HB 253 passed both chambers with good support and was sent on to the governor for his consideration. On June 5, the governor vetoed this bill and has since led an all-out assault to discredit the legislation as well as the efforts of Missouri’s legislature to reduce taxes on our state’s taxpayers. He has used scare tactics and fear mongering at its worst in an attempt to divert attention away from the key points in the legislation. Two of the most damaging tactics the governor used were the withholding of appropriated funds and the driving of a wedge between the education community and the General Assembly.
Many people believe the governor may have violated Missouri’s constitution by withholding $400 million in funds that were appropriated by the General Assembly. These funds were for education and for other vital state services. Missouri’s constitution makes it clear that the governor’s authority to withhold appropriations is limited to circumstances where actual revenues fall short of projections used to create the state’s operating budget. The constitution states that the governor “may reduce the expenditures of the state or any of its agencies below their appropriations whenever the actual revenues are less than the revenue estimates upon which the appropriations were based.”
Missouri’s constitution vested budget-making authority in the General Assembly and limits the governor’s power to those circumstances that require emergency actions, such as a budget crisis or a natural disaster. The governor’s actions come at a time during which there is a budget surplus of approximately $400 million. In FY13, which just ended on June 30, Missouri collected approximately $742 million more than it did in FY12. Today we are awaiting the ruling from Missouri’s Supreme Court on the lawsuit filed by the State Auditor’s office challenging the governor’s actions. Lawmakers want to return to our state’s taxpayers a portion of their money in the form of a tax cut; the governor does not.
It’s unfortunate that the governor would choose to use misleading information, especially in regard to the funding of public education. The General Assembly has always taken very seriously its commitment to and support of public education. Today, it funds K-12 education with approximately 37% of the general revenue monies, though the Missouri constitution only requires funding at 25% of general revenue dollars. In the FY14 budget, historically record funds were appropriated for public education by the General Assembly.
HB 253 is not about funding education. It is about tax reform, tax relief and lowering the tax burden on all working Missourians. It is about stimulating the economy today in order to have adequate revenue tomorrow. It is about keeping good paying jobs in Missouri and not losing them to neighboring states. Consequently, we have to ask ourselves who will fund education in ten years if our businesses and our jobs do leave Missouri?
Should HB 253 become law, it will phase in the tax cut slowly and carefully over a period of 10 years. Beginning with the 2014 tax year the personal income rate will be reduced by .5% over a period of 10 years. The corporate income tax rate would be reduced by 3% over a period of 10 years. However, in both cases the reduction can only occur if the tax revenues collected in the current year exceed those collected in the previous year by at least $100 million. If revenues don’t increase then the rate reduction won’t take effect for that year. The tax cut must prove to be working in order to be implemented.
Yes, it certainly will be interesting to see what happens in September and how this issue will play out. No matter what happens during the Veto Session, though, some feel that tax reform will remain the key to driving economic development and job creation in Missouri.