CHICAGO - The Missouri Senate on Monday voted to override Gov. Jay Nixon's veto of a $620 million income tax cut.
The 23-8 vote in the Senate was along party lines with all Democrats voting against it. A vote in the House was expected as soon as Monday night.
An override requires a two-thirds vote by each chamber with a vote coming first in the Senate where the bill originated. Republicans, who backed the tax cut, hold a two-thirds majority in the Senate but are one vote short in the House.
Nixon, a Democrat, last Thursday vetoed Senate Bill 509 warning that it would harm funding for social services and other state programs and could jeopardize the state's triple-A ratings.
"Senate Bill 509 is an unfair, unaffordable and dangerous scheme that would defund our schools, weaken our economy, and destabilize the strong foundation of fiscal discipline that we've worked so long and hard to build," Nixon said in his veto message.
Nixon contends an independent fiscal analysis found the bill could end up costing the state $4.8 billion annually due to language that eliminates taxes on the highest bracket. Under the legislation, most residents would fall under the highest bracket eliminating 65% of state revenue.
Republicans have called Nixon's claims ridiculous.
Senate sponsor Will Kraus, R-Lee's Summit, said in a statement the cuts were responsible and would "act as an economic driver for the state of Missouri."
The legislation would gradually cut the state's top individual income tax rate to 5.5 % from 6% and phase in a 25% cut for business income. Republicans estimate the total annual cost once all pieces are phased in to be $620 million.
Even if an override is successful, the tax cut would only begin to be phased in 2017 if revenue collections rise by a minimum of $150 million annually from a high benchmark over the previous three years.
Nixon sought to capitalize on Moody's Investors Service downgrade last week of neighboring Kansas to help make his case of the potential credit damage.
Moody's dropped the state's issuer rating to Aa2 from Aa1 citing "Kansas' relatively sluggish recovery compared with its peers, the use of non-recurring measures to balance the budget, revenue reductions (resulting from tax cuts) which have not been fully offset by recurring spending cuts, and an underfunded retirement system for which the state is not making actually required contributions."
"This week's report by Moody's demonstrates the very real and dangerous consequences of fiscal experiments like Senate Bill 509," Nixon said. "For decades, Democrats and Republicans have worked together to keep Missouri on a fiscally responsible path and protect our spotless AAA credit rating - a rock solid foundation of fiscal certainty that Senate Bill 509 would put at risk."
Like Kansas' 2012 legislation, the Missouri version also creates an exemption for business income reported by "pass-through entities" such as LLCs and corporate partnerships.