Columbia, Boone County services threatened by tax cuts, Nixon says

Wednesday, June 18, 2014 | 6:46 p.m. CDT

COLUMBIA — The city of Columbia and Boone County stand to lose millions of dollars in sales tax revenues, Gov. Jay Nixon told city and county leaders on Wednesday, if his vetoes of several "special tax breaks" are overridden.

The cuts would diminish the city and county's ability to provide services to residents, the Democratic governor said at a roundtable in the Boone County Commission chambers.

The governor's office estimates that the city would lose $5.7 million per year in funding and that Boone County would lose $4.6 million per year.

"On the last day of the session, the legislature not only blew up the state budget but also the budgets of local governments," Nixon said. "Especially ones like here in Columbia that rely so much on the sales tax and on the voters to pass that sales tax."

In particular, local leaders worried about bills that would exempt some local businesses from sales taxes, which not only would reduce overall government funding but also for specific programs and projects, such as children's mental health services that are funded by a quarter-cent sales tax approved by voters in 2012 and planned improvements to the 911 emergency center that will be paid for with a three-eighths cent sales tax that voters approved last year.

"The exemptions would decrease the ability to provide those services," Boone County Treasurer Nicole Galloway said. "These are services that voters have approved."

City Manager Mike Matthes said Columbia's general fund, which funds city administration, the police and fire departments and health and environmental services, is 90 percent funded by local sales taxes and the legislation, if the vetoes are overridden, would be "devastating." Matthes added that the general fund is already "stretched," in part, because it doesn't receive tax revenue from online retail sales.

About 72 percent of the county's general revenue comes from sales tax, according to its 2014 budget.

Columbia Police Chief Ken Burton said that the vast majority of the Columbia Police Department's budget goes toward personnel and that any loss of revenue would force him to lay off some officers.

"Here in Missouri, we have a time-honored tradition of respecting local control," Nixon said. "These special tax breaks would undermine those principals and defy the will of voters by siphoning these resources away from their intended purposes and into the pockets of the selected few industries who got these tax breaks."

A news release from the governor's office said that provisions in the bills would reduce state and local revenue by up to $776 million annually. The legislation includes new sales tax exemptions for recreation venues, fast-food restaurants, power companies, businesses that use data storage and processing, used car dealers, supplies and equipment used in electricity generation and commercial laundries.

Boone County Auditor June Pitchford said the governor's projected losses in Columbia and Boone County are understated because funding for the 911 center and children's mental health services were not included in the projections.

"On the 911 proposal, we based our projections on the assumptions that the tax base would remain intact," Pitchford said. She added that the tax base would be "significantly" eroded by the exemptions.

The city of Columbia also has sales taxes that are earmarked for parks, public safety projects, transportation and capital improvements. Boone County has sales taxes dedicated not only to the 911 operations and children's mental health but also to road and bridge projects, law enforcement and general revenue.

Proponents of the bills have said that the exemptions are mere clarifications of how tax policy should be implemented across the state and that the governors' projected losses are inflated.

The county and city representatives, which also included Columbia Fire Department Chief Charles Witt and Boone County Presiding Commissioner Dan Atwill, thanked the governor for vetoing the bills and asked how they could bring attention to the bills.

Nixon advised them to be precise and "real" when trying to explain the impact of the bills on local government services.

Supervising editor is Scott Swafford.

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