Missouri laundry-tax break up for potential veto override

JEFFERSON CITY, Mo. -- A Missouri state senator says he plans to push lawmakers this week to overturn Democratic Gov. Jay Nixon's veto of a tax break for large-scale laundries.

The bill would waive sales taxes on detergent and other materials used to clean linens for businesses that handle at least 500 pounds of clothes per hour and 60,000 pounds per week, mostly for hotels, hospitals and the food industry.

Prompted by industry complaints the facilities are taxed unfairly, the measure passed overwhelmingly this spring in the Republican-led House and Senate.

Lawmakers will convene Wednesday for a session to review vetoed bills. That's when bill sponsor Sen. Will Kraus, a Lee's Summit Republican running for secretary of state in 2016, said he plans to ask lawmakers to enact the legislation through a two-thirds majority vote that would override Nixon's veto.

Commercial laundries raised concerns after the state Supreme Court in 2014 denied a "processing" tax break for a laundry.

Kraus said the Department of Revenue can collect taxes on both the materials laundries use to wash linens and the final cleaned product.

"I don't believe that was ever intended," said Kraus, who called it "double taxation."

Nixon blasted the $3.4 million reduction in state and local funds projected by legislative researchers for this fiscal year if the tax exemption is enacted and more than $4 million in subsequent fiscal years. He said the legislation was an unfair expansion of existing sales tax breaks for manufacturers.

"The commercial laundries might be getting their detergent tax-free, but the rest of Missouri taxpayers would be getting taken to the cleaners," Nixon wrote in a veto letter of the bill, citing about 50 facilities that would benefit.

Mark Spence, chief operating officer for Faultless Healthcare Linen, said neighboring states such as Kansas, where materials such as soaps and solvents for laundries are not taxed, are more business-friendly. Faultless has a facility in Kansas, as well as several in Missouri and Illinois.

Spence said the current tax policy might push commercial laundries to expand in other states, calling it "a pretty significant advantage from a business standpoint."

The veto has a good chance of being overturned, as the bill fell five votes short of the needed two-thirds majority in the House in May, although more than a dozen lawmakers were absent. It passed 31-3 in the Senate in April, well over the 23 needed for an override.