August 14, 2013

Nixon calls vetoed bill a threat to seniors

Nixon has attacked HB253 for raising taxes and threatening public services. Nixon told a crowd of about 120 Tuesday that the bill would raise taxes on prescription drugs alone by tens of millions of dollars.

Gov. Jay Nixon chose Warrensburg Senior Center to bring focus to one of several consequences he said the public can expect if lawmakers override his House Bill 253 veto.

“You cannot be for senior citizens and be for 253,” Nixon said. “You cannot be for education and be for 253.”

During a statewide veto-override-prevention tour that started June 11, Nixon has attacked the bill for raising taxes and threatening public services. Nixon told a crowd of about 120 Tuesday that HB253 would raise taxes on prescription drugs alone by tens of millions of dollars.

“House Bill 253, which I vetoed in June, contains a huge tax increase that Missourians cannot afford and don’t deserve,” he said.

Nixon said taxing life-saving prescription drugs is wrong for Missouri.

“A bill that increases taxes on every single Missourian taking prescription drugs by a total of $200 million a year cannot and will not become law,” he said. “Since 1979, Missouri has exempted prescription drugs from statewide sales tax – an exemption that this bill eliminates in one fell swoop.”

The new tax would raise the price of prescription drugs by up to 10 percent in some communities, Nixon said, affecting people with osteoporosis, diabetes, high blood pressure and other chronic conditions.

“The out-of-pocket costs of prescription drugs already puts a strain on Missouri seniors. The last thing they need is a tax increase from Missouri’s General Assembly. Putting additional barriers between Missourians and the life-saving medications they need is unnecessary, unacceptable, quite frankly, dangerous,” he said.

An opposing view

Anne Marie Moy from the St. Louis suburb of Kirkwood, representing the veto-override group, Grow Missouri Coalition, said the prescription drug increase would not go into effect until 2015. She said lawmakers could fix the bill before then.

“If that correction needs to be made, certainly there would be no argument

that there would be legislators lining up to sponsor that bill,” she said by phone.

At the meeting in Warrensburg, Nixon said Missourians are unlikely to accept that lawmakers will fix a tax they already approved. He said lawmakers should fix the entire bill when they return in January for the 2014 session.

Moy said an override would help Missouri match tax levels in other states, such as Kansas. The Kansas Legislature this year, the Wichita Eagle reported, made “devastating” funding cuts to higher education. Moy said Missouri should be as tax-attractive as others states.

“We need to be in step with that,” she said, shrugging off the image of a “race to the bottom” in terms of services being cut with taxes. “Arguments like that fail to take into account the growth that income tax relief is going to provide for businesses and for residents of our state.

“We expect to see new businesses coming into the state. We expect to see new wealth and population increases because of the more attractive tax climate.”

Veto support growing?

People who study the issue back the veto, Nixon said.

“This bill’s costs are so staggering, its provisions so flawed, that it even caught the attention of leading, independent credit-rating agencies,” he said.

Separate reports issued in July by Fitch, Moody, and Standard and Poors, indicate House Bill 253 could jeopardize the state’s AAA credit rating. Nixon said.

Due to the funding loss that would result from a potential veto override Sept. 12, Nixon said he put a hold on some spending called for in the state budget.

“Because of the potential $1.2 billion that the state would have to pay out in refunds under this bill,” he said, “I restricted about $400 million in the original budget.”

An override would mean funds now on hold for senior services – such as home-delivered meals, education and other programs – would be unavailable, Nixon said.

“To put it in context, that’s $200,000 a month from the University of Central Missouri,” University of Central Missouri President Charles Ambrose said.

The bill also includes a tax increase on college textbooks, Nixon said.

“Boy, now that’s a way to keep college costs down — welcome them back to campus by increasing the cost of textbooks by 7 to 11 percent across the state,” he said. “Once people understand what’s in this measure, very clearly they have said to me, let’s come back and look at this again in January, and if we want to do something with the taxation system, fine, we'll look at that, but we also need to do something with some of the entitlements, like tax credits, so we get some reform there. If we’re going to do this, let’s look at the whole thing.”

Changing the state’s tax structure should be done comprehensively rather than haphazardly, Nixon said.

“Let’s not pick and choose certain beneficiaries. Let’s not give a $260 million tax break to ‘S corps.’ and LLCs for pass-through income and at the same time raise taxes by $200 million on seniors. Let’s not raise the taxes on kids going to college by paying more for their textbooks while at the same time giving a special break to lawyers and lobbyists on their taxes. That’s not the way to do this.”

Nixon said his feeling about lawmakers letting the override stand is good.

“My gut says we’re making real progress,” he said.

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