I joined Representative Denny Hoskins to honor the NCAA D-II National Champion Mules on the House floor. (Contributed photo)
I'll begin with this week's visitors. We had fourth graders from Martin Warren School, Warrensburg visiting the House and the Capitol this week. Clark the Bald Eagle visited the House chamber to celebrate the comeback of our national symbol from the endangered specious list. KOKO Radio made its annual trek to the Capitol. Finally, Coach Kim Anderson and the national champion Mules basketball team visited Jefferson City this week and were honored in both the House and the Senate (see the picture at the end of the report). Congratulations to the team!
More on Tax Reform with Education Funding Safeguards
The General Assembly has passed SB 509, a very reasonable tax modification that protects the vital service of education in our state. However, once again Governor Nixon is refusing to consider change in the Missouri tax code and is screaming that education and other vital services will suffer. This is the governor who has implemented withholdings from education every year of his two-term tenure in the executive office. This has occurred even as state revenue has risen! What is going on?
SB 509 has several provisions, but the primary provisions are:
-- The lowering of the top tax rate for Missouri taxpayers.
-- Tax cuts to stimulate economic activity including farms and small businesses.
-- Adds tax exemptions for lower-income taxpayers.
-- Adjusts tax rate brackets for inflation, again helping lower-income taxpayers.
Why does the governor continue to deny even the slightest tax reform for hardworking Missourians? Let's take a hard look at his argument.
Last year the governor grabbed the debate early and warned of the disaster of a tax cut for hard working Missourians and threatened education with a reduced budget. He continues this practice and implemented withholdings well before the passage of SB 509. While tax legislation approved by the legislature in 2013 was ultimately vetoed by the governor, this year's bill has combined safeguards with the legislature's commitment to record levels of funding for education. The governor's complaints have been addressed and fixed, but his methods continue.
First, the threats to budget revenues are not real. Some of the analysis of SB 509 failed to include the triggers that are an integral part of the bill. An analysis of the revenues including the increases required before any rate reductions areincluded yield a picture of increased funding of $47 million for education. Every school system in District 51 will receive an increase in funding with SB 509. Let me repeat that:
EVERY SCHOOL SYSTEM IN DISTRICT 51 WILL RECEIVE AN INCREASE IN FUNDING WITH SB 509!
Here is a synopsis:
SCHOOL / GOVERNOR'S PROPOSAL / UNDER SB 509 / CHANGE
Knob Noster / $4,521,559 / $4,586,510 / + $ 64,951
Warrensburg / $12,490,932 / $12,693,335 / + $202,403
Pettis Co. R-V / $1,404,910 / $1,410,773 / + $5,863
La Monte / $2,124,488 / $2,153,539 / + $29,051
Pettis Co. R-XII / $269,357 / $270,481 / + $1,124
Sedalia / $20,333,191 / $20,643,707 / + $310,516
Malta Bend / $538,231 / $540,477 / + $2,246
Marshall / $10,268,025 / $10,427,034 / + $159,009
Sweet Springs / $1,974,775 / $2,004,609 / + $29,834
This is an analysis from the Missouri Society of CPAs, and has been produced in response to the current debate. The CPAs, along with numerous other organizations, believe SB 509 will be a positive for the state of Missouri and endorse its signing by the governor. Now, let's consider the second part of the governor's argument.
In a phrase, the governor has pulled a sentence out of context and is trying to shoot down the bill based on this out-of-context quote. The governor warns that in full implementation those with over $9,000 in income will be removed from the tax rolls. He bases this on one sentence of the bill, and this is incorrect.
The flaw in the governor's argument is a court will read the bill in context, and former Missouri Supreme Court Judge William Ray Price, Jr. has stated this in his review of the statute. The Court cannot render a bill absurd, an interpretation strained, or other provisions meaningless. That's a lot of legal language, but it means that words are given their plain and ordinary meaning in Missouri judicial interpretation. Also, the provisions are read in context. Pulling out one sentence does not constitute the whole bill. Additionally, that sentence cannot negate other portions of the bill. Those other portions retain all taxpayers while simplifying the tax table. The governor is stretching his reasoning with this argument.
To further the point that the governor is grasping at straws, I ask a question: Where was his staff's fiscal note for negative $4.8 million (for loss of tax revenue) during the vetting of this bill? The governor's staff was present and consulted various times throughout the bill process, but no mention of losing taxpayers or millions of dollars entered the conversation. These lapses in analysis seem to be frequent.
In a nutshell, the tax cut would not impair the legislature's ability to fund education, and in fact it improves our ability to fund the Foundation Formula. Additionally, the current budget plan approved by the House increases K-12 education funding by as much as $278 million and funding to the state's public universities and community colleges by as much as 3 percent. With that stated, let's move on to other provisions of the bill.
SB 509 would also phase in a 25 percent tax exemption for Missouri business income in 5 percent increments. For low income Missourians who make $20,000 or less, the bill increases the exemption for personal income taxes from $2,100 to $2,600. In addition, the bill would require that the income tax brackets for individual payers will be adjusted annually for the percent increase in inflation. These last two provisions are definitely geared to help lower income taxpayers.
The final misinterpretation of SB 509 is that it helps the rich, but nothing is further from the truth. As many farmers and small business owners know, LLCs and S-corporations are privately held and often constructed for protection against adverse legal situations. Most of these companies are not rich, but have significant at-risk investments. Again, the governor has denied these hard-working people a helpful tax modification in the past.
Education is a primary service provided by the state. The legislature has constructed a plan to support this vital service while encouraging Missouri businesses to stay and grow in our state. With SB 509, a big part of our move forward in Missouri is now on the governor's desk for acceptance or rejection. Will he move forward with us or keep us mired in the politics of the past? Will he join the Republicans who criticized last year's tax cut, but have worked to fix its perceived problems and move forward with a new vision for Missouri? These are the real questions to be answered in the next few days.
It is an honor to serve the 51st District in the Missouri House of Representatives. Each week I will issue a capitol report to keep you informed of activities in Jefferson City and Missouri. Any concerns or issues you might have are of great interest to me. I look forward to your input and thoughts, so please feel free to contact me at any time if you have questions, concerns, or ideas to improve our state government and the quality of life for all Missourians. My telephone number is 573-751-2204 or you may contact me by email at email@example.com. Thank you for working with me to make Missouri a great place to live.