Local Impact Of Special Exemptions And Giveaways Passed On Final Day Of Session

Gov. Nixon on left and Missouri House Speaker Tim Jones on right continue their war on words.  Who's telling the whole truth?

JEFFERSON CITY, Mo.  Missouri Gov. Jay Nixon issued the following statement saying,  “This eleventh-hour free-for-all on the final day of session will make it harder for local governments to provide the services Missourians count on,” Gov. Nixon said.

“We’re talking about firefighters and cops, libraries and ambulance services, snow plows and health inspectors, public transit and road repair.  Missourians deserve an explanation for why legislators rushed through $776 million in special breaks and exemptions on the last day of session, without accounting for even a penny of these costs in the budget they sent to my desk.”

Missouri House Speaker Tim Jones responding to Gov. Nixon's statement by saying the governor has again resorted to half-truths and hyperbole to attack the tax relief efforts of the Missouri General Assembly. Jones said it was especially disingenuous for the governor to refer to the tax law clarifications passed by the legislature for Missouri job creators as a “special-interest spending spree.”

Gov. Nixon says, "The legislature passed eight bills on the last day of session that will significantly impact state and local funds: House Bills 1296 and 1865, and Senate Bills 584, 612, 662, 693, 727 and 860."

Nixon added, "These bills contain more than a dozen provisions that would reduce state and local revenue beginning on August 28, including new sales tax exemptions for recreation venues, data storage and processing, used vehicles, supplies and equipment used in electricity generation, and laundries."

“These are much-needed clarifications to our tax laws that will prevent the governor from exceeding his authority by unfairly collecting more taxes from our employers who create the family-supporting jobs that drive our economic engine. Business leaders around our state have made it clear they are greatly displeased with the way the chief executive has chosen to narrowly interpret many of our existing tax exemptions so that he can collect more of our tax dollars to further grow the size of government,” said Jones, R-Eureka, who noted the executive branch had made changes to existing tax policy without vetting the changes with the legislature.

According to Gov. Nixon's office the budget plan passed by the legislature each year is expected to account for any legislation that could impact state revenue, but the budget passed by the General Assembly on May 9 did not account for any of these provisions.

Most of these provisions impact sales tax collections, and therefore they have a large impact on local tax collections. Existing statute (section 32.087) requires that the base for local sales taxes be the same as the base for state sales taxes and that sales tax exemptions be the same for both.

In addition to an annual state revenue reduction of $425 million, these provisions would reduce local revenue by an estimated $351 million on an annual basis.

These reductions would impact cities and counties as well as other taxing jurisdictions including fire protection districts, ambulance districts, and community improvement districts.

Jones added, “As a legislative body we came together to stand in defense of the taxpayers and to provide a shield against the glaring overreaches made by the executive branch. The governor fails to understand that these dollars do not belong to him, they were earned by Missouri businesses of all sizes that are the lifeblood of our economy and the providers of jobs.”

Jones also took issue with the governor’s estimates of the impact some of the tax relief provisions would have on state revenues. “The governor fails to understand the positive impact substantive tax relief will have on our economy when businesses can re-invest earnings into infrastructure development and more jobs with higher pay instead of using tax dollars to expand government and increase spending.