Local schools concerned about revenue loss with tax-cut bill
Wednesday, July 24, 2013 ~ Updated 8:53 AM
Editor's note: The following story has been edited to correct the amount of revenue lost by the Cape Girardeau School District.
Missouri schools stand to lose about $450 million in state revenue this school year and $260 million annually if lawmakers override Gov. Jay Nixon's veto of a hotly contested income tax-cut bill, according to data provided by state education officials to a school administrators' association.
But House Republicans said this is the latest tactic used by Nixon to scare voters and pressure state legislators against the override.
Between a looming budgetary freeze by Nixon and the possibility of reduced tax revenue from the House bill, administrators are worried that schools could be big losers in the battle in Jefferson City.
The Missouri Department of Elementary and Secondary Education released a breakdown of data to the Missouri Association of School Administrators, calculating revenue loss to each school district should the Republican-backed bill become law. It would have phased in a tax deduction for business income over the next five years, along with reducing the income tax rate for individuals and corporations over the next decade.
According to the governor's office, Cape Girardeau would lose an annual $688,873 in state revenue by the time the bill would be phased in after 10 years. The district also could lose up to $1.191 million in state aid this year should the bill become law and if Congress were to pass the Marketplace Fairness Act, which would allow states to collect tax on Internet sales. The Missouri tax-cut bill was written so an extra 0.5 percent would be shaved off the income tax rate if the federal law on Internet sales passes.
The Jackson School District would lose about $1.248 million over the next 10 years and lose up to $2.16 million this year, depending on the actions taken on the federal act and state bill, according to the numbers.
Nixon touted the release of the data with a statement Monday. But Republican House leaders countered Tuesday, saying the data wasn't accurate.
Republican House Speaker Tim Jones and House Budget Chairman Rick Stream said the Marketplace Fairness Act is unlikely to pass in the next year, and Nixon's numbers are based on people filing amended tax returns for the past three years, which "would likely be a violation" of the state constitution, according to a news release from the Missouri House.
In June, Nixon froze more than $400 million of spending from the state's budget. GOP lawmakers questioned the legality of the withholding and accused Nixon of fear-mongering. These withholdings will become permanent if Republican legislators succeed in overriding the veto. Of these funds, about $66 million would be withheld from K-12 schools.
Local districts are fearful of the what-ifs. Jackson Superintendent Ron Anderson said the district is looking at a loss of $300,000 with that freeze. He said translated into personnel, that's six to eight teachers.
"There's so many things you don't have control over," he said. "You try to do what you can, but your other costs are mostly fixed costs that you're required to expand, so it's hard to squeeze out those kinds of dollars."
Cape Girardeau Superintendent Jim Welker said his school will receive about $472,000 less -- about 5.3 percent short -- in the coming school year because the state formula is already underfunded, assuming Nixon's funding freeze for K-12 schools isn't permanent.
"If the governor's withholding does go through, then that's another 2 percent on top of that, which is about another $150,000," he said. House Bill 253 might add to that loss, Welker said.
"The additional cuts would be devastating to the district," he said. "That's a significant amount of money, and we would have to look at ways to adjust the budget in future years for that."
The biggest expense for the district is personnel, and Welker said cuts could affect class size, employee raises and technology and facility upgrades.
"Hopefully we won't see cuts to this year's budget, but our concern is that the governor has already withheld $66 million," Welker said. "Hopefully everything will work out and that money will not have to be withheld."
The state Legislature will convene in September for its veto session.