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Governor says tax-cut bill will harm education funding
By Erin Ragan
NEW MADRID, Mo. -- Flanked by the state budget director and his top legal analyst, Missouri Gov. Jay Nixon spent over an hour Friday telling a large group of school administrators, teachers and community members why they should support his fight against a veto override of House Bill 253.
The governor had no shortage of strong words for supporters of the override, calling it "an unprecedented attack on public education" -- the likes which he said he has not seen in his 27 years as an elected official.
House Bill 253 would create tax cuts for individuals and certain types of businesses, which the governor said will harm the state's ability to fund schools statewide. Supporters say the legislation offers a responsible way to lower taxes and that the cuts will stimulate the state's economy and draw new businesses. Whether the governor's veto should be overridden is among the most hotly debated issues in Missouri.
Nixon, some Democrats and Republicans in the state legislature, along with education groups and many school officials, sit on one side of the squabble. On the other side are leaders of the General Assembly and many of its members. Lobbying groups, including Grow Missouri, a coalition formed with the purpose of promoting a veto override of House Bill 253, have also launched large-scale campaigns.
The bill would phase in a 50 percent tax deduction for business income over the next five years, along with reducing the income tax rate by 0.5 percent for individuals and 3 percent for corporations over the next 10 years.
Republicans who wrote the bill say safeguards are in place so funding for public services and schools won't be at risk, such as deductions taking effect only if state revenues grow by at least $100 million. But the governor said he sees loopholes in the bill's language that would create large shortfalls in the budget.
"Special breaks for certain kinds of businesses are conveniently exempt from these so-called safeguards and would kick in immediately," Nixon said Friday.
Projections of school funding losses compiled by the Missouri Department of Elementary and Secondary Education and released by Nixon's office show districts could lose up to $450 million this year if a veto override occurs and Congress passes the Marketplace Fairness Act, which would allow, although not require, states to collect taxes on online sales. Missouri also would have to use the new law for the cuts to education funding to be that large. Without the act passing, DESE estimates the cut to school districts would be $260 million if House Bill 253 goes into effect.
House Speaker Tim Jones last week called the projections and claims by Nixon "fear mongering" and that the governor only wants to "prevent tax relief."
Republicans also say they doubt the Marketplace Fairness Act will pass Congress, so it should be left out of the equation in claims it will bring cuts to funding for schools.
Grow Missouri says House Bill 253 will help the state's economy by lowering income taxes for the first time in 100 years and allow people who are delinquent on their taxes an opportunity to get back to compliance.
Missouri, according to the coalition, will lose businesses and income to neighboring states that have lowered income taxes because "income migrates to where it is treated the best."
The coalition represents business groups such as the Missouri Chamber of Commerce, the National Federation of Independent Businesses and the Associated Industries of Missouri. A major contributor to the coalition is billionaire Rex Sinquefield, who gave Grow Missouri $1.3 million to promote the veto override -- part of $2.4 million he has given to the groups pushing for it.
According to the figures from DESE released by Nixon, the 75 school districts which make up the state's Southeast Region would see a combined total loss of $22 million if the foundation formula for funding schools were reduced by $260 million this year, or $39 million if the formula were reduced by $450 million this year.
Republican members of the General Assembly also question why, if Nixon is so concerned about funding for schools, he decided to withhold $400 million from the state budget, including $66 million for K-12 schools.
The move, according to Nixon, is to partly to deal with the outcome he fears for House Bill 253. He told his audience Friday he is ready and willing to release the money for schools as soon as the Sept. 11 veto session has passed without an override of the bill.