Income tax cut, reform likely topics in expected special session

      A tax break for most Missourians and a restructuring of the state’s income tax brackets will likely be considered by legislators in a special session that Governor Mike Parson (R) is expected to soon call.

Representatives Peter Merideth (left) and Cody Smith (Photo: Tim Bommel, Missouri House Communications)

      That’s according to House Budget Committee Chairman Cody Smith (R-Carthage), who says he’s looking forward to seeing what the Governor outlines in a plan to be aimed at helping Missourians facing high prices and high inflation.  The top Democrat on the Budget Committee, Peter Merideth (D-St. Louis), says he wants a plan that goes beyond changing income taxes, so that all Missourians would be helped; not only those who pay that.

      Governor Parson earlier this month vetoed a proposed $500-million tax rebate plan sent to him by legislators in May, saying he prefers a permanent tax cut.  He has said he will call for a special session of the legislature to consider that cut. 

      Smith, who spearheaded that tax rebate plan as the best proposal thought possible at the time, said he would also prefer a permanent cut.  He spoke to Parson on Tuesday to get a better idea of what the governor might propose.

      “We are busy now collaborating with the senate and the governor himself to try to find a starting point and then from that point the legislature will take over and will hopefully put forth a good product, at the end of the day, for the governor to sign,” said Smith.  “It’s important that we try to keep this simple and try to make it as impactful to as many Missourians as possible.  I think the income tax is the best way to do that, and trying to simplify the tax code in the process I think is also a worthy goal.”

      Merideth said he and fellow Democrats were glad that the rebate plan was vetoed, but he’s concerned that a cut to the income tax won’t help the Missourians who need help the most. 

      “A third of Missourians don’t make enough money to pay [the income tax], and those are, of course, the third of Missourians that are having the hardest time right now, so if all we’re focused on is a tax cut on income, that’s not really a big help for people,” said Merideth. 

“That said, our income tax brackets are completely out of date.  We haven’t had updated brackets in like 100 years.  Democrats have actually long advocated for updating those to a more progressive tax rate structure.  Now, we have yet to see what that proposal’s going to look like but there’s a path that we could get on board with,” he added.  “Democrats are generally supportive of relief for those that make the least and generally resistant to relief for those that are doing just fine, at the expense of our long-term budget.”

      Smith agrees that the state’s brackets are outdated and should be revised, if not eliminated, and doing so would help all income earners.

      “Our highest tax bracket in Missouri is for anyone that makes over $9,000 annually.  At one time that was a considerable amount of money … but now most folks who work at all generally make more than $9,000 per year … so we [would be] helping lower income folks by addressing that top line number.  Additionally I think we can take a look at some of the tax brackets on the lower end and see if we can reconfigure those or eliminate those entirely so that folks on the lower end of the income spectrum won’t pay taxes up to a certain amount.  That would provide relief on those lower income folks.”

Merideth thinks permanently cutting the income tax right now is not a good idea.  He said the state is in a great position with revenue right now, but the next time there’s a downturn, cuts made now could put the state in a bad position. 

The governor has expressed confidence that Missouri’s good fortune will continue, and Smith agrees. 

      “I would guess that we may have a general revenue surplus in excess of $2-billion by the time we come back to the next legislative session and that is just unprecedented … we’ve got federal money set aside for Medicaid, we’ve got general revenue dollars sitting in the state’s treasury for all purposes, and I think there’s never been a better time to cut taxes and still be able to protect the priorities that we have in the budget,” said Smith.  “I think we’re probably looking at 3 to 5 years where we are very well situated even after a tax cut.”

      Smith said while the state is enjoying increased revenues and never-before-seen surpluses, Missourians are dealing with high inflation, high gas prices, and other factors that are causing many to struggle.  He said this is the right time for the legislature to do something to help.

      “Rather than issue stimulus checks, which is talked about in Washington from time-to-time, certainly we’ve seen that … I believe the best way to combat things like inflation is let [Missourians] keep more of their own money,” said Smith. 

      Merideth said he and other Democrats would also like to see the legislature talk about things besides the income tax, such as eliminating taxes on groceries and other essentials.   

      The governor has said he is also planning to have the legislature consider six-year extensions to tax credits under the Missouri Agriculture and Small Business Development Authority.  He vetoed a bill that would have extended them by two years.

      Dates for a special session have not been set. 

K-12 education gets big wins in proposed FY 2023 budget

      Missouri schools and teachers would receive a number of boosts in the state spending plan approved last week by the legislature; a state budget that is one of the largest ever.  The final total proposed to go to K-12 schools exceeds $10-billion.

Representative Rusty Black (Photo: Tim Bommel, Missouri House Communications)

“It is making an unprecedented investment in K-12 education in the State of Missouri and it is doing that in a couple different ways,” said House Budget Committee Chairman Cody Smith (R-Carthage).

      The top Democrat on the budget committee, Peter Merideth (D-St. Louis), said, “[This budget proposal] is moving us back in the direction of showing that we as a state, we as a legislature, value K-12 education.”

      More than $21-million was included to boost base teacher pay by $13,000 a year, to $38,000.  The plan is a state/local split, with districts covering 30-percent of the cost for that increase. 

      Another $37-million would restart the Career Ladder program, which rewards experienced teachers for taking on extra responsibilities and professional development opportunities. 

      Representative Ingrid Burnett (D-Kansas City), a former teacher, school counselor and principal, said she was glad to see the state resume funding career ladder, a program that she often took advantage of during her career. 

      “I found it really helpful.  It was part of our family budget.  It was how we paid for things like the summer vacation or braces for the children,” said Burnett.

      Rusty Black (R-Chillicothe), who chairs the subcommittee on education appropriations and also worked as a teacher for 32 years, also appreciated the career ladder funding.

Representative Ingrid Burnett (Photo: Tim Bommel, Missouri House Communications)

      “As somebody that received that once, I think there’s value in that for our students, not just teachers.  Students get something out of those extra hours that are spent with them trying to make their lives better.”

      School bussing would also see an increase over the current fiscal year’s budget.

      “There’s an additional $214-million appropriated there and that is, again, an unprecedented level of funding in that regard,” said Smith.

      Merideth spoke for many Democrats in praising that increase.

“Something that we’ve been funding at below 40-percent for the last number of years we’re finally funding at 100-percent.  That’s another 200-plus million dollars going to our schools for their transportation costs,” said Merideth, who said this could lead to additional boosts in faculty pay.  “The fact that we’re fully funding school transportation is going to give schools some flexibility to be able to provide the local match they need and to give raises elsewhere.”

      Black, who was an agriculture teacher throughout his career, was excited by proposed increases to match programs to benefit career technical schools.  Local districts could upgrade equipment or facilities if they come up with 25-percent or 50-percent of the cost.

      Black said this would, “Help students with up-to-date equipment to [be able to] leave school and go into the workforce and see something that’s not 30, 40 years old in the shop at school, and get into a place and oh, it’s got a computer attached to it.”

      Burnett said she was glad to see this level of support proposed for Missouri K-12 education.  She said past years, when less money was appropriated, were like when she was teaching and would be confronted by an angry parent. 

“If the administration doesn’t have your back, you can’t understand that until the administration doesn’t have your back … to help mediate the situation.  To give you support on how to engage with the parent in a way that was not going to be escalatingwhen the administration is not getting that from the state, it’s the same.  You just feel like you’re out there on an island.”

      Black and other lawmakers stressed that much of the funding in the spending plan comes from non-recurring sources, like federal stimulus and COVID response.  Part of the challenge in appropriating that money is in finding targets that will give schools the best chance of long-term benefit, rather than supporting programs that might go unfunded in future years when those funding sources aren’t available.

Representatives Peter Merideth (left, seated) and Cody Smith (Photo: Tim Bommel, Missouri House Communications)

“We just hope the people at the local level making those decisions are doing a good job making those decisions, spending this money that we have one-time to help reduce future costs so that those long-term items maybe with their local budgets, they can do a good job with,” said Black.  “One-time doesn’t automatically mean that it’s not going to be there next year, it’s just not making the guarantee to people that it’s going to be there.  Honestly in my years of dealing with government before this, there is no guarantee.  From year-to-year it’s a new budget and people making decisions at the local level, they know that too.”  

      The Fiscal Year 2023 budget would also provide grants or reimbursements of up to $1,500 to parents and guardians to cover tutoring and other services meant to catch up K-12s students who fell behind due to the COVID pandemic, and would provide pay increases to providers of the Parents as Teachers and First Steps programs.

      That spending plan is now before Governor Mike Parson (R).  If he approves it, it would take effect July 1.

House committee asked to weigh stronger civil asset forfeiture law

      A House committee has been asked to consider closing what’s been called a “loophole” in Missouri law regarding civil asset forfeiture.

Representative Tony Lovasco (Photo: Tim Bommel, Missouri House Communications)

       Civil asset forfeiture, “allows the government to take your private property without compensation and without the need to convict you or even charge you with a crime,” Representative Tony Lovasco (R-O’Fallon) told the House Committee on General Laws

      “Now you might think that this is a ridiculous process that we wouldn’t allow here in Missouri, and you’d mostly be right,” Lovasco continues, but he says there’s a hitch.  While Missouri law doesn’t allow for civil asset forfeiture without a conviction he said local prosecutors are getting around it through the federal equitable sharing program.

      “This program allows local prosecutors to transfer assets to federal jurisdiction to actually proceed with a case under federal law, which does not have the same due process rights that Missouri’s law affords,” said Lovasco.

      He said the federal program also allows 80-percent of the proceeds stemming from seized assets to go to the law enforcement agencies who seized them, “which creates an unfortunate, perverse incentive to be very, very aggressive at actually filing these cases.”

      Lovasco’s proposal, House Bill 1613, would block Missouri law enforcement and prosecutors from transferring seized property to federal authorities.  It would also stipulate that federal authorities working with authorities in Missouri must give responsibility for seized property to a state entity. 

      The bill would apply to seizures including less than $100,000 in U.S. currency.  Lovasco explained this was a compromise with law enforcement, who told him that most cases involving that amount of money or more are tied to drug trafficking.  He said he doesn’t like this limit but it will make the bill more appealing to some lawmakers.

      The plan has bipartisan appeal including from Peter Merideth (St. Louis), the committee’s top Democrat.  He told Lovasco he strongly agrees with the proposal but he also doesn’t like that $100,000 cap.

      Lovasco said nationwide, the median amount of money that has been seized by authorities is less than $1,300.  In Missouri the number is higher, but he argues that in most cases money has been seized from people who aren’t involved in crime at all.

      He showed his colleagues a blank Uniform Vehicle Stop Report which includes check boxes for listing contraband that is discovered. 

      “Currency is listed as a check box.  We are in a situation where simply traveling throughout the State of Missouri with legal tender could mark you as a target for law enforcement and subject to having your property taken from you without trial.  That is unacceptable.  My bill aims to correct that,” said Lovasco.

      Reverend Darryl Gray of St. Louis told the committee civil asset forfeiture reform is important in the African American communities of the state. 

      “If one of your colleagues is driving down the street going to buy hay with $10,000 in cash and they got pulled over and one of my colleagues is driving down the street in my neighborhood with $10,000 in cash, your friend might go home with $10,000.  Where I live they’re not going home with that $10,000.  That’s another reality, too,” said Gray. 

      “Stopping someone in my community with x-number of dollars, be it $10,000, $5,000, or $1,000, and you take that away based on some suspicion you have and … turns out that no crime has been committed, the effect that has on that person’s family, that is my biggest concern.”

      The only opposition to the bill voiced in the hearing came from St. Charles County.  Lobbying on behalf of the County, Michael Gibbons said the county’s prosecutors and others believe such asset forfeiture is an effective tool in fighting drug trafficking.  He maintains it is done in St. Charles County without abuses described by Lovasco and other backers.

      “We believe that this is a very important tool to combat the kind of crimes that we’re seeing.  We think we do it effectively, we absolutely believe we do it the right way and … there’s been no evidence presented today, anyway, that says that we’re not,” said Gibbons.

The committee has not voted on the legislation.

Bipartisan effort seeks best way to help Missourians who owe for unemployment overpayments

      One week after hearing from the Department of Labor about the state’s efforts to seek repayment of erroneous unemployment payments from struggling Missourians, a bipartisan slate of House members is debating the best way to provide relief.

      The Special Committee on Government Oversight has heard that of roughly $150-million in overpayments, only a small portion – roughly a quarter or less – came from the state’s unemployment trust.  State statute requires the Department to get that paid back. 

Representatives Scott Cupps and Jered Taylor (photo: Tim Bommel, Missouri House Communications)

      The larger portion comes from federal covid relief, the repayment of which the federal government has said states can choose to waive.  Missouri Governor Mike Parson (R) has told his Department he wants it to be paid back.

      The committee held a hearing on six bills – three filed by Republicans and three by Democrats – and a resolution filed by a Democrat, to deal with the issue.   

      The big question before lawmakers is whether to require that Missourians pay back overpayments out of the state fund.  Committee members from both parties say they would like to waive all repayment, but some are questioning whether that can be done.  They are unanimous about finding a way to waive the federal repayments, but some think the state portion might have to be recouped.

      Shell Knob Republican Scott Cupps said a priority for the Department is to maintain the integrity of the state’s unemployment trust.  His bill is one of those that would waive repayment of federal funds, but require Missourians to pay back state overpayments.

      “If you’re sitting there staring at a letter that says you owe $4,200 back that’s probably not something you’re going to be able to digest real easy.  Where if it says, ‘Hey, you owe $500 back and we’re going to be able to put you on a payment plan where you pay $50 a month for a couple of years, that’s probably something you can digest a heck of a lot easier,” said Cupps. 

      Cupps, who sits on the House Budget Committee, is one of those concerned that to waive the repayment of state benefits, the state would have to replenish the fund.  This could come from other core budget functions, such as schools or transportation. 

      St. Louis Democrat Peter Merideth, also a Budget Committee member and sponsor of the resolution, noted that Governor Parson has proposed putting $500-million in federal CARES Act relief funds into the state’s unemployment trust.  He suggests that would be a way to waive repayment of state overpayments while maintaining the fund.

Representatives LaKeySha Bosley, Ian Mackey, and Doug Clemens (photo: Tim Bommel, Missouri House Communications)

      “I think that we need to not wrap ourselves in circles trying to figure out where this money’s coming from and simply recognize that if we think this is an important form of the relief, well the federal government has given us $2-billion in relief money to use right now.  Let’s use that,” said Merideth.

      Cupps and other Republicans said they would consider that option. 

“The main thing that I talked to the Department about was maintaining the integrity of the trust,” said Cupps.  “If it’s already been discussed that we were gonna throw some CARES Act money in there … it is something that could be a tool in the toolbox … it’s something we maybe should look at.”

      Five of the six bills filed are largely the same.  Committee Chairman Jered Taylor (R-Republic), the sponsor of one of them, said his intention is to pare them down into one bill and to have the committee vote next week on that and the resolution.

The legislation dealing with unemployment overpayments includes: House Bill 1085 (Taylor), House Bill 1083 (J. Eggleston – R, Maysville), House Bill 1050 (Cupps), House Bill 1036 (LaKeySha Bosley – D, St. Louis), House Bill 1035 (Doug Clemens – D, St. Ann), House Bill 873 (Ian Mackey, D-St. Louis), and House Concurrent Resolution 30 (Merideth).

Earlier story: House Members Denounce State’s Seeking Payback of Unemployment Benefits