A Halftime Report
This week, I was back at the State Capitol with my colleagues for an extra legislative session called by the governor. I’d like to be able to tell you we’re nearing the end of this session, but it’s hard to say. We could have a lot of work yet ahead of us. It all depends on what the House of Representatives does.
To understand how we got here, you have to go back to the regular legislative session that ended in May. Earlier this year we passed a package of tax incentives for agricultural producers. The bill renewed several tax credit programs that had already lapsed or were set to expire, so it was really important we got it done this year. Unfortunately, some compromises had to be made to get the bill across the finish line. One of those was that we renewed these programs for only two years. That didn’t sit well with the governor, who said he wanted the programs to be renewed for six years. The governor, a farmer himself, vetoed the bill and called the Legislature back to try again.
The other issue that brought us back to Jefferson City was tax cuts. In May, the Legislature passed a one-time tax credit that would have saved Missourians money on their 2023 tax bill. The governor vetoed that bill, too, saying we hadn’t cut taxes enough. He said he wanted us to enact a permanent tax cut, lowering Missouri’s top individual state income tax rate from the current 5.3% down to 4.8%, a change he described as the largest tax cut in Missouri history.
Senate Bill 8, passed by the Senate this week, is nearly identical to the agriculture bill the governor vetoed, except farmers will now have six years to participate in the programs. Meanwhile, the House passed its own nearly identical ag bill. If the House approves the Senate bill as written, we’ll finally put the ag credits issue behind us. If they make changes or simply refuse to vote on our bill, the Senate will have to take up the issue again next week, or perhaps even later. We’ll see.
As for the tax cut, the likely future chairman of the Senate Appropriations Committee and the current chair of the Ways and Means Committee put their heads together and came up with a plan that gives the governor what he wanted, although at a slightly slower pace. Senate Bill 3 and 5, their compromise legislation, would lower the top state income tax rate in 2023 and could bring additional rate reductions in each of the next four years, assuming revenues continue to grow. Initially, the rate would fall to 4.95%. The governor’s 4.8% target would be reached the following year, but only if revenues continue to rise sufficiently. The bill the Senate passed requires additional rate cuts in future years as specific revenue triggers are reached. Eventually, Missouri’s top rate could fall to 4.5%, reducing taxes even more than the governor requested.
In my opinion, tying rate reductions to revenue thresholds is a conservative, responsible approach that returns surplus tax dollars to the people, while still protecting the budget if the economy falters. I think it’s a good plan, and I’m sure Missourians will appreciate keeping more of their hard-earned money. But, like the agriculture bill, the ball is now in the House of Representative’s court. They could approve both Senate bills as written or they could make changes to one or the other. They could also write their own tax cut bill. If they do anything other than pass the Senate bills, the extra session will continue for at least another week or two. I’ll let you know how it turns out as soon as I know myself.
Contact Me
I always appreciate hearing your comments, opinions and concerns. Please feel free to contact me in Jefferson City at (573) 751-2459. You may write me at Holly Thompson Rehder, Missouri Senate, State Capitol, Rm 433, Jefferson City, MO 65101, send an email to Holly.Rehder@senate.mo.gov or visit www.senate.mo.gov/Rehder.