Columbia Education Leaders Brace for Possible Impact of Tax Cut

6 years 8 months 3 weeks ago Monday, September 02 2013 Sep 2, 2013 Monday, September 02, 2013 2:12:00 PM CDT September 02, 2013 in News
By: Nick Thompson, KOMU 8 Reporter
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COLUMBIA - Columbia's teacher's union leaders, school board members and a pro-business group have come forward to express grave concerns with a tax cut bill passed by the Missouri General Assembly.

Conservative interest groups have led an election-style campaign in recent weeks to try to convince a few members of the Missouri House to override Gov. Jay Nixon's veto.
Republican supporters said it could be the first major change to Missouri's tax code since 1921.

All taxpayers making more than $9,000 currently pay the top individual income tax rate of 6 percent.

The bill would lower the top individual income tax rate to 5.5 percent over ten years, and would lower the corporate income tax rate from 6.25 percent to 3.25 percent in the same period.

In five years, small business owners who file business income on their personal returns would be able to deduct 50 percent of their business income.

CRITICS: BILL DOES LITTLE FOR MANY, TOO MUCH FOR FEW

Several community-based social service organizations, health organizations and education groups have formed the Coalition for Missouri's Future to fight against the bill.

According to the group, the bill would provide an annual $15 tax cut to a family of three with one earner making $60,000, while a family of two with $500,000 of net business income would see a nearly $2,500 tax cut.

Columbia fifth grade teacher Susan McClintic leads Columbia's chapter of the Missouri National Education Association, which is part of the coalition. She said, although she believes society rewards hard workers, she does not understand why the General Assembly would pass a bill in which the wealthiest Missourians would reap the greatest benefit. The richest quintile of Missourians would see the biggest tax cuts.

"If you are in the $250,000 dollar income bracket, and you own your own LLC, and you earn your income in that way, then it is a big cut," McClintic said. "But for the working people, anybody in the $40,000 or less, it's less than $9. It's not going to be much of a cut at all. And it's going to change greatly how our system runs."

McClintic said the bill would force inevitable cuts to education funding and would put working class students at a further disadvantage by draining the state budget.

McClintic said lawmakers cannot just consider core education funding, they must also think about social services, which many school-aged children depend on, such as early childhood programs, nutrition programs, mental health services and preventative healthcare services.

McClintic said education is "the great equalizer," as an economic development tool. McClintic said lawmakers should sustain the veto if they truly want to grow the economy.

NIXON: LAWMAKERS MUST MAKE HARD CHOICES

Nixon has toured the state extensively since the bills' passage and has repeated his opposition to the legislation, saying it will drain funding for vital public services, especially K-12 education.

At many stops Nixon has repeated the same phrase: "Members of the General Assembly can choose between House Bill 253 or education, but not both."

Supporters of the measure have described the income tax cut bill as a sparkplug to ignite an engine of economic growth. The Missouri Chamber of Commerce, the Associated Industries of Missouri, Americans for Prosperity and several other conservative groups said they agree with the same economic ideas espoused by Ronald Reagan's administration. Those are based in the concept that state revenues will actually grow over time if taxpayers keep more of their own money.

Rep. Caleb Rowden, R-Columbia, said he is still crunching the numbers and will not vote for the bill again if he determines it will devastate funding for education. However, he said he agrees with the vision of his Republican colleagues.

"We do things we think will stimulate the economy, stimulate private sector growth and stimulate folks to make investments and feel good enough about the state of the economy to make those investments," Rowden said. "That's why you cut taxes."

Columbia's chamber issued a statement in August asking lawmakers to sustain the governor's veto, despite the statewide chamber's support of the bill.

"The Columbia Chamber of Commerce is very concerned with our economy and we strongly support anything that would help our members to be more successful," said Columbia board chairman Bob Wagner. "But we cannot do that with flawed legislation and anything that would jeopardize the funding of education in Missouri."

For years, Missouri has not funded education at levels required by state law. In the current budget year, lawmakers fell $600 million short of the target set by law.

Missouri implemented its current school funding system during the 2006-2007 school year.

McClintic said the state continues to demand more from its schools, but elected officials do not realize what it costs to keep up with those demands.

"We want kids to enter kindergarten reading, we want kids to graduate, we want all these things," McClintic said. "However we are not willing to fund it at the nominal level that the funding formula requires."

COLUMBIA BRACES FOR IMPACT

Nixon's administration released a hypothetical spreadsheet July 22, presenting a scenario in which appropriations for each public school district would be reduced due to the proposed tax cut bill's effect on revenue collections.

According to the figures, Columbia Public Schools are scheduled to receive nearly $48.1 million this year. However, if the bill passes, Nixon projects the state would need to cut $260 million in state-wide K-12 education spending. Columbia would lose nearly $4.1 million in that scenario, roughly 8.5 percent of its 2014 appropriation.

The Columbia School Board passed a resolution Aug. 23 opposing the bill. The Missouri School Boards Association crafted the resolution, which has been approved by several other boards from around the state.

REPUBLICANS RESPOND

Nixon has already withheld $400 million worth of state spending in case his veto is not sustained. The state collected more money than initially projected in the 2013, and those excess collections are applied to the next fiscal year.

Critics contend Nixon is withholding that budget surplus to build opposition to the bill.

Rowden is one of many Republicans who have accused Nixon of using "scare tactics," and he called the governor's spreadsheet a "worst case scenario."

"The governor is using that money and using that to bargain and bribe people to think this is going to be worse than it is," Rowden said.

Rowden said it will be solely the governor's fault if schools do not receive some of their state funding this year.

House Speaker Tim Jones, R-Eureka, speaking at at a pro tax-cut rally near St. Louis, said the Republican-controlled General Assembly has done all the footwork in passing a balanced budget. He said the legislature has worked in the past to restore education funding when Nixon initially proposed cuts.

"This is the first time in five years I have seen Jay Nixon concerned about anything," Jones said. "And what he's concerned about is, the GOP super majority is going to set a record, is going to make history, and make him the most overridden governor in our state's history."

The Missouri House passed the income tax cut bill with 103 votes during the 2013 legislative session, but 109 votes will be needed Sep. 11 to override Nixon's veto and put the tax cuts into effect. The Senate passed the bill overwhelmingly, with only one Republican voting against it, Sen. David Pearce, R-Warrensburg, who is the chairman of the Senate Education Committee.

 

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