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ANALYSIS: Despite Missouri's budget woes, ideas for tax cuts flourish

Sunday, January 10, 2010 | 4:41 p.m. CST; updated 5:22 p.m. CST, Sunday, January 10, 2010

JEFFERSON CITY — Missouri lawmakers are proposing dozens of ways to cut taxes, dipping further into depleted state coffers that already have made setting the state's budget difficult.

Through the first half of the 2010 budget year, Missouri's tax revenues cascaded 10.6 percent, with individual income tax collections down 10.4 percent, corporate taxes down 13.1 percent and sales tax down 6.8 percent. That has budget officials in the governor's office and the chairmen of the legislature's budget committees preparing for trouble.

Proposals to cut taxes, however, are not yielding to the budget blues.

Lawmakers have filed bills waiving the state sales tax on guns and bullets for three days, exempting gasoline used by school buses from taxes, excusing yoga studios from sales taxes, creating tax breaks for people that build storm shelters and offering a tax incentive for public safety officers. Gov. Jay Nixon also wants to divert state tax revenue from science and technology firms into a new fund for recruiting more businesses.

In all, about 40 bills and constitutional amendments have been filed just two days into this year's legislative session that would further reduce the revenue that state and local agencies used to function. Simultaneously, Missouri's bean counters warn that consecutive years of declining revenue means money again will be tight for the budget to be crafted this year.

Cash shortages already have forced the Democratic governor to cut about $634 million out of the roughly $23.7 billion that lawmakers approved for running state government and completing capital improvement projects. Last week, Nixon's budget office said it might need to cut another $200 million.

Because of the budget problems, Senate Majority Leader Kevin Engler, R-Farmington, said that he wants lawmakers to reject a prescribed $16 pay increase for their daily expenses. Starting Oct. 1, lawmakers began receiving $103.20 per day instead of $87.20.

But the push for frugality over Missouri's finances has not stopped officials from suggesting measures that would put at least a short-term crimp on the state's funds.

Nixon, for the second straight year, is proposing to steer state tax money into business development efforts — which supporters say will return tax money to the state by creating new jobs. He acknowledged last week that balancing the budget has been difficult but said his focus has been on spending and not taxes.

"I've been looking more on how do we keep the spending part in line with the energy I have right now rather than whatever might happen on the revenue side," Nixon said.

Critics contend that putting state money into business development packages equates to spending money. Sen. Jason Crowell, R-Cape Girardeau, sharply criticized proposals to offer more tax incentives and called for existing tax credits to go through the same budgetary process that lawmakers use to fund other state programs.

Doing that "can provide greater flexibility and options with Missouri's available revenue, allowing the legislature to review the best use of every tax dollar," he said.

House Speaker Ron Richard opened the 2010 session by telling lawmakers that the degree of fiscal difficulties mean policy makers are dealing with challenges few have faced in Missouri's history.

But the sluggish economy has not dampened the House's desire for cutting taxes.

Last year, the House backed hundreds of millions of dollars in tax cuts and incentives, including $200 million for shoppers and small businesses that it passed on April 15. Those bills did not clear the Senate.

This year, with less than 10 months until the November elections, lawmakers have filed an assortment of tax-cutting ideas that can appeal to voters. Several House members who are running for the state Senate have filed tax cuts, including ones exempting seniors from property taxes and giving parents a tax break if they send their children to private schools.

"Families across the state are finding ways to stretch their dollars, and we will work to follow them," said Richard, R-Joplin. "With an ever increasing financial burden being placed on Missourians by the actions of the federal government, we must do what we can to decrease and cut taxes in Missouri."

EDITOR'S NOTE — Chris Blank has covered state government and politics for The Associated Press since 2005.


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