For many legislators working through the historic 2014 veto session in Jefferson City, the governor’s objections to dozens of budget-related bills amounted to advice deemed not worth following.
In all, Missouri lawmakers overrode 47 of Gov. Jay Nixon’s budget cuts and 10 nonbudget bills during a one-day veto session Sept. 10 that spilled over into the wee hours Sept. 11. Add the income-tax bill vetoed before the end of the regular session in May, and the total 58 overrides far surpassed the previous record of 12 set in 1833.
The extensive list of overrides includes a budget item that withheld $900,000 for the Missouri Works job-training program, a key business-support initiative for the Missouri Chamber of Commerce and Industry.
“That’s a win for us,” said chamber President and CEO Dan Mehan.
Other business-related bills overrode during the session include Senate Bill 829, legislation that would presume taxpayers as innocent when the Missouri Department of Revenue brings them into court for a tax dispute.
“In our society, you are innocent until proven guilty,” Mehan said. “That did not apply in disputes with the Missouri Department of Revenue until a few years ago when it was signed into law for individuals and small employers. This year, we passed the bill … that did it for all employers, not just small businesses, and it included sales tax exemption questions and disputes to all Missourians.”
The Missouri Public Defender System celebrated lawmakers restoring $3.4 million to hire private attorneys to assist public defenders in conflict cases.
“We are very pleased with the support that we’ve gotten. While we understand the economic realities of withholding part or all of it for a little while necessary on the governor’s part, we certainly hope that is short-lived and the money gets released because we desperately need it,” said Cat Kelly, state public defender director. “We’re in sit-and-wait mode.”
According to the state constitution, the governor has the authority to withhold appropriations when revenues are not sufficient to fully fund the budget, but there has been disagreement between the governor and legislators to the degree the governor can withhold funds.
“In our situation, we hope the money gets released sooner rather than later because it’s designed to contract out conflict cases,” Kelly said of the funds that have yet to be released. “The cases that come to our attention throughout the year can’t go on hold until money is released.
“They have to have a lawyer, so we have to assign another public defender from another area.”
Since 1989, public defenders have had to represent defendants in other areas when co-defendants both need representation to avoid a conflict of interest, Kelly said. That policy stretched the bounds of what’s possible with an already overburdened system, according to a report by St. Louis accounting firm RubinBrown, on behalf of the American Bar Association.
Kelly said the report helped convince lawmakers there was a need for additional funding after the budget increase was vetoed by the governor following the regular session.
Rep. Lynn Morris, R-Nixa, said he supported the move to override SB 727, which provides sales and use tax exemptions for products at farmers’ markets.
“It’s nice that those sales can be exempt because a percentage of your groceries are exempt when you go to the grocery store,” Morris said.
“I don’t think that’s really hurting the sales tax revenue in the state of Missouri.”
Not everyone was pleased with the significant override activity.
Officials with the nonprofit, fiscal policy-focused Missouri Budget Project said critical services such as education, public safety and infrastructure still aren’t getting the funds they’re due.
“Last session’s massive income tax cut will make it difficult for our state to fund even the most basic of services once it goes into effect,” said Traci Gleason, the Budget Project’s communications director, in an email.
“We can’t cut our way to prosperity. Missouri needs a revenue structure that funds the services Missourians need to thrive and our state needs to compete.”
In response to the override session, Nixon released $143.6 million for local school districts and higher education institutions across the state.
Following the end of the regular session, Nixon withheld about $1 billion from the fiscal 2015 budget, saying tax cuts passed by lawmakers couldn’t be covered without decreases in services.
Morris also noted a few other overrides he viewed as successes from the veto session. Among them was House Bill 1132, which allows tax credits for contributions to maternity homes, pregnancy care centers and food pantries. Another was SB 731, which changes provisions relating to nuisance ordinances and actions in rental situations.
“It gives a little more protection to the owners of buildings and brings clarity to the law,” Morris said, adding he voted for all 10 nonbudget-related bills that received overrides.
Among the bills listed for an override vote but not enacted into law was SB 584. Bill sponsor, Sen. Bob Dixon, R-Springfield, said he pulled the bill because he believes a committee should be formed to create a more comprehensive array of tax reforms.
He said his bill was designed to sort out tax fairness issues, including undoing changes the Missouri Department of Revenue made internally a handful of years ago that Dixon said almost put a Springfield company out of business.
“The department reclassified taxpayers that are fitness centers as areas of amusement. So, you’d pay sales tax on your membership just like you would pay sales tax if you were going to a ballgame. But they didn’t notify everyone. They were doing what we call notification by audit,” Dixon said. “They were auditing businesses like they did Big Time Results here in Springfield.”
He said the company was told it had to pay three years in back sales tax.
“He almost shut his doors,” Dixon said of fitness center owner Noah Alldredge.
Recent talks with municipal leaders have unveiled issues with inconsistent sales tax payment checks, prompting Dixon to consider re-establishing the Missouri Tax Study Commission, dormant for nearly 50 years.
“We need to look at the entire tax code,” Dixon said. “These were tax justice issues, but we’ve just been nibbling at the edges with (SB 584). It’s a mess at the department.”
He hopes the governor and lawmakers can come to more consensus in 2015.
“The breakdown in communication between the legislature and the governor has not been helpful,” Dixon said.
