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Nixon on HB 253: A Fiscally Irresponsible Experiment

Nixon HB 253 Veto
Inside Parkview High School Library in Springfield, Gov. Nixon offers his explanation for vetoing HB 253/Credit: Scott Harvey

Claiming it will cause irreparable harm to education and vital public services in Missouri, Gov. Jay Nixon Wednesday vetoed House Bill 253, which aimed to gradually reduce corporate and individual income tax rates. KSMU's Scott Harvey reports.

The Governor announced his intentions on the campus of the University of Missouri-Kansas City, before reiterating his remarks at a Springfield high school. 

Nixon called the legislation a “fiscally irresponsible experiment,” and touted the state’s “low tax burden and fair tax code,” that he says have established a pro-growth environment. He offered recent examples like the phasing out of the franchise tax, and tax breaks to small businesses that add jobs.  

“I mean independent studies show us as the eight-lowest business tax rate, the seventh-lowest as a percentage of our personal income, and the fifth-lowest in per capita taxes in the nation; lower than every state that touches us. This is not a race to the bottom. This is a race to the finish line,” Nixon said.

Missouri’s Republican-led Legislature has championed the bill as a way to keep pace economically with neighbors such as Kansas and Oklahoma that have cut taxes. The bill would phase-in a 50 percent deduction over five years for business income reported on individual income tax returns, plus gradually cut Missouri's corporate income tax rate.

Read how the tax cut issue extends beyond Nixon's veto.

The Governor Wednesday said that the tax cut bill would cost the state more than $800 million a year, a concern he raised weeks ago, which would deprive public schools and social services of needed funding.

“$800 million is the equivalent of eliminating all state support for all of our public and higher education institutions, 2-year and 4-year. Or closing all of our state prisons; every one. Or shutting down the entire Department of Mental Health.”

The Governor also pointed to several drafting errors in the bill’s language, one of which would repeal an existing sales tax exemption for prescription drugs, potentially costing consumers more than $200 million annually.

Read Gov. Nixon's full veto message here.

Potential safeguards were written into the legislation, indicating that the rate reductions for corporate and individual taxes would take effect only if annual state revenues continue to grow by at least $100 million over their highest point in the preceding three years. But Nixon says that’s not true, indicating that special breaks for pass-through business income are “conveniently exempt from these so-called safeguards.”

Some Republican lawmakers are vowing to try and override Nixon’s veto when the Legislature convenes in September, which would require 109 votes in the House and 23 in the Senate. While the Party holds enough seats in both chambers to do that, three House Republicans voted against the measure during the regular session, while seven Republicans were absent from the vote, as outlined here by the Post-Dispatch.

Tim Jones in the Missouri House Speaker.

“We’ll sit down and go through the entire list of all the bills with all of the bills’ sponsors – we want to obtain their opinion first – and then after we obtain a position as a caucus on all vetoed bills, we’ll share that sentiment with the Senate and then determine what we can move forward on in September.”

The Governor’s veto Wednesday was also met with criticism from leading businesses Associated Industries of Missouri and the Missouri Chamber of Commerce.

But Nixon told reporters in Springfield that he’s not concerned over a possible veto override, saying that as Missourians learn more of the potential implications, they too will join in saying that “this is not the path forward for the state.”

For KSMU news, I’m Scott Harvey.