Nixon in Carthage to discuss vetoes of special interest tax breaks

(From Gov. Jay Nixon)

Gov. Jay Nixon today visited Carthage in Jasper County for a roundtable discussion with local officials about the impact of special breaks and exemptions passed by the General Assembly in the final hours of the legislative session and vetoed by the Governor earlier this week. Together, provisions in these bills would reduce state and local revenues by up to $776 million annually, and were not accounted for in the budget passed by the legislature or in the budgets of the local jurisdictions they would impact. Most of these provisions would impact sales tax collections, and therefore would reduce local tax revenues.

“From fire protection to storm water management, these special breaks for special interests hastily passed by the legislature would undermine the basic public services these communities rely on to support the health, safety and quality of life of their citizens,” Gov. Nixon said. “These provisions would begin reducing revenues immediately, and with no guarantee that my vetoes will be sustained, these special interest giveaways will have to be accounted for with tough choices and dramatic spending reductions on the state and local levels.”

Earlier this week, the Governor vetoed Senate Bills 693, 584, 612, 860, 727, 662, and 829, and House Bills 1865, 1296 and 1455, which contain more than a dozen special breaks for a variety of industries. If these bills were to become law, they are projected to reduce state revenue by up to $425 million annually and local revenue by up to $351 million annually starting in the fiscal year that begins on July 1. By reducing local tax revenues, these special breaks would undermine support for services including police, fire, ambulance, emergency services, parks, and other vital public services provided at the local level.

“The City of Carthage relies heavily on sales tax revenue to support the operation of the city,” said Carthage Mayor Michael Harris. “Because of this, we appreciate the recent veto by Governor Nixon of legislation that would have drastically cut municipal sales tax revenues that have been previously approved by the citizens of Carthage and are crucial to maintaining our current levels of service in all facets of the Cities operations.”

In a previous letter urging the Governor to veto the bills, Carthage City Administrator Tom Short wrote “. . . sales tax is our City’s largest single source of revenue for our basic city services to be provided to our citizens . . . For us and other cities, this revenue source is the lifeblood enabling basic city services to be provided to our citizens.”

The bills vetoed by the Governor include new sales tax exemptions for recreation venues, fast food restaurants, power companies, data storage and processing, used vehicles, supplies and equipment used in electricity generation, and commercial laundries.

“All across Missouri, communities have come together to pass local sales taxes to support local public services and capital improvements,” Gov. Nixon said. “These special breaks passed by the General Assembly would defy the will of the voters by siphoning these voter-approved resources away from their intended purpose, and into the pockets of the well-connected.”

The reduced state sales tax revenue would also reduce funding from dedicated sales taxes for K-12 schools (also called the Proposition C sales tax), Highways, Conservation, State Parks, and Soil and Water Conservation Programs.

The loss of local revenue from these provisions could also impact repayment of voter-approved bonds issued to finance capital improvements such as county jails, county hospitals, fire stations, emergency management centers, road projects and other critical public infrastructure.

An overall summary of the fiscal impact of these provisions is available here.

A breakdown of the fiscal impact on local taxing districts is available here.