Jul 13, 2017 – Weekly Capitol Update

FIRST PHASE OF STATE INCOME TAX CUT TO KICK IN JAN. 1

The state income tax rate paid by most Missourians will drop one-tenth of a percentage point to 5.9 percent as of Jan. 1, the State Treasurer’s Office confirmed on July 6. The tax cut is part of legislation passed in 2014 but triggered only recently due to growth in state revenue collections.

Although state revenue collections increased sufficiently during the 2017 fiscal year to meet the relatively low benchmark set by the 2014 tax-cut measure, SB 509, it’s not an indication the state is doing well financially. In enacting the FY 2018 state budget, lawmakers made deep spending cuts across state government, particularly to higher education, and Gov. Greitens announced plans to unilaterally cut another $191 million in approved spending, most of which he has already implemented.

When fully phased-in over several years, Missouri’s main income tax rate will drop to 5.5 percent, and the law also will provide a 25 percent tax deduction for “pass through” business income reported on personal tax returns. It also will restructure the state’s income tax brackets, which haven’t been updated since 1931 and resulted in individuals earning more than $9,000 a year paying the current top rate of 6 percent.

The Republican-controlled General Assembly enacted SB 509 over the veto of then-Gov. Jay Nixon, a Democrat. In was modeled on a massive tax cut Kansas enacted in 2012 that promised economic growth and job creation but delivered neither and instead shattered the state’s finances. The Kansas Legislature largely repealed the cuts earlier this year.

Because the Missouri Constitution requires voter approval to enact any major tax increase, if SB 509 produces a similar outcome, lawmakers won’t easily be able to raise taxes back to their previous levels.

GREITENS TO LET STL MINIMUM WAGE CUT BECOME LAW

The minimum wage in St. Louis City will be cut by 23 percent on Aug. 28 under legislation Republican Gov. Eric Greitens will allow to become law without his signature.
The city’s minimum wage currently stands at $10 an hour and was slated to increase to $11 an hour next year. Instead the city’s wage floor will revert to the statewide minimum of $7.70 an hour.

Under the Missouri Constitution, all bills passed during the regular legislative session that are neither signed nor vetoed as of July 14 automatically become law. In a June 30 news release announcing his planned inaction on HB 1194, Greitens wasn’t entirely clear about his motivation.
While he blasted St. Louis’ higher minimum wage by saying “it will kill jobs and … take money out of people’s pockets,” he said he disapproved of how the Republican-controlled legislature handled the bill by waiting until late in the legislative session to grant it final passage. Greitens didn’t explain why that fact prompted him to not sign a bill he supports, causing Democrats to accuse him of attempting to avoid responsibility for cutting the wages of thousands of low-income workers.

The St. Louis Board of Aldermen enacted the city’s minimum wage ordinance in 2015 but its implementation was delayed until earlier this year due to legal challenges. While the city will revert to the state minimum wage in August, employers in the city won’t be compelled to cut wages to employees currently earning $10 an hour, although they will be free to do so.

GOVERNOR ORDERS HIGHWAY PATROL TO PATROL HIGHWAYS

As the centerpiece of his plan to address violent crime in St. Louis City, Gov. Eric Greitens has ordered the Missouri State Highway Patrol to patrol state highways within the city limits. Although under state law the patrol is charged with enforcing traffic laws on all state highways, it apparently stopped doing so in St. Louis years ago for reasons that aren’t clear.

According to the St. Louis Post-Dispatch, the city’s police chief asked the patrol in 2015 to resume patrolling the interstates through the city, but the patrol declined. Greitens anti-crime plan also calls for unspecified partnerships between the Missouri Department of Public Safety and federal law enforcement agencies and increased services targeting at-risk youth.