Gov. Jay Nixon came to Lee’s Summit to rally support for his veto of a Republican bill to cut income taxes over the next 10 years, saying that the move will be devastating to public school finances.
Nixon fears the tax cuts won’t be offset by growth in jobs and business, the purpose Republicans tout for making the cuts.
Republicans maintain that cutting income taxes on corporations and individuals is of paramount importance to compete with Kansas.
Nixon said at the meeting that insuring education funding is a better strategy.
He noted Lee’s Summit companies are now part of a global economy.
“That’s the future we have to compete in, and the best economic development tool there is for doing that is education. The competition of the future and the jobs of the future is global and will be won by states and nations with the most skilled, most creative, quite simply most educated work force,” Nixon said.
The Lee’s Summit R-7 Board of Education is supporting the Democratic governor’s veto. Nixon spoke Tuesday, Aug. 6, at the district’s Tony L. Stansberry Leadership Center to an audience of educators and others invited to the event organized by Nixon’s office.
“Even under the most conservative estimates, Lee’s Summit schools could lose at least $5 million annually in state aid when House Bill 253 is fully phased in,”said David McGehee, superintendent of Lee’s Summit schools.
The bill doesn’t cut education spending directly.
Because so much of Missouri’s general fund is devoted to education, any big hit to revenue could force cuts in education.
Legislative researchers predict the eventual revenue lost, when fully phased in, would be $692 million a year based on compared with the current tax structure. But the tax cuts only go into effect if state revenues grow every year by at least $100 million from adding businesses and jobs, for a total of $1 billion from new growth, according to Republicans.
The Republican plan would cut taxes on corporations and other businesses in half, reduce the top individual tax rate to 5.5 percent from 6 percent over the next decade.
Nixon asserts cuts might be imminent, due to a possible trigger of the U.S. Congress passing the Federal Marketplace Fairness Act, which would enable states to collect sales tax on Internet sales. Republicans pooh-pooh that, saying it’s not close to passing.
Voters are being subjected to a see-saw of claims, with Nixon and Democrats contending Missouri is a low-tax state that’s beginning to outperform Kansas, while Republicans say the state’s business climate needs an overhaul to compete.
The speechifying hasn’t shaken local Republicans support for House Bill 253, except Rep. Jeff Grisamore, who is undecided.
Representatives Gary Cross and Mike Cierpoit said they intend to vote to override the veto, if they have the chance, during the veto session scheduled for Sept. 11.
While the legislature is dominated by Republicans, there might not be enough votes for the override in the Missouri House and leaders may decide not to challenge the governor.
That decision likely will be made next Friday when Republican leaders caucus.
Grisamore said his hesitation is caused by Nixon’s move to withhold $40 million of the money appropriated in this year’s budget to help people with mental and developmental disablilties.
Grisamore said he has worked hard to support that vulnerable group, so Nixon’s action is causing him dismay and doubt on overriding the veto.
“I look at it a couple of different ways,”Grisamore said. “I normally am supportive of tax cuts to stop the bleeding, or at least slow down the loss of businesses to Kansas...I’m undecided, we’re still a month out.”
Cierpoit, who attended the meeting, said Nixon is misleading people about the bill.
“It’s very frustrating, they bring things up far from reality, but it’s hard to counter them,” Cierpoit said. “Nobody down there (Jefferson City) wants to hurt education.”
Nixon said the tax cuts could be retroactive for three years, Cierpoit said they won’t happen because of Missouri law that forbids that.
Cierpoit said the cuts in personal income tax and corporate tax rates would only begin when targets set for revenue growth are met during coming years.
Nixon says the bill eliminates the sales-tax exemption on prescription drugs, raising taxes there by $260 million, and also eliminates the sales-tax exemption for college textbooks, because of an error in the bill.
“I guarantee we’ll fix it in January or February,” Cierpoit said. “I’m going to vote to override.”
Cross said “I would like for someone to show me, in that bill, where there’s a cut to education, Please show me.”
Cross said his support for the bill doesn’t make him anti-education.
He noted he championed the plans for the Missouri Innovation Campus in Lee’s Summit through the House, while Lee’s Summit’s Sen. Will Kraus did the same in the Senate.
Nixon is portraying the cuts as favoring wealthy lobbyists and lawyers, who pay taxes through corporations organized as limited-liability corporations or entities known as S-corps., saying the bill immediately drops taxes for them.
Republicans counter many small businesses use those same corporate structures and contend the cuts will boost Missouri’s economy long term.
“If we’re not successful, we’ll make another run next year at making the tax bill lighter on Missouri businesses and citizens,” Cierpoit said.