New year means higher minimum wage, lower corporate tax in Missouri

12/30/2013 4:57 PM

12/30/2013 4:57 PM

Wages will rise for Missouri’s low-income workers and taxes will fall for some corporations as a result of laws taking effect with the new year.

While that may be good news for some, it is not good enough for labor and business groups that want to see even further increases in Missouri’s minimum wage or even deeper reductions in state tax rates.

Some of the new Missouri laws that take effect Wednesday are the result of bills passed in the 2013 legislative session, such as new screening requirements for babies born beginning in 2014 and new benefit entitlements for claims of serious work-related illnesses.

But other changes, such as the minimum wage hike and tax cut, are the result of laws enacted years ago that had annual inflationary provisions or phased-in effective dates.

A law passed by voters in 2006 set Missouri’s minimum wage at $6.50 an hour with an annual cost-of-living adjustment. Because of inflation, Missouri’s minimum wage now stands at $7.35 an hour and will rise in January to $7.50, making Missouri one of 20 states with a rate above the federal minimum wage of $7.25 an hour.

The

National Employment Law Project

, a New York-based worker advocacy group, estimates that the minimum-wage increase will affect 104,000 workers in Missouri.

“It just makes sure you can buy as much milk and bread at the corner store as you were able to last year,” said Lara Granich, the director of

Missouri Jobs with Justice

, which backed the 2006 initiative.

Granich has filed four proposed initiatives with the secretary of state’s office that would ask voters next year to approve another increase in the minimum wage. The different versions would set the rate either at $8.40, $8.45, $8.50 or $9.25 an hour in 2015, with an annual cost-of-living adjustment thereafter.

Supporters haven’t decided whether to gather the petition signatures needed to get any of those versions on the November ballot, Granich said. They face a May 4 deadline to turn in signatures. But Granich said supporters waited as late as March 17 in 2006 to start circulating petitions and still made the deadline.

The National Employment Law Project points to research indicating that a minimum-wage increase can occur without causing job losses. But Missouri business groups have tried for years to persuade legislators to repeal the increase for inflation, arguing that it places employers at a competitive disadvantage with counterparts in other states that abide by a lower, federal minimum wage.

The sponsors of Missouri’s minimum-wage initiative, meanwhile, have opposed laws enacted in 2009 and 2011 that first exempted many businesses from the state’s corporate franchise tax and then ordered the tax to be phased out.

The middle step in that gradual reduction takes effect in 2014. Legislative staff previously estimated that Missouri could collect nearly $20 million less in franchise taxes for 2014, compared to the previous year, because of the phase-out.

“It’s another step in the right direction,” said Ray McCarty, the president of the

Associated Industries of Missouri

, a business association.

But business groups contend more tax cuts are needed for Missouri to remain competitive with neighboring states such as Kansas and Oklahoma, which cut their income tax rates.

In the 2014 legislative session “we'll continue to push for broad-based tax relief for Missouri employers,” McCarty said.

One of the new laws taking effect Wednesday seeks to replenish the state’s Second Injury Fund, which employers finance through surcharges on their workers’ compensation insurance premiums. The fund pays benefits to disabled workers who suffer additional serious work-related injuries or illnesses.

As of mid-December, the fund had a balance of less than $3 million but owed nearly $39 million of initial payments to people, not counting interest. Almost 32,000 additional claims were pending for which no judgment or settlement had been reached.

The new law temporarily doubles the fees paid by businesses for the Second Injury Fund. It also sets workers’ compensation benefits for people suffering from toxic-exposure illnesses, such as an asbestos-related cancer called mesothelioma.

A law taking effect with births Wednesday requires a particular type of test to determine if babies have congenital heart disease. The new test likely can detect seven additional ailments, raising to 79 the number of conditions covered by mandatory newborn screenings, according to the state Health Department.

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