May 20, 2014

Freewheeling legislature puts Missouri in a hole

The Missouri legislature just concluded a season of fiscal irresponsibility that ordinary Missourians will rue for years to come.

Missouri legislators were feeling magnanimous last Friday.

The session’s closing bell would ring at 6 p.m. Most of the big, controversial issues had been settled the day before. Why not loosen up a little, do some favors for friends?

And so they did. They granted a tax exemption for motor fuels used at marinas. They exempted sales taxes from transactions involving used manufactured homes and locally grown produce at farmer’s markets. Large commercial laundries got a tax break. So did fast food restaurants and power companies. Even Sprint Center patrons who get first dibs on tickets received a reprieve on sales taxes.

Gov. Jay Nixon, a Democrat, estimated the total cost of the giveaways at $263 million to almost $500 million a year. The last-minute binge threw Missouri’s 2015 budget out of balance before the legislature even left town.

And so concluded a season of fiscal irresponsibility that ordinary Missourians will rue for years to come.

The final-day favors were just the cherry on the whipped cream. The Republican-controlled General Assembly already had passed an income tax cut that mostly benefits upper-income taxpayers. When fully phased in, it will cost the state at least $600 million a year.

That means less money for Missouri’s underfunded schools, its colleges and universities, and essential services for citizens.

With dazzling hypocrisy, legislative leaders declared that expanding Medicaid eligibility to include 300,000 low-income working Missourians was too risky for the state’s finances, even though a host of credible studies have said otherwise.

Lawmakers acknowledge that roads and highways are in disrepair. Their prescription is a ballot issue that will ask voters to increase the state sales tax by three-quarters of a cent to raise about $500 million a year for repairs.

Tim Jones, the Republican House speaker, praised the tax breaks, telling reporters that “Missouri has finally put out the sign on our doorstep that we are wide open for business.”

With all due respect, Mr. Speaker, a willy-nilly orgy of tax breaks on top of a reckless income tax cut does not on any planet qualify as an economic development strategy.

Instead of randomly selecting winners and losers in the tax break lottery, the legislature should make a serious attempt to get its arms around the many-headed monster that is Missouri’s existing tax credit system.

A study in 2010 showed that more than 60 tax credit programs — which allow recipients to subtract the amount of taxes they return to the state — had carved almost 8 percent out of the state’s general revenue.

This year, state Auditor Tom Schweich, a Republican, issued reports slamming three of the largest programs — tax breaks for developers who build low-income housing, renovate historic buildings and clean up contaminated business sites.

While the goals of the programs are laudable, too much state money gets siphoned off by investors, tax credit brokers and syndicators, Schweich said.

The legislature has tried and failed in past sessions to tackle tax credit reform.

This year it didn’t even make an effort; it just gave more money away.

The General Assembly’s Republican majority has shown a callous disregard for schoolchildren, working families and middle-income Missourians. This year, it couldn’t even be bothered with the well-being of the state’s future finances.

Nixon should veto the irresponsible late-session bills. And citizens should insist on a more responsible legislature.

Elections this August and November would be a good time to send the message.

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