Gov. Nixon Vetoes "Special Interest Breaks" In Final Hours Of Legislative Session

"Fiscally irresponsible carve-outs were not accounted for in the budget passed by the General Assembly or in the budgets of local jurisdictions they would impact", said Nixon.

JEFFERSON CITY, Mo. — Gov. Jay Nixon today vetoed legislation containing more than a dozen special breaks and exemptions passed in the final hours of the legislative session.

These special interest carve-outs would reduce state and local revenues by up to $776 million annually and were not accounted for in the Fiscal Year 2015 budget passed by the legislature or in the budgets of the local jurisdictions they would impact.

In a letter addressed to members of the General Assembly, the Governor faulted the legislature for ignoring the legislative process and adding new loopholes to the tax code that will shift a greater tax burden to the majority of taxpayers.

“Rushed through with little debate in the final hours of the legislative session, these special breaks and exemptions for a handful of special interests are the result of a deeply flawed process and a fundamentally misguided approach to tax policy,” Gov. Nixon said. “Many of the most costly provisions were slipped into bills without a public hearing or even a fiscal note, and none of these giveaways were accounted for in the budget the legislature sent to my desk or in the local budgets of the jurisdictions they would impact.”

The provisions include special breaks for fast food restaurants, personal seat licenses, commercial dry cleaners and laundries, data storage and processing, certain used vehicles, farmers’ markets and fitness centers.

The fiscal impact of these provisions, which would reduce state and local revenues by as much as $776 million annually starting in the fiscal year that will begin on July 1, was not accounted for in the budget passed by the General Assembly or in the budgets of local jurisdictions.  This includes a $425 million annual reduction in state tax and a $351 million reduction in local taxes.

Most of these provisions would impact sales tax collections, and therefore would reduce local tax revenues that support police, fire, ambulance, emergency services, parks, children’s services and other public services provided at the local level. The loss of local revenue from these provisions could also impact repayment of voter-approved bonds issued to finance capital improvements such as county jails, county hospitals, fire stations, emergency management centers, road projects and other critical public infrastructure.

“These special carve outs and loopholes would undermine local public services and flout the will of voters by eroding revenues that support services like firefighters and cops, libraries and ambulance services, snow plows and health inspectors, public transit and road repair,” Gov. Nixon said. “From storm water management in West Plains to fire protection in Webster Groves, voters in communities across Missouri have come together to pass local sales taxes to support local public services and capital improvements . These special breaks passed by the General Assembly would siphon these voter-approved resources away from their intended purpose, and into the pockets of the well-connected.”

The reduced state sales tax revenue would also reduce funding from dedicated sales taxes for K-12 schools (also called the Proposition C sales tax), Highways, Conservation, State Parks, and Soil and Water Conservation Programs.

“Perhaps most troubling is the way the General Assembly is carving out special sales tax breaks for a select few, while pushing a $6.1 billion sales tax hike on all Missourians,” Gov. Nixon said.   “Passing secret, sweetheart deals so that the well-connected can pay less, while asking all Missourians to pay more, reflects priorities that are dangerously out of whack.” 

Senate Bill 693, which would reduce state and local highway funding by more than $30 million annually, was passed just two days after legislators sent to the ballot a $6.1 billion sales tax increase to fund roads.

“Instead of engaging in an open and honest debate about the overall tax policy of our state, the legislature has once again opted for an undisciplined, scattershot approach by adding more loopholes to the already dizzying array of carve-outs that riddle our tax code,” Gov. Nixon said. “My vetoes today are a first step toward restoring fiscal sanity to a budget process that has gone off the rails.  That being said, I have the responsibility to maintain fiscal discipline regardless of whether my vetoes are sustained.  Moving forward, I will take the actions necessary to account for the reduced state revenues resulting from these giveaways and keep our state on a fiscally sustainable path.”

The Governor vetoed the following bills:

Senate Bill 693
Senate Bill 584
House Bill 1865
Senate Bill 612
Senate Bill 860
House Bill 1296
Seate Bill 727
Senate Bill 662
House Bill 1455
Senate Bill 829