At MU, Gov. Nixon criticizes tax-cut bill's effect on higher education

Wednesday, July 31, 2013 | 7:15 p.m. CDT; updated 7:56 p.m. CDT, Wednesday, July 31, 2013
Gov. Jay Nixon speaks Wednesday at MU about House Bill 253 and its potential impact on the University of Missouri System, including a tax increase on prescription drugs and college textbooks. Nixon vetoed the bill and is hoping his veto will be upheld.

COLUMBIA — Gov. Jay Nixon continued to decry the impact that tax cuts in a bill passed by the General Assembly would have on institutions like the UM System that rely on state funding if his veto is overridden in September.

Speaking Wednesday in front of the MU Columns at Francis Quadrangle, Nixon cited data recently released by the Department of Higher Education, which estimated that almost $67 million a year would be cut from state spending for higher education as a result of the bill.

For the UM System, the reduction would be more than $31 million, according to the estimates. MU Chancellor Brady Deaton, who attended the news conference, said the Columbia campus has in the past received "close to half" of the state funding allocated to the system.

"The General Assembly can support House Bill 253 or they can support education, they cannot do both," Nixon said.

According to documentation by the legislature, if the bill were overridden and allowed to come into full effect, tax on corporate income would eventually be reduced by nearly half the current rate of 6.25 percent, individual taxpayers would be permitted to deduct 50 percent of their business income after the 2017 tax year, and the maximum tax rate for individual income would be 5.5 percent in 10 years.

The maximum cut on corporate tax and the reduction of the individual income tax rate are dependent upon the state collecting tax revenues that are at least $100 million higher than the revenues collected within any of the previous three fiscal years.

Nixon also said that the bill would remove a tax exemption on college textbooks that has been in place since 1998.

"College costs can already put a strain on a family's budget," Nixon said. "The last thing they need is a tax increase."

According to a fiscal impact drawn up by the oversight division of the Committee on Legislative Research, the reduction in income tax rate and corporate tax — if taken completely into effect— would lead to a reduction in state revenue after 10 years of more than $692 million.

If Congress passes the Federal Marketplace Fairness Act this year, which would require online and catalog retailers to collect sales tax, Nixon has said the state tax cut bill would have a cost approaching $1.2 billion. 

A provision in the General Assembly's bill would cause the maximum income tax rate to decrease by .05 percent if the Marketplace Fairness Act were passed, which Nixon argues would cause an immediate loss of $300 million and could lead to Missouri residents who would qualify for a refund under the new reduction filing amended tax returns, which Nixon estimated could cost the state $900 million.

If the federal measure passes, the Missouri Department of Higher Education estimates the reduction in annual funding would reduce by $116 million, with funding for the UM system losing $54.5 million a year.

According to a report from The Associated Press on Tuesday, Missouri House Speaker Tim Jones said it would be an "uphill battle" for the House to get the two-thirds majority needed to override Nixon's veto. Republicans were short of that number when they originally passed the bill in the spring.

While Nixon has continued to travel the state, railing against the bill's effects, other organizations, legislators and individuals have pushed for an override of the governor's veto.

In July alone, Rex Sinquefield contributed a total of $2.35 million dollars to groups that support an override, including the Missouri Chamber of Commerce, the Club for Growth, the Associated Industries and a recently established group, Grow Missouri.

According to an AP report, the coalition plans to broadcast TV and radio ads, mail printed materials to homes and mount a social media presence campaign to persuade state legislators to override the veto.

In June, Nixon froze $400 million in state spending for fiscal 2014, which included a $33.7 million reduction in core funding for higher education in Missouri. Within the UM System, the freeze will reduce state funding by $15.8 million dollars.

In K-12 education funding, the Missouri Department of Elementary and Secondary Education estimated that funding for Missouri school districts could be reduced between $260 million and $450 million from its current annual funding. For Columbia Public Schools, that would be a reduction of between $4.1 million and $7 million.

"The school district feels the (tax cut) legislation is poorly written and will have a negative impact for education, not just in our school district but all across the state," Columbia Public Schools spokeswoman Michelle Baumstark said.

Baumstark said that if less funding came from the state, the school district would have to look for funding elsewhere, including local resources.

"That's what happens: The onus is placed on the local community if they want to keep education to the level of quality they expect," Baumstark said.

Baumstark estimated that the district receives 25 percent of its funding from the state, between 62 and 65 percent from local resources and the remainder from grants, bonds and federal funding.

Supervising editor is John Schneller.

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