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Nixon links veto of proposed tax-cut bill to school-transfer controversy

This article first appeared in the St. Louis Beacon July 29, 2013: At the start of a new statewide tour, Missouri Gov. Jay Nixon gave two more reasons – the state’s credit rating and school funding -- that he says make his veto of the tax-cut measure, HB 253, the right thing to do.

In response to press questions, the governor said that the student-transfer controversy involving the Normandy, Riverview Gardens, Francis Howell and Mehlville school districts could get worse if the school districts have less money because his veto was overridden by the General Assembly.

The governor already has temporarily withheld about $67 million in school aid for the current fiscal year (part of $400 million withheld overall), just in case his veto of HB 253 is overridden and the state loses significant revenue because of the bill’s mandated tax cuts.

Legislative backers of the tax-cut bill have accused Nixon of withholding the aid to make political points.

Appearing at Commerce Bank in Clayton, Nixon cited recent warnings from the nation’s three major independent credit-rating agencies, all of which projected major losses in state income – and possible credit-rating downgrades – should the governor’s veto of HB 253 be overridden when the General Assembly holds its veto session in September.

The governor said he sent a letter Monday to each of the state’s legislators to make clear that an override “could put Missouri’s spotless credit rating at risk,’’ Nixon said.

He noted that all agencies acted earlier this spring to reaffirm Missouri's AAA credit rating. That action was taken before the General Assembly approved the tax-cut bill.

The credit-rating agencies all projected larger losses that some state officials have estimated, Nixon said, especially if the federal Marketplace Fairness Act – which taxes internet sales – goes into effect. Under state law, Missourians can deduct some federal taxes.

“Standard and Poor’s wrote that HB 253 could have ‘significant negative impact on the state’s finances,’” Nixon said.

The governor contended that the measure poses “a direct threat’’ to Missouri’s economic stability.

Tax cut backers challenge credit agencies

Associated Industries of Missouri, one of the business groups backing the tax cut bill, said that the credit agencies’ warnings are based on a “flawed assumption’’ that the federal Marketplace Fairness Act would require retroactive tax refunds.

"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," said Associated Industries president Ray McCarty.

Nixon is embarking on the tour – which includes other stops Tuesday – as millions of dollars in pro-override TV spots are being aired. The ads come from several conservative groups, including the Missouri Chamber. Wealthy financier Rex Sinquefield, who wants to eliminate Missouri’s income tax, has donated $2.4 million to pay for the spots.

Still, the governor said that he has no plans to conduct a fundraising effort to run ads backing his veto. He says he is relying on his numerous stops around the state to provide enough publicity to back up his cause.

Nixon has been campaigning around the state for over a month to defend his veto, and to outline his reasons.

Until Monday, Nixon’s chief arguments have centered on the lost state revenue – which could top $1 billion a year, according to some estimates – and HB 253’s unintended elimination of the state’s longstanding sales tax exemption for prescription drugs.

Nixon repeated his longstanding message, since the bill passed, that it paid for corporate tax breaks by increasing taxes on the elderly and the ill.

HB 253’s chief provisions would phase in a 50 percent tax cut on corporate taxes and provide a smaller tax cut for individuals. Backers have maintained that the sales tax hike on medicine was unintended and would be fixed next session, should Nixon’s veto be overridden and HB 253 become law.

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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