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Nixon vetoes tax cut, calls it a 'fiscally irresponsible experiment'

This article first appeared in the St. Louis Beacon: Missouri Gov. Jay Nixon followed through Wednesday with his long-expected threat to veto a broad-based tax cut, and he used surprisingly blunt language as he did it.

In his veto letter, the governor called HB253 “an ill-conceived, fiscally irresponsible experiment that would inject far-reaching uncertainty into our economy, undermine our state’s fiscal health and jeopardize basic funding for education and vital public services.’’ 

Nixon also asserted that the measure would make the state’s tax system “less economically efficient and less fair” by giving preferential treatment to some businesses and individuals.

At his Wednesday morning appearance in Kansas City, Nixon offered up more sharp language. “This legislation would increase taxes on seniors’ prescription drugs, while giving special breaks to lawyers and lobbyists,“ he said, referring in part to a provision – which backers say was inserted by mistake -- that eliminates the state’s sales tax exemption for prescription drugs.

“That’s not the way we do things here in the Show-Me State,” the governor went on. “House Bill 253 costs too much, accomplishes too little, and puts our budget and our economy at risk.”

Nixon's budget staff has estimated the tax-cut measure would cost the state $800 million a year when fully implemented; backers of the measure have contended that the cost was far less.

Jones blasts veto as 'backdoor tax increase'

House Speaker Tim Jones, R-Eureka, repeated his earlier assertion that Nixon’s complaint about the prescription drug error was “a red herring” to cover his real intentions.

“Unfortunately, this is yet another example of the governor's refusal to lead,” Jones said, calling the veto “a backdoor tax increase.”

“Amid news that our state is going to be ending the year with $300 million more than budgeted, it is disappointing that Gov. Nixon is standing in the way of cutting taxes and giving some of this money back to taxpayers,” Jones continued.

The speaker contended that Nixon’s real aim is “to use the money to expand costly social welfare programs and other Democrat priorities which will only increase the burden on taxpayers in the long run.” Jones appeared to be referring to Nixon’s support, backed by health care groups and some businesses, for expanding the state’s Medicaid program in line with the recommendations in the federal Affordable Care Act.

Jones earlier said that Republican legislative leaders will meet this summer to decide whether to seek to override the governor’s veto this fall. If not, Jones has promised a new tax cut bill next session.

Business groups sharply critical

Meanwhile, the reaction among business and civic groups was mixed, while education groups sided with the governor.

Two of the state’s business groups – the Missouri Chamber of Commerce and Industry, and Associated Industries of Missouri – sharply criticized the veto.

“With one stroke of the pen, Gov. Nixon has wiped away the first tax rate decrease for Missouri businesses and individuals since the 1920s,”  Associated Industries said in a statement.

“One of the strongest economic development tools that our state could have put to work for our state was taken away today by Gov. Jay Nixon,” said Chamber chief executive Dan Mehan. “Missourians would have received a $384 million tax cut. Missouri small employers would have seen their taxes reduced as well, and all employers would have their corporate tax rate cut in half. “

Both business groups also alleged that it was Nixon’s Department of Revenue that caused the mistake involving the prescription-drug snafu, although the governor has hotly denied it.

Internal emails provided to the Associated Press last week showed that the department had provided the proper language to legislators, and that the error appeared to have occurred during legislative revisions by legislators or staffs.  Subsequently, neither camp caught the error until Nixon’s staff discovered it after the bill was on his desk.

Civic, education groups praise Nixon

But the governor’s allies -- including the Civic Council of Greater Kansas City, and the Missouri School Boards’ Association – strongly praised his action. Both groups issued statements saying that HB253 would have resulted in drastic cuts to education.

“Missouri can’t afford to put state funding for our public schools in jeopardy with unaffordable and irresponsible tax cuts,” said Carter Ward, executive director of the school board association.

“Missouri already has a very competitive tax and regulatory environment,” said Civic Council chairman Donald J. Hall Jr.

“Missouri must maintain quality public services to remain competitive. An excellent K-12 education system and world-class, affordable colleges and universities that produce a skilled, 21st century workforce, an efficient transportation infrastructure and reliable public safety are essential to our state’s success," Hall continued. "That is why we urged Gov. Nixon to veto House Bill 253 and applaud him for doing so today.”

Jo Mannies has been covering Missouri politics and government for almost four decades, much of that time as a reporter and columnist at the St. Louis Post-Dispatch. She was the first woman to cover St. Louis City Hall, was the newspaper’s second woman sportswriter in its history, and spent four years in the Post-Dispatch Washington Bureau. She joined the St. Louis Beacon in 2009. She has won several local, regional and national awards, and has covered every president since Jimmy Carter. She scared fellow first-graders in the late 1950s when she showed them how close Alaska was to Russia and met Richard M. Nixon when she was in high school. She graduated from Valparaiso University in northwest Indiana, and was the daughter of a high school basketball coach. She is married and has two grown children, both lawyers. She’s a history and movie buff, cultivates a massive flower garden, and bakes banana bread regularly for her colleagues.

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