Daniel P. Mehan
We’ve all heard the story about the boy who cried wolf. That fable came to mind as I read about Gov. Jay Nixon’s latest announcement of $400 million in budget withholdings for education, mental health and other government services.
Similar to President Barack Obama’s sequester cuts, Nixon is withholding money from the state’s most visible state services as a threat to lawmakers considering his override of House Bill 253. Missourians should call his bluff.
Some lawmakers have questioned the constitutionality of this move, which the governor has made before. A ruling by the Missouri Supreme Court is still pending on a suit filed by State Auditor Tom Schweich regarding the $176 million in budget withholdings Gov. Nixon made in 2011 in response to the Joplin tornado. According to the Associated Press, the state’s portion of that expense came up to $34 million, of which only $7 million has actually been paid out.
Constitutional or not, his most recent budget withholding announcement makes little sense. Why would Nixon take money out of classrooms, hospitals and state workers’ pockets at a time when, according to House and Senate budget offices, the state currently has more than $150 million to $350 million in surplus? Why would the governor withhold funding for fiscal 2014 when the vast majority of cuts in HB 253, should lawmakers override his veto, would not impact state revenue until the following fiscal budget and beyond?
At the same time, the amnesty provision of the legislation would impact fiscal 2014 – in a positive way by bringing in additional revenue. Further, the tax relief only goes into effect if state revenues increase by $100 million each year.
The Missouri Chamber of Commerce and Industry is lobbying to secure legislative support for a veto override of HB 253 during the September veto session. We are part of a large advertising campaign to provide Missourians with the facts about this legislation.
If we are successful, working Missourians will get to keep more of their paychecks. Missouri workers would receive a $384 million tax cut. Small employers in the state would see their taxes reduced as well, and all employers would have their corporate tax rate cut in half. Missouri would join 20 other enterprising states that have eliminated the income tax, have recently enacted legislation to cut income tax rates, or are pushing for income tax reform.
Much of this legislative action is happening right in Missouri’s backyard.
• In 2013, Kansas passed another tax cut, taking the Kansas income tax rates down to 3.9 percent and 2.3 percent. Kansas started with a top rate 6.45 percent when Gov. Sam Brownback began his cuts last year.
• From 2005 to 2011, Oklahoma went from a 7 percent income tax rate to 5.25 percent. This year, Gov. Mary Fallin signed another tax cut into law that will take the Oklahoma rate down to 4.85 percent by 2016.
• In 2013, Iowa Gov. Terry Branstad signed the biggest tax cut in the state’s history and has announced his goal to return next year for more cuts.
• Nebraska Gov. Dave Heineman signed three tax cuts into law in 2013. While his priority of eliminating the income tax didn’t make it through, he remains committed to the issue.
• In 2013, Indiana Gov. Mike Pence signed into law the largest tax cut in Indiana history.
• Legislative leaders in Arkansas are pushing income tax reform.
• Tennessee has never taxed individual income; however, the Tennessee legislature is referring a constitutional amendment to permanently ban taxation on income.
Leaders in those states know that the way to grow state revenue is by allowing workers and employers to keep their hard-earned money to reinvest in the economy.
That’s how you improve education, health care and other state services. Not by crying wolf.
Daniel P. Mehan is president and CEO of Jefferson City-based Missouri Chamber of Commerce and Industry, which represents nearly 3,000 employers that employ 425,000 Missourians. He can be reached at dmehan@mochamber.com.[[In-content Ad]]
