Task Force Analyzes Fiscal Impact of Tax Exemptions

Jun 11, 2014

Mary Mannix-Decker, city director of finance, details the challenges Springfield could face with these bills, like losses in community services.
Credit Anna Thomas / KSMU

During the final hours of its session in May, the Missouri General Assembly passed 10 bills, a majority of which were tax exemptions.  On Wednesday morning, ahead of Gov. Jay Nixon’s veto of all of the bills, the Joint City-Greene County Planning Task force met to discuss the potential losses for Springfield and Greene County. KSMU’s Anna Thomas has the story.

There are three bills in particular that, if lawmakers override the Governor’s vetoes this fall, could cause the city and county a combined loss of $18 million dollars annually. These numbers are based off of Gov. Jay Nixon’s fiscal analysis, the only report officials say they have to work off of.

Mary Mannix-Decker, Springfield finance director, says even if the numbers are overstated by 50%, it’s still a large number to deal with locally.

“These bills were passed in the last few days of the legislation session, without an opportunity for public hearing or fiscal notes.  Now some of these exemptions were included in other bills during the legislation session, but they made their way into the bills in the last few days, and some of them were changed significantly,” Mannix-Decker said.

For example, Senate Bill 584 is a state and local exemption for certain materials used to facilitate the storage or processing of data. With such a broad definition of processing, Mannix-Decker said she couldn’t think of any local business that would not qualify for this exemption.

The bill also shifts the responsibility of gaining proof of tax liability from the taxpayer to the director of Revenue.

“And so now there really is no downside for a business to try to claim a tax exemption. So there is a feeling that there will be more litigation because of this provision in the bill,” Mannix Decker.

View the slides presented on the bills Wednesday by the Task Force.

Senate Bills 612 and 693 are more specific. The first would allow sellers to not be liable for additional tax until notified by the Department of Revenue. It also has an exemption for commercial laundries. Bill 693 is an exemption on sales tax for vehicles 10 years or older which cost less than $15,000.

The bills apply to every sales tax, and with sales and use taxes making up at least 50% of the General Fund for both entities, City of Springfield officials estimate it will lose nearly $11 million, and Greene County about $7 million.

Martha Mundt is the Greene County budget director.

“As the county has tried to communicate in the last couple of years, the financial condition of the General Fund is already stressed,” Mundt said.

The Task Force says the losses would be seen in community services like police, fire, municipal court, building development services and many more.

Governor Nixon reiterated those same concerns in his veto message Wednesday afternoon as he rejected the 10 bills. Republican legislative leaders have disputed those figures laid out by Nixon of what the bills could mean to the state’s revenues. In a statement, House Speaker Tim Jones says Nixon's vetoes illustrates that the Governor is growing government rather than growing the economy.

“Missourians should be outraged that he [Nixon] has utilized his executive authority to expand the reach of the continued overreach of the revenue department, and even more outraged that he has now stood in the way of the legislature’s efforts to clarify and rein in the over-taxation policies he has put in place," Jones said.

The General Assembly will meet in September for their annual veto session, in which Jones predicts lawmakers will override more vetoes than last year "which will positively benefit the lives of Missourians.”

Scott Marrs, a lobbyist for local Springfield groups, says there is a slim chance many of them will be overridden because of their specific scopes, but it will determine the Task Force’s next action.

“Knowing which are vetoed and which are not, there will have to be a major effort to alert our legislators on those particular bills and what the impact will be on the city and county,” Marrs said.

The Joint City-County Planning Task Force’s next meeting will be held June 25th at 9:30 a.m. in the Busch Municipal Building.

For KSMU News, I’m Anna Thomas.