle between two men: Democratic Gov. Jay Nixon and conservative mega-donor Rex Sinquefield.

That showdown tests the power of the state’s highest-profile politician — a man who almost always can command public attention — against the influence of the state’s most prominent political financier. Together, they will wrestle over a few legislators who will decide whether the Republican majority of the General Assembly is truly veto-proof.

Last month Nixon vetoed a roughly $700 million tax cut passed by the Republican-dominated legislature. The governor argued it would punch a hole in the state’s budget. Ever since the veto, he has been traveling the state to spread his message that the GOP-backed proposal is unfair and extreme.

Sinquefield, a retired financier from St. Louis, countered last week by donating nearly $2.5 million to various groups pushing for lawmakers to override Nixon’s veto.

That money has been used by the Missouri Chamber of Commerce, Associated Industries of Missouri and the Missouri Club for Growth to help fund TV and radio ads across the state praising the tax cut and urging Missourians to press lawmakers for an override.

The fight will reach its climax Sept. 11, when lawmakers return to the Capitol for their annual veto session.

“Whether the tax bill lives or dies is going to come down to three or four votes in the House,” said George Connor, a political science professor at Missouri State University. “That’s who both sides are targeting this summer.”

Inspired by massive tax cuts enacted in Kansas, and warning of an exodus of businesses if Missouri did nothing, the legislature sent Nixon a bill that would have gradually cut taxes on corporations and other businesses in half. Additionally, the top individual tax rate would have dropped to 5.5 percent from 6 percent over the next decade.

Legislative researchers estimate the eventual cost, when fully phased in, would have been $692 million a year. But the corporate and individual tax cuts would have gone into effect only if state revenues grew every year by at least $100 million.

Nixon panned the measure, calling it “an ill-conceived, fiscally irresponsible experiment that would inject far-reaching uncertainty into our economy, undermine our state’s fiscal health and jeopardize basic funding for education and vital public services.”

Since then, the governor has held a series of campaign-style events around the state making a similar argument: Members of the General Assembly can either support the tax cut, or they can support education. But they can’t, by Nixon’s reasoning, do both.

Adding to critics’ concerns is an apparent error in the bill that would have repealed a sales tax exemption for prescription drugs that could cost consumers an estimated $200 million annually.

An alliance of groups representing school boards, teachers, labor unions and some of the largest employers in the Kansas City area is rallying around the governor.

“We’re already underfunding our public schools by $600 million,” said Brent Ghan, a spokesman for the Missouri School Boards Association. “This tax bill would only make that situation worse.”

On the other side is Grow Missouri, a coalition of groups representing business interests as well as conservative advocacy organizations such as Americans for Prosperity and the Missouri Family Network.

Ann Marie Moy, Grow Missouri’s spokeswoman, said the plan is to treat the push for a veto override just like a full-fledged political campaign, with TV, radio and print ads running throughout the summer.

The group is also “constantly polling,” which Moy said shows public support for the right message.

The problem, Moy said, is that the governor is “engaging in fearmongering in an effort to divert attention away from the issue at hand.” Moy pointed to Nixon’s reference to the accidental $200 million tax increase on prescription drugs.

“It wouldn’t kick in until 2015, so it could be easily rectified by the legislature next year,” she said. “There’s no reason that mistake should kill Missouri’s first tax cut in 90 years.”

Nixon doesn’t share the same confidence in the legislature’s ability to remedy the mistake.

“Their plan of ‘Oh don’t worry, let us raise taxes now, we’ll come back next year, just trust us,’” Nixon said. “I wouldn’t trust folks to work out a fix.”

The governor has a built-in advantage of the bully pulpit when it comes to getting his message out, said Ray McCarty, the president of Associated Industries of Missouri.

“It’s a little tougher for us,” he said. “We don’t have that same luxury.”

Sinquefield’s donations, McCarty said, help level the playing field.

Sinquefield is no stranger to Missouri politics. In fact, the more than $20 million he has spent on candidates, committees and ballot initiatives since 2008 far outpaces any other Show-Me State donors. Over the years, he has bankrolled many campaigns, but his overarching focus has been on two passions: tax policy and education reform.

Ghan, of the Missouri School Boards Association, said Sinquefield’s involvement means that supporters of the governor’s veto know they will be outspent. They hope to counter that by reaching out to members and urging them to speak out in their communities about the issue.

In response, school boards around the state have begun passing resolutions urging the General Assembly to sustain the veto.

Woody Cozad, a lobbyist for Sinquefield and a former chairman of the Missouri Republican Party, said the key to success will be which side is better able to inspire public pressure on wavering lawmakers.

“This is going to be almost literally about a handful of votes at the end of the day,” Cozad said. “And public pressure moves those.”

As for how the debate will ultimately turn out, Missouri State’s Connor said it is “too close to call.” In the end, he said it probably will come down to whether ideological belief in cutting taxes can overcome any policy concerns some lawmakers may have about this particular bill.

If Democrats all stick together, Republicans will need the support of all 109 members in the House to override the veto. When the bill originally passed, three Republicans voted “no.” Since then, a fourth has switched his vote and said he will support the governor’s veto.

Adding to the mix is a fear among Republican leaders that Nixon could appoint a GOP House member to an open seat on the Public Service Commission, denying them a veto-proof majority.

Despite bankrolling the veto override campaign, Sinquefield himself has remained silent, declining through a spokeswoman to comment on the issue.

When questioned about the showdown with Sinquefield during a recent stop in Kansas City, Nixon said he didn’t plan to “get into a check-writing contest with a billionaire.”

He followed up a few days later in St. Louis, saying, “In an election, if it’s one guy against 6 million Missourians, I like our side.”

To reach Jason Hancock, call 573-634-3565 or send email to jhancock@kcstar.com.

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