Credit Rating Agencies Express Concern Over Missouri Income Tax Bill
Credit rating agencies warn that allowing a Missouri income tax bill to become law could have a negative impact on the state's credit rating.
“We believe that if the Missouri legislature overrides the governor’s veto and enacts the legislation, and the federal government passes the Marketplace Fairness Act, it has the potential to result in a significant financial impact to the state, despite requirements for the maintenance of a balanced budget," Standard & Poor's wrote.
House Bill 253 enacts an income tax cut of about half a percent -- and detractors say it would result in a decrease of revenue for the state ranging from $700 million to $1.2 billion.
Democratic Governor Jay Nixon, who vetoed the tax cut legislation, pointed to the credit agencies' findings in St. Louis on Monday.
"Fitch rating wrote the need to re-evaluate our rating should House Bill 253 become law," Nixon said. "Now folks, I've had disagreements with the legislature -- they've passed bills I didn't like and I've made proposals they've never taken up. But never in recent memory has an action taken by the General Assembly posed a direct and dire threat to our financial health and reputation."
Nixon's appearance is just one of several he's made in recent weeks, as he goes on a campaign against the bill. Last week, he released numbers detailing how much each school district would stand to lose should the income tax become law.
But Nixon isn't the only one waging a campaign. Wealthy libertarian Rex Sinquefield has funneled $2.4 million in ads to pressure legislators to override the governor's veto in September. Sinquefield has been a big player in Missouri politics, giving more than $20 million to candidates and PACs in the past four years. An income tax cut has been one of his goals.
Republicans have shrugged off Nixon's concerns as "scare tactics." AIM, an organization that is advocating for a veto override, issued a statement in response to the credit agencies' findings, and said it was based on false assumptions.
"After the veto is overturned by the General Assembly, it is our hope that the state will provide this clarification to the rating agencies so they may evaluate the state’s credit rating based on application of the law as required by the Missouri Constitution."
-AIM president Ray McCarty.
The veto override vote in September is likely to be contentious, and could come down to just a few votes in both houses. If the veto is sustained, the bill is likely to come back in some form next session.
When asked if he would be interested in working with the legislature next session on a compromise bill, Nixon responded that he is "always interested in working with the legislature. Generally more so when they're in session than when they're not."
Follow Chris McDaniel on Twitter: @csmcdaniel