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Kehoe pledges to pass reconfigured vehicle tax bill before end of session

This article first appeared in the St. Louis Beacon: The sponsor of vetoed legislation allowing some counties and municipalities to collect sales tax on certain vehicle purchases says he will not attempt to persuade the General Assembly to override Gov. Jay Nixon’s objection.

Instead, state Sen. Mike Kehoe, R-Jefferson City, says he will work to pass an alternative to satisfy Nixon’s concerns. In his veto message last week, Nixon cited problems with the bill’s language.

“This isn’t about politics. This is about policy. This is about jobs,” Kehoe told the Beacon on Friday. “This is about municipalities getting their money. So we’re going to take the recommended language fix that the governor’s office provides us and we’re going to make those changes and start looking for a bill that’s still moving in the House or Senate that we can put it on with.”

At issue is a 2012 Missouri Supreme Court decision that barred local jurisdictions from collecting local taxes on vehicles purchased out-of-state or through private sellers unless that jurisdiction had voted for such a tax.

Vehicle dealers and local governments had been pushing for legislation to overturn that ruling, arguing that doing nothing would hurt their bottom lines. The issue is especially important in St. Louis County, which doesn’t have a use tax.

Nixon vetoed legislation last year on the issue, arguing that such a bill would impose a tax increase without a public vote. He also noted that last year’s bill would result in tax bills for more than 120,000 people who purchased a vehicle out of state or from an individual.

Earlier this year, both chambers of the General Assembly passed another bill to try to satisfy Nixon’s concerns. Among other things, the bill would not apply the tax retroactively. And it would give voters a chance between November 2014 and November 2016 to repeal the measure.

But in his veto message, Nixon cited two concerns. The first was that ballot proposals to repeal the tax applied only to out-of-state vehicle purchases, excluding individual transactions within Missouri.

“Regardless of whether this oversight was intentional or inadvertent, it is significant,” Nixon wrote in his veto message. “In 2012, there were 112,000 vehicles purchased from out-of-state dealers. During that same time, non-retail sales exceeding that number by nearly six times (approx. 650,000). Therefore, while requiring a referendum properly recognizes that local voters should approve matters concerning local taxation, the mandated referendum would not apply to 85 percent of the transactions that would be subject to the local sales tax.”

His veto message went on to say that in the event that the tax repeal is put on a local ballot through an initiative petition, the bill's language creates another problem. "Local voters could not repeal the local sales tax on out-of-state and non-retail vehicle transactions… without repealing the local sales tax on all vehicle transactions, including vehicles purchased in-state at retail.

“Again, inadvertent or not, this would result in a loss of local revenue in an amount that would dwarf the economic impact caused by the [Supreme Court] decision, and would significantly hamper the ability of counties and cities to fund and perform critical functions and services,” Nixon said.

While expressing disappointment with Nixon’s decision, Kehoe said he would work with the governor to pass a new bill before the session ends on May 17.

“It’s nothing I object to. It’s nothing that was intentional to it. As matter of fact, other attorneys who have looked at the bill disagree with their opinion. They think that their concerns are addressed in different parts of the bill,” Kehoe said. “But that doesn’t matter. He’s the governor. He doesn’t like it. They’re giving us language that would make them more comfortable. We will make those corrections. We will look for a vehicle or bill to put it on and still get it done this session.”

Such a maneuver occurred in past sessions. For instance, Nixon vetoed a bill in 2011 related to agricultural nuisances late into the session. The House then attached language allaying Nixon’s concerns onto another bill, which he subsequently signed.

“It’s a disappointment. But like I said, it’s an important issue,” he said, adding the bill passed with big majorities. “We will get these corrections made and find a place to get it going.”

Jason is the politics correspondent for St. Louis Public Radio.

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