Special session begins with no great expectations

JEFFERSON CITY, Mo. -- Missouri lawmakers convened in special session for the second time in four months Monday to consider Gov. Bob Holden's scaled back tax plan for education. But few, if any, expect the plan to receiver serious debate, much less pass.

Holden, a Democrat, wants the Republican-led legislature to eliminate four tax breaks -- primarily affecting businesses -- as a way to raise money for what he claims is an underfunded state education budget.

The cost to taxpayers: $44 million for the school year already in progress, and about $80 million next year. Holden calls it a modest proposal, mere "baby steps" for public schools. But most Republicans aren't open to higher taxes. And few Democrats are optimistic about their governor's plan, which now is just a fraction of the over $700 million in new taxes and revenues he sought in January.

"It's dead on arrival in the House," state Rep. Jeff Harris said matter-of-factly while waiting in line for a cheeseburger in the Capitol cafeteria after a brief, low-key House opening to the special session.

Not even Harris, a fellow Democrat, supports all of Holden's proposals. Harris, of Columbia, believes two of the four items Holden identifies as loopholes actually are small-business incentives worth keeping.

Republican leaders, while leaving open the slight possibility of considering one of Holden's four targeted tax breaks, expressed frustration at being summoned into a special session on issues that already failed in a June special session and in a five-month regular session that ended in May.

"Having the pomp, the circumstance, the expense of everybody down here is not benefiting anybody, least of all the school children of Missouri," said House Speaker Catherine Hanaway, who commands a 90-71 House majority over Democrats. Republicans have a 20-13 majority in the Senate.

Missouri is one of 18 states to hold special sessions this year, many on budget issues, according to the National Conference of State Legislatures.

While many governors and legislators have been locked in budget debates, Missouri's has become especially intense at times. During the first special session, anti-tax activists and education advocates squared off in the House galleries -- chanting, jeering and cheering the speeches of Holden, Hanaway and Republican Senate President Pro Tem Peter Kinder.

Holden twice vetoed the Legislature's budgets for public schools and colleges, wanting lawmakers to boost spending by raising more revenues. He begrudgingly signed the third set of education budget bills just hours before the July 1 start of the state fiscal year, avoiding a potential partial government shut down but vowing to call lawmakers back for a September special session on his revenue plan.

On Monday, Democrats filed Holden's bills in both the House and Senate.

But Sen. Wayne Goode, who is handling the Senate version, wasn't too optimistic.

"I know people on both sides are looking at this as a political issue, and in that context there's a good argument that the bills won't go anywhere, but we'll see," said Goode, D-St. Louis, a former chairman of the Senate Appropriations Committee.

Holden's plan seeks to end a unique incentive that lets Missouri businesses keep a percentage of the state income taxes they withhold from employees' paychecks as a reward for collecting the taxes quickly and correctly. It also would end an accounting technique under which corporations establish a patent company in a state that does not tax them, such as Delaware, then transfer revenues there as royalty charges as a way to avoid paying Missouri income taxes.

It's the latter tax break that Republican leaders are open to addressing, but only if business groups can give their stamp of approval to language that won't effect Missouri-based companies. And even then, Hanaway said, she would rather see the issue studied and addressed later.

The governor also wants lawmakers to revisit two proposals passed this spring, claiming legislators did not go far enough in scaling back the sales tax breaks available to big boat purchasers and in restricting the ability of businesses to keep overcollected state sales taxes.

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On the Net

Gov. Bob Holden: www.gov.state.mo.us

Missouri Legislature: www.moga.state.mo.us