Nixon Warns Of Huge Cuts In Local Services Because Of Legislature's Last-Minute Tax Cuts

May 29, 2014
Originally published on May 29, 2014 9:57 pm

(Updated Thursday, May 29)

Missouri Gov. Jay Nixon says that local governments stand to lose almost as much money as the state because of a final tax-cutting spree by the General Assembly before it adjourned earlier this month.

All told, Nixon said Wednesday, local jurisdictions around Missouri — from city halls to fire districts, libraries and ambulance services — could lose $351 million in annual sales tax revenue because of “a grab bag of giveaways’’ approved by legislators.

"It's easy to pretend that these tradeoffs don't exist, that we can shower our friends with generous breaks without taking away money from our schools, our students, and other services," the governor said. "And sure enough, instead of owning up and taking responsibility for fiscal consequences of their actions, the legislature just skipped town and left this fiscal mess behind.”

State House Speaker Tim Jones, R-Eureka, accused the governor of misrepresenting legislators' aims. “As a legislative body we came together to stand in defense of the taxpayers and to provide a shield against the glaring overreaches made by the executive branch. The governor fails to understand that these dollars do not belong to him, they were earned by Missouri businesses of all sizes that are the lifeblood of our economy and the providers of jobs."

Nixon announced that he plans to veto many of those tax cuts during the coming weeks, but he fears that the General Assembly may seek to overturn his actions in September, when legislators gather to attempt their veto overrides.

That level of uncertainty could hurt bond ratings for state and local governments, Nixon said.

If the tax breaks go into effect, he said, cuts in services on the local and state level could be severe. “On the local level, we’re talking about firefighters and cops, libraries, ambulance services, snow plows and health inspectors,” he said.

The St. Louis area would suffer some of the biggest income losses, he said. St. Louis would lose $20.8 million a year in sales tax revenue, while St. Charles County would lose $10.8 million. St. Louis County and its municipalities would lose $57.8 million in sales taxes.

On Thursday, the governor's office released a breakdown of each local jurisdiction's financial loss, should the tax cuts go into effect.

Local governments appear to be caught off-guard

Nixon said that most local officials were unaware of what legislators were up to when they approved sales-tax breaks for stadium luxury boxes, dry cleaners, restaurants, farmers markets, data-storage facilities and other businesses.

In the city of St. Louis, for example, "I don't think they sent their legislators up there to take $20.8 million out of this year's budget,'' Nixon said.

Spokeswomen in St. Louis and St. Louis County declined comment while their budget offices looked into the tax cuts that the governor outlined.

The local tax breaks come on top of the $425 million in state income tax cuts that the governor had blasted earlier. Nixon asserted that legislators celebrated after approving a balanced state budget for the fiscal year that begins July 1, then “(blew) their own budget up” with the tax cuts during the final hours of the legislative session, which ended May 16.

“While this Friday free-for-all will benefit a select few special interests, its far-reaching fiscal impact has thrown the budget dangerously out of balance,” Nixon said during a news conference at the Wainwright state office building downtown.

“From special breaks for fast food restaurants to power companies, the only thing these giveaways have in common is that they were not accounted for in either the state budget or in the budgets of the cities, counties and fire districts they would affect.  By going on a $776 million special-interest spending spree, members of the legislature have broken their own budget, and I’m prepared to fix it.”

Nixon's planned vetoes also call attention to a ballot measure that the General Assembly has placed before voters in an attempt to curb the governor's constitutional powers when it comes to overseeing state spending.  The governor now has line-item power to veto some spending items, and can also "withhold'' budgeted money in order to guarantee that the state budget is balanced by the end of the fiscal year, as mandated by the state constitution.

Nixon said he has yet to look at how the ballot issue -- which will go before voters in November -- would affect budget vetoes like the ones he now is considering.

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