Associated Industries fends off proposed tax increases

Guest editorial

By Diane Slater

director of public relations

Associated Industries of Missouri

Jefferson City -- The 2002 legislative session was a cliffhanger. Would we or wouldn't we raise taxes? Will we or won't we have to lay off state workers. Despite the end of session, more time may be needed to answer these questions.

The budget debate became the monster that devoured Jefferson City. Many good pieces of legislation got lost on their way to passage. Even things the state must do, such as comply with federal laws on unemployment, failed to garner the appropriate attention.

"The budget debate is the classic case of trying to close the door after the horse is out of the barn," said Jim Kistler, interim president of Associated Industries of Missouri. "Missouri government has expanded so much in recent years that it is impossible now to discuss downsizing any program. The size of the state budget has tripled in 15 years."

That growth required Associated Industries to spend much of its time this session fending off proposed tax increases, said Kistler. Proposals included hundreds of millions of dollars in tax increases for income tax withholding, the overcollection of sales tax, business royalties, non-Missouri income sources, net operating losses, gambling fees, sales taxes on "soda pop" and others. Without the efforts of AIM, businesses stood to lose more than in any previous year.

"Businesses will see the results of our efforts in their bottom line, because there will be no new taxes," said Kistler.

In the end, the Missouri Legislature was able to find enough money to balance next year's budget without a tax increase, and without borrowing money the government could not afford to pay back.

"This will be a difficult year for all of us," said Kistler, "but not nearly as difficult as if we had borrowed money we would have had to pay back in three years." Budget projections don't hold much hope for improvement during that time.

Sounding a note of accomplishment, AIM also touts passage of the transportation bill as a positive step forward.

"At the beginning of session, no one suggested we could pass a transportation bill," said Kistler. "In fact, we all believed we would have to do it by initiative petition. This is one time I am glad we were wrong."

Missouri voters will have the opportunity to pass a tax increase to pay for improvements to our state transportation system. Associated Industries, in conjunction with the Missouri Transportation and Development Council, lobbied hard for the Legislature to address the issue of transportation.

The bill that passed combines all the needed elements: increased funding, greater accountability and elimination of diversion. The job now will be to convince voters this is a good idea.

More disappointing is the state's failure to comply with federal law as it relates to unemployment and federally designated Indian tribes. In December 2000, the federal government told states they must adopt state laws allowing Indian tribes to be designated as reimbursable employers, and that change must occur by July 1, 2002.

"Unfortunately, the state of Missouri dropped the ball," said Kistler. "If Missouri loses more than a billion dollars a year because of this, as the federal government has threatened, Missouri voters should hold our elected officials accountable.

" I find it unconscionable that our state government has chosen to ignore federal law."

Sometimes, however, we can be thankful for what we don't have. A slew of legislative proposals, if passed, would have forced people out of business or forced more Missourians to lose their health insurance.

Many proposals suggested employers should be exposed to additional liability, or force employers to offer costly health care benefits such as mental health coverage, or pay unemployment and workers' compensation benefits to individuals who don't deserve such benefits.

For all the debate and hoopla, Missouri businesses faired pretty well.

Businesses will be subjected to a one-year delay on their bonus depreciation deduction, but even that was better than the alternatives.

"We have taken about 2,500 legislative proposals, some good and some bad, and boiled those down to a couple hundred practical and sound ideas. And Missouri's businesses, taxpayers and economy do not suffer as a result. I call that a success," said Kistler.

Associated Industries of Missouri is a business and industry trade association serving as "The Voice of Missouri Business" for more than 1,500 Missouri employers. AIM represents its membership before the Missouri Legislature, state regulatory agencies, the courts and the public. AIM's Web site is www.aimo.com.