CHICAGO — Missouri House Republicans failed to muster the votes to override Gov. Jay Nixon's veto of a tax cut package that the Democrat had warned jeopardized public services and state's triple-A bond ratings.
The vote came Wednesday, the opening day of the Legislature's annual veto session. The GOP holds 109 seats in the House and needed votes from every Republican to meet the two-thirds threshold for an override. The final vote was 94-67.
All 94 votes in favor of the override came from Republicans. Fifteen Republicans voted against the override and one Democrat did not cast a vote. Override attempts are first taken in the chamber where the bill originated. No vote will be taken in the Senate.
It marked a victory for Nixon who traveled throughout the state over the summer holding events with school and healthcare leaders warning of the impact should the Republican-controlled Legislature succeed in overriding his veto.
"Across Missouri, dozens of local school boards and business organizations have spoken out against House Bill 253 and the drastic cuts to education that would be required to pay for its colossal price tag," Nixon said recently as he beat the drum to uphold his June veto.
"The more folks learn about this bill and its flaws, the more concerned they become about why some members of the General Assembly would support such a fiscally irresponsible approach," he said.
Republicans are expected to resurrect tax cut legislation in the next session. Supporters argued that the state can afford it and it's needed to compete with neighboring Kansas.
Missouri education groups had warned that the cut would result in layoffs of thousands of teachers. Mental health providers stood to lose $164 million in state and federal dollars, according to a state analysis. Once fully implemented, it was expected to have trimmed state revenues by at least $700 million annually.
Under the vetoed legislation, the top tax rate for individuals would have dropped to 5.5% from 6% over the next 10 years and corporate income tax rates would be cut almost by one half to 3.25% from 6.25%. The changes hinged on annual growth in state revenues meeting a minimum threshold of $100 million. The tax on business income reported on individual tax returns would have been reduced by half over five years.
In addition to the cut in budgeted revenues, Nixon had raised concerns over a provision that could retroactively cut income taxes if Congress enacts legislation to allow state governments to collect sales and use taxes from retailers without a local presence. The state projected a negative budget impact of $1.2 billion from all the provisions of the package in its first year if passed.
In making his case, Nixon has sought to highlight comments in July rating reports ahead of a state appropriation-backed refunding issue as evidence that an override threatens the state's gilt-edged credit.
"We believe that if the Missouri legislature overrides the governor's veto and enacts the legislation, and the federal government passes the Marketplace Fairness Act, it has the potential to result in a significant financial impact to the state, despite requirements for the maintenance of a balanced budget," Standard & Poor's wrote.
Analysts called the first year's $1.2 billion loss of revenue significant as the state operates on an $8.47 billion general revenue fund. The state's overall fiscal 2014 budget totals $25 billion.
