Missouri Senate passes sales tax increase for roads

04/29/2014 5:48 PM

04/29/2014 9:50 PM

The Missouri Senate passed a scaled-back sales tax increase for transportation funding Tuesday as supporters sought to make the bill more palatable to the chamber’s Republican majority.

Senators voted 22-10 in favor of a three-fourths-cent sales tax, less than the 1-cent increase approved this month by the House.

If the two chambers can agree on an identical version, the proposed constitutional amendment will go on the statewide ballot in November.

The Senate version would boost the state sales tax to just below 5 percent, but in most places the overall tax is higher.

The Senate’s version is projected to generate $534 million annually during the 10-year lifespan of the tax. A 1-cent tax would produce $720 million yearly.

“It doesn’t cure all the problems, but it does take care of a lot of issues,” said Sen. Mike Kehoe, a Jefferson City Republican and bill sponsor. “It’s a compromise.”

The Missouri Department of Transportation says it takes $485 million annually to maintain roads in their current condition, but its construction budget is projected to dip to $325 million in 2017.

The decline is due to a variety of factors. Federal funding has become more uncertain, and fuel taxes have flattened, partly because of more fuel-efficient vehicles. A bond-financed surge in construction during the last decade has dropped off while the payments continue. Construction costs have risen.

Transportation Department director Dave Nichols said he was “excited” that lawmakers were continuing to discuss the proposal.

Some lawmakers said the legislature would send voters a mixed signal by advancing a sales tax increase in the same year it passed an income tax cut for individuals and some business owners. The income tax cut is estimated to cost $620 million annually once fully phased in.

With a smaller sales tax, the Senate plan would ensure the revenue for transportation would not exceed the reduction from the income tax cut.

“What message do we send to voters when we say we have enough revenue to institute a tax cut, but we don’t have enough revenue that we need to raise taxes on most goods purchased in the state?” asked Sen. Jason Holsman, a Kansas City Democrat.

If passed by the legislature, the proposal will head directly to the ballot.

Under the legislation, the sales tax would need to be reauthorized by voters every 10 years, starting in 2024. Most of the revenue would go to roads and bridges, but some could be used to construct or operate other facilities, including railroads, ports, airports and transportation for disabled people.

Ten percent of the revenue would go toward local transportation projects.

The tax increase would not apply to purchases of food, and the constitutional amendment would bar the state from raising the gas tax or implementing toll roads during the lifespan of the sales tax.

How local lawmakers voted

Republicans voting yes:

David Pearce, Warrensburg; Ryan Silvey, Kansas City.

Democrats voting yes:

Kiki Curls, Kansas City; Jason Holsman, Kansas City; Paul LeVota, Independence.

Republicans voting no:

Ed Emery, Lamar; Will Kraus, Lee’s Summit; Rob Schaaf, St. Joseph.

Democrat voting no: Jolie Justus, Kansas City.

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