Callaway's county, city and ambulance district officials have voiced their concerns for a series of last-minute Missouri state bills that would cost them a combined estimated $1.25 million in annual tax revenues.
The bills - Senate Bills 584, 693, 662 and 612 - were passed by both the Missouri Senate and House of Representatives May 16, the final day of the legislative session. Gov. Jay Nixon has until June 30 to veto the legislation, otherwise it would become law. If he does veto any of these bills, the legislature has a chance to override the vetoes in a session that begins Sept. 10.
An analysis released by the Missouri Department of Revenue states the bills would have a total impact of $351 million statewide.
A letter from Missouri Municipal League Deputy Director Richard Sheets to members, obtained by the Fulton Sun, states the bills "would significantly diminish municipal sales tax revenues if they become law."
"The harmful provisions in these bills were added during the final hours of the 2014 legislative session," the letter states, asking city officials to call Nixon's office and urge a veto. "If these bills are not vetoed, municipalities stand to lose millions of dollars in revenue."
Republican Representatives Jeanie Riddle and Jay Houghton and Democratic Senator Jolie Justus, who cover Callaway County in their constituencies, voted yes on all four measures.
The bills read as follows:
•Senate Bill 584 removes state and local sales tax exemptions on a number of things, including data processing and storage, energy and equipment used in electric distribution and watercraft fuel, and changes a tax "on places of amusement, entertainment and recreation, and games and athletic events ... so that it is on charges to view certain commercial attractions." The Missouri Municipal League estimates that various exemptions under this bill total to a combined $217 million loss in local tax revenue statewide.
•Senate Bill 693 includes a state and local tax exemption on titling motor vehicles that are 10 years old or older, not including vehicles with a sales price exceeding $15,000. The Municipal League estimates this would cost municipalities $26 million.
•Senate Bill 662 requires the Missouri Department of Revenue to notify sellers if there has been a change in the interpretation of sales tax laws on personal property or taxable services, and states that 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." The Municipal League estimates this would bring a $100 million loss to local municipalities.
•Senate Bill 612 further requires the Department of Revenue to notify sellers of changes in tax law interpretations "that modifies which items of personal property or services are taxable." This bill would also leave sellers exempt from taxes until notified, and also creates a tax exemption for "for material, machinery, and energy used by commercial laundries in treating or cleaning textiles. The facility must process at least 500 pounds per hour and 60,000 pounds per week to qualify for the exemption." The Municipal League states this will cost $2 million statewide.
The local cost
The Department of Revenue estimates Fulton stands to lose $388,843. Fulton Director of Administration Bill Johnson and Assistant Director of Administration Matt Harline echoed the Missouri Municipal League's call to veto.
"This is a huge deal, this is a sales tax cut for special interests, even though they have community-wide negative impact," Johnson said. "This is totally unacceptable for them to cut funding for services for citizens for a limited number of peoples' benefit."
Harline said the estimated cut would be about 4 percent of the city's $9.5 million general fund budget, but with public safety making up 37 percent of that fund Johnson added the difference could mean about 11 police officers' salary and benefits.
"Making government smaller is a great platitude, but they never came to us about what to do," Harline said. "Are they really making government smaller? Is that what they want to do, get rid of the police officers or kick firefighters out of the station?"
Callaway County could lose $434,183, bringing its total revenue fund from about $3.3 million to a little less than $2.9 million, according to Callaway County Presiding Commissioner Gary Jungermann. While he said the commission doesn't oppose tax cuts, these bills could have an impact on a future budget.
"A $434,000 hit is hard to take," Jungermann said.
Jungermann said he's been in contact with the Missouri Association for Counties trying to learn more about the bills. He's also placed phone calls with Riddle and Sen. Mike Kehoe.
If the cuts go into affect, Jungermann said one or a selected few departments wouldn't feel all the financial burden, so there's "not as big hit in any one spot."
He gave an example to impart the importance of the general revenue fund. For the past five years, Jungermann said, the Callaway County Road and Bridge Department fund has been enough to cover maintenance costs and not projects. Money for overlay and chip sealing projects - up to $300,000 at times - has come from the general revenue fund.
The commission won't be able to afford those projects if the cut goes into effect.
He added that the county's revenue each year has been roughly the same, and it all goes back to the community through the schools, library, etc., so a more than $434,000 deficit would be substantial.
The commission still has more to learn, Jungermann said, and will know the "full effect" of the legislation in about a year if it becomes law. Jungermann believes the two bills that will most affect the county are Senate Bill 693 and Senate Bill 612.
"(The sales tax bill) on vehicles will hurt us quite a bit," Jungermann said.
If Nixon vetoes the legislation, Jungermann said the commission has enough time to express its opposition to possible veto override.
The Callaway Ambulance District stands to lose an estimated $217,100. Director Charlie Anderson said he couldn't speak for the board, but he personally would support a veto.
"That would be a really significant amount of money if that were to come to pass, that would be problematic," Anderson said. "You're probably looking at somewhere in the neighborhood of about four personnel by the time you figure salary and benefits, and then the unfortunate thing is we're kind of at our minimum level as it is anyway, so there are really no positions to cut."