HB 253 - State Tax Reform Bill

HB253 is the result of a bipartisan effort to lower taxes as state revenues grow. The Governor's staff assisted in crafting some of the bill language. Supported by both Republicans and Democrats, it passed by nearly 2/3 in the House and over 2/3 in Senate.

The legislation was based on the following budget facts:

1) Budget was based on the GOVERNOR'S budget numbers

2) The General Assembly signed a budget with nearly a $150 million surplus on bottom line

3) FY13 - state collected $742 million more than FY12 for a sustained 10.11% growth

4) Since 2008, K12 funding has increased nearly $300 million

The Governor has withheld $400 million from education and other state agencies, but Article IV, Section 7 of the MIssouri Constitution states, " The governor ....may reduce 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." Since our actual revenues are higher than the budget, it seems as if the Governor may be overstepping his constitutional authority to withhold.

The Governor is also basing his withholds on the Marketplace Fairness Act passing Congress. Article 1, Section 13 of the Missouri Constitution states,..."no ex post facto laws.....can be enacted." This prohibits the legislature from enacting a retroactive law. Therefore, refunds for previous years would not be allowed.

Projecting our fiscal picture at the end of this current fiscal year, using numbers provided by the Governor's Office of Budget and Planning, there would be a surplus of $14.9 million (nexus +$7 million increase, tax amnesty +$51.8 million, corporate income tax -$5 million, individual income tax -$20.7 million, and business income tax -$18.2 million). The FY15 impact, using the Governor's numbers and no-growth assumptions, is -$101.5 million. However, for the tax cut to take effect there must be $100 million in revenue growth during the previous fiscal year. It seems that numbers currently being used in calculations by the Governor's office and shared with the media and education are not consistent with the budget numbers that his office submitted at the beginning of the session.

The personal income tax cut and the corporate income tax cuts do NOT go into effect unless the tax collections exceed the previous year's revenues by $100 million or more. No growth-no tax cut.

Finally, the General Assembly is committed to funding education, maintaining our AAA credit rating, and not force a sales tax on prescription drugs. Since the 1970's, small business has created two out of three new jobs. In addition, small business provides about 55% of the jobs in the private sector. Therefore, a state tax plan that spurs new job creation by our small business and keeps more money in taxpayer pockets, while requiring a minimum revenue growth measure for the tax cut implementation is a forward-thinking, common sense approach to tax reform that is good for Missouri.