Friday, June 13, 2014
Gov. Jay Nixon vetoed four senate bills Thursday that concerned local officials after the Department of Revenue released numbers showing amounts Callaway County, the ambulance district and cities would lose if the bills became law.
Assessing the effects of tax-related Senate Bills 584, 693, 662 and 612, the Department of Revenue estimated a revenue loss for Callaway County would be $434,183; Fulton, $388,843; Holts Summit, $121,834; and Callaway County Ambulance District, $217,100.
See more information on the bills under "Bill Details" below.
Missouri’s General Assembly could override Nixon’s vetoes when it reconvenes for veto session, which starts Sept. 10.
In a letter to the General Assembly, Nixon said these bills, along with six others outlining tax reliefs, are “not fiscally responsible,” and gave “special tax breaks.” He continued to state the bills would have costed the state $425 million per year while decreasing revenues for local jurisdictions by $351 million statewide.
When the DOR’s numbers were released in late May, local officials in the county sounded opposition. A press release from the city of Fulton stated the city is “appreciative” of the vetoes because the legislation would have set back Fulton in terms of services, hiring new employees and could have even caused layoffs.
Fulton City Administrator Bill Johnson told the Fulton Sun in May that despite a negative impact on the local governments, the legislature moved forward with a “sales tax cut for special interests.”
“This is totally unacceptable for them to cut funding for services for citizens for a limited number of peoples’ benefit,” Johnson said at the time.
Gary Jungermann, Callaway County presiding commissioner, also expressed his approval of Nixon’s vetoes.
“Currently, I think all of us are glad that happened,” Jungermann said Thursday of the vetoes.
He added that the commissioners are still researching the DOR numbers, and believes the estimates could have been inflated for the county because certain language in the bills — such as tax exemptions for data processing and storage of which Jungermann said are none — do not apply to Callaway. Senate Bill 693, which would give tax exemptions to titling of motor vehicles 10 years or older, would cost the county, Jungermann said.
He also said the commissioners would like to understand the full effect of the bills before approaching the legislature during veto session, but overall, Jungermann said he was pleased with Nixon’s decision because the exemptions would have resulted in some sort of revenue deficit.
Holts Summit City Administrator Brian Crane echoed previous statements about the state legislation’s possible negative impact on local governments.
He wrote in an email to the Fulton Sun on Thursday that revenue decreases effects the city’s “essential services” such as public safety, street maintenance, parks, recreation and sewer services.
“When we have a decrease in revenue, we have to analyze the situation and decrease service, find efficiencies, or raise fees,” Crane stated in the email. “With the City of Holts Summit’s funding structure heavily dependent on sales tax revenue, minor sales tax adjustments can have an impact on city services.”
Senator Will Kraus, R-Lee’s Summit, sponsored SB 662 and stated his opposition to Nixon’s 10 total vetoes in a press release.
“The core of Senate Bill 662 is the premise that Missouri should treat taxpayers fairly across the board,” Kraus said in the release. “By vetoing Senate Bill 662, the governor has made it clear that he prefers ‘notification by audit’ to any proper notification of tax changes.”
Senator Rob Schaaf, R-St. Joseph, said the main purpose of his bill, 662, was to keep major cleaning companies from leaving the Kansas City area for other states, but another section states the Department of Revenue is required to alert sellers of changes to certain sales tax law interpretations. If the department fails to do so, “the seller will not be liable for the additional taxes to be collected until the seller is notified.”
“Taxpayers and especially businesses should have full disclosure about how taxes are computed,” Schaaf said.
• Senate Bill 584 outlines state and local tax exemptions for data processing and storage, energy and equipment used in electric distribution and watercraft fuel, and modifies a tax for amusement, entertainment and recreation entities. The Missouri Municipal League estimated the bill would have resulted in a $217 million loss in local tax revenue across the state. According to the bill’s fiscal notes, it would have reduced the state’s total revenue by $30.4 million annually.
• Senate Bill 693 would have given state and local tax exemptions on titling of motor vehicles aged 10 years or older with an exception of vehicles with a sale price exceeding $15,000. The Municipal League estimated a $26 million decrease to municipalities. The Department of Revenue stated in the bill’s fiscal notes that more than $21 million was collected in local sales tax on motor vehicles 10 years or older in 2013, “and assume this proposal would result in a loss of that revenue to local taxing jurisdictions.”
• Senate Bill 662 states that the DOR must contact sellers about interpretation changes to sales tax laws on personal property or taxable services. If DOR doesn’t follow through with notification, “the seller will not be liable for the additional taxes to be collected until the seller is notified.” The Municipal League estimated a $100 million deficit for local goverments. Senate Bill 662 would have no financial effect on local governments according to information the Department of Revenue outlined in the fiscal notes.
• Senate Bill 612 also sets requirements for the DOR to alert sellers of tax law interpretation changes that adjust what is considered taxable of personal property or services. Until notified, sellers would be exempt from taxes. The bill also would have given a tax exemption for material, machinery and energy utilized by a commercial laundry service processing at least 500 pounds per hour and 60,000 pounds each week. The Municipal League estimated a $2 million statewide loss. The Secretary of State’s Office for Administrative Rules estimated a less than $2,500 hit in the bill’s fiscal notes.
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