Fate of Missouri tax cut rests in House after Senate votes to override Gov. Jay Nixon’s veto

05/05/2014 4:35 PM

05/05/2014 7:51 PM

Missouri Republicans sit one step away from achieving their top legislative goal: A $620 million income tax cut.

And it looks as if they’ve found the one Democratic vote needed to make the cut a reality.

The Missouri Senate voted 23-8 along party lines Monday to override Gov. Jay Nixon’s veto of the tax cut passed last month.

In the House, all 108 Republicans would have to stick together and be joined by one Democrat to garner the two-thirds vote needed for an override. They appear to have found that Democrat in Rep. Keith English of St. Louis County, who said Monday that he plans to support the bill on the veto override vote.

After an hour of debate, the House adjourned Monday night without taking a vote. Rep. Rick Brattin, a Harrisonville Republican, was attending a funeral and couldn’t make the trip to Jefferson City.

An override vote would culminate a year of struggle between the Democratic governor and a Republican-dominated General Assembly over tax cuts.

The GOP has argued the cuts are desperately needed for Missouri to keep up economically with its neighbors, particularly Kansas and the much more expansive tax cuts it passed two years ago.

“We’re returning taxpayer dollars to the taxpayers,” said Sen. Will Kraus, the Lee’s Summit Republican who sponsored the tax cut bill.

Nixon has called the tax cut an “ill-conceived, fiscally irresponsible experiment” that could jeopardize funding for public education and state services.

The Missouri legislation would gradually cut the top individual income tax rate to 5.5 percent from the current 6 percent and phase in a 25 percent deduction for business income reported on personal tax returns.

Those tax cuts wouldn’t kick in until 2017. The soonest they could fully take effect would be 2022. Each incremental cut would happen only if state revenues grew at least $150 million over the high mark of the previous three years.

Supporters herald the $150 million trigger as a safeguard against potentially falling state revenues. They say that by putting more money in taxpayers’ pockets, the state’s economy would improve and ultimately state revenues would increase.

They warn of an exodus of businesses and individuals out of Missouri if lawmakers do nothing.

“We have to compete with Kansas on the western side of the state,” said Rep. Myron Neth, a Liberty Republican. “This is a responsible way to do that.”

But Neth and his fellow Republicans were quick to dismiss any comparisons with Kansas’ tax cuts.

“You cannot compare apples to oranges,” said Rep. Jeff Grisamore, a Lee’s Summit Republican. “These are very different bills.”

Critics say those safeguards aren’t enough. They say that the $150 million triggers would only represent 1 percent growth, when the average annual rate of inflation has been 2.4 percent over the last decade.

Democrats on Monday repeatedly pointed out that last week

Moody’s Investors Service downgraded Kansas’ credit rating

, noting its sluggish economic recovery compared with those of other states.

Among other things, Moody’s said the income tax cuts were putting pressure on the budget and creating risk for Kansas’ financial future.

“Kansas’ downgrade demonstrates the very real and dangerous consequences of reckless fiscal experiments,” Nixon, a Democrat, said in a statement.

Other Democrats say that cutting $620 million out of the state’s budget would be unwise at a time when public education is already underfunded.

“This bill is designed to weaken our ability to pay for schools,” said Senate Minority Leader Jolie Justus, a Kansas City Democrat. “It’s designed to weaken our state government.”

According to the state Department of Revenue, a married family of four earning $44,000 annually would get a tax cut of $32 once the law is fully in effect.

Nixon said that’s not worth losing the tax revenues that could be spent on education.

“Here’s the tradeoff,” Nixon said last week. “In exchange for larger class sizes, fewer teachers and higher tuition, Missouri families get the equivalent of an oil change, eight years from now.”

The legislation also would increase a tax deduction for low-income residents and make annual adjustments to Missouri’s tax brackets based on inflation.

Last year, the Republican-dominated General Assembly passed a similar tax cut that Nixon vetoed. The governor campaigned around the state against the tax cut bill all summer, aided by a coalition of groups representing school boards, teachers, labor unions and some of the largest employers in the Kansas City area.

In the end, a handful of Republicans joined with Democrats to sustain Nixon’s veto in the Missouri House.

Those Republicans came back into the fold this year, however, with all 108 GOP lawmakers in the House supporting the override.

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