Governor says federal tax cuts to hit state hard
Saturday, March 9, 2002
JEFFERSON CITY, Mo. -- While Washington lawmakers delighted Friday over passing an economic stimulus package, Gov. Bob Holden said it could cost Missouri $100 million in tax revenue, making it even tougher to balance the budget.
"It's difficult for me as governor to understand how you can have an economic stimulus package that would cut the legs out of the state and local government," Holden said.
Earlier this week, the governor declared that Missouri was in an economic emergency, the first step toward tapping into the state's savings account to help balance the budget.
On Friday, the U.S. Senate passed an economic stimulus package that extends jobless benefits and provides billions of dollars in tax cuts by enhancing federal tax write-offs for business equipment. The legislation, which passed the House earlier, now heads to President Bush to be signed into law.
Because Missouri bases its corporate tax structure on the federal system, Holden fears the federal tax reduction also will decrease the amount of money paid to the state.
The plan's opponents say it could cost states $14.6 billion collectively over the next three years.
Holden said it could mean up to $100 million less in state income tax revenues. His office said it isn't clear whether the tax hit will affect the current budget or the one for 2003 fiscal year, which begins July 1. Lawmakers now are in the midst of drafting the 2003 budget.
"If these things are as severe as we fear at this point, the governor is going to need help from the General Assembly," said Holden's budget director, Brian Long. "This is going to be a joint effort in coping with this."