The battle over legislation to cut income taxes has once again come to the forefront with the legislative passage of Senate Bill 509. The bill is now on Gov. Jay Nixon's desk and from press releases coming from his office it appears he will veto the legislation again.
The Bill came under attack by public education officials last year because public education in the state has not been fully funded under the state's educational funding formula for several years. The Foundation Formula is Missouri's primary method of distributing money to public schools. Although school districts receive funding for different programs from different sources (local, state and federal taxes), the Foundation Formula is the major source of basic state support for public schools. Voted into law in 2005 and enacted in 2006-2007, the foundation funding formula was meant to provide equity and adequacy to all Missouri schools.
Senate Bill 509, sponsored by State Sen. Will Kraus, R-Lee's Summit, would gradually cut individual state income tax rates from 6 percent to 5.5 percent and phase in a 25 percent deduction on business income earned by individuals. It also would require tax brackets to be adjusted annually for inflation.
Provided by the Missouri Department of Elementary and Secondary Education (DESE) at the request of the Missouri School Board Association (MSBA), the data MSBA issued last week compares the estimated funding level for kindergarten through 12th grade education for the fiscal year starting July 1, 2014 with the amount of state revenue that would be lost under Senate Bill 509, the release said. The estimated funding level is based on the amounted proposed at the beginning of the legislative session by Nixon. The legislature passed an education funding bill that was less than the Nixon proposal because they said his revenue projections were too high.
It is estimated the SB 509 would result in at least a $620 million annual revenue loss for the state, according to a news release by Nixon's office.
Proponents of the bill said concerns are exaggerated because the bill contains safeguards: No reduction will go into effect unless the net general revenue collected in the previous fiscal year increases by at least $150 million.
According to data released by MSBA, every school district in Stoddard County would lose money if the tax cut passes. The Dexter School District would have received $7,407,961 under Nixon's proposal, but would receive $6,812,430 if the tax cut passes. That would be a $595,531 funding formula loss to the district. Dexter has the largest budget of any school district in the county. The Puxico School District would have a $268,334 loss, with $3,930,655 coming from Nixon's proposal and $3,662,321 received under the tax cut.
Other county districts data are (Nixon proposal first and amount received after tax cut) Bernie -- $2,185,439, $2,024, for a loss of $160,816; Bloomfield -- $2,756,546, $2,551,386 for a loss of $205,158; Richland -- $1,546,880, $1,516,326 for a loss of $30,554; Bell City -- $894,440, $876,812 for a loss of $17,668; and Advance -- $1,771,785, $1,638,312 for a loss of $133,477.
The tax cut bill passed by a 53-4 vote in the House. Every representative in the Bootheel voted for the tax cut with the exception of Rep. Steve Hodges (D-Dist. 149) who was not present for the vote. Those voting in favor included Holly Rehder (R -- Dist. 148), Kent Hampton (R -- Dist. 150), Todd Richardson (R- Dist. 152) and Donna Lichtenegger (R -- Dist. 146). Stoddard County currently does not have a representative after the resignation of Dennis Fowler.
The Senate passed the tax cut bill by a vote of 23-1. Sen. Doug Libla (R -- Dist. 25) and Sen. Wayne Wallingford (R -- Dist. 27) both voted in favor of the bill.
Dexter Superintendent Dr. Thomas Sharp said the cuts, if they transpire, would have negative consequences on the district.
"Losing $550,000 in revenue would result in these re-active considerations, as well as many others --
greater class sizes, not replacing staff who retire, restricted extra-curricular travel, delayed maintenance and new construction projects, delayed technology implementations, increased rental fees, and salary restrictions," said Sharp.
Sharp was asked if the uncertainty about education funding would make it difficult to prepare a budget for the next school year.
Sharp responded, "SB 509 is proposed to be implemented over a five year period, so the immediate impact would be cautionary; all funding decisions would be weighted with reticence."
"This is the same bill as last year just different wrapping," commented Richland Superintendent Frank Killian. "If taxes are lowered and this gamble does not work, then it would be devastating to schools."
"Once taxes are lowered due to a gamble (by legislators that cannot get along), to put those taxes back in place would take a vote of the people, and I do not believe the people would vote to increase government taxes on themselves, especially since our government is dysfunctional," said Killian.
"Schools have made cuts in the past several years to get down to skeleton crews, but unlike our legislators, our educators will get the job done even when facing lack of funding, which is quite evident by the great scores Stoddard County Schools are producing," added Killian about possible reduction in funding due to SB 509. "Schools are not able to hire full staffs due to unpredictable funding."
"I and all other educators do want to thank the legislators that support public education," continued Killian. "It seems this breed of legislator becomes harder to find every year."
Rehder, of Sikeston commented in a recent report that the current House-approved budget will increase K-12 education funding by as much as $278 million, and funding to the state's public universities and community colleges will increase by as much as 3 percent.
The state funding formula has not been fully funded for several years, ever since the economy went into a recession. The data released by the MSBA is based on a proposal made this year by Nixon for funding public education, not on actual funding to school districts.
Advocates of the tax cut say that tax cuts will help businesses grow and employ more people. They contend that the tax cut will actually lead to increased revenue for the state. Supporters of the tax cut include the State Chamber of Commerce and state's biggest businesses associations and conservative activist groups such as the Missouri Club for Growth and Grow Missouri. Retired investment firm executive Rex Sinquefield poured about $2.4 million into an advertising campaign to override Nixon's veto of the tax cut last year and has been at the forefront of the effort this year to pass tax cut legislation.
Nixon will likely veto Senate Bill 509, setting up another effort to override the veto by the legislature. The override failed in the House last year. There are currently three vacancies in the House which are to be filled in an August special election. If Republicans pick up those House seats, they would have the needed votes to override Nixon's veto in a special September session.
Southeast Missourian staff writers Ruth Campbell and Samantha Rinehart contributed to this report.