JEFFERSON CITY — Missouri lawmakers return to the Capitol Wednesday facing a call by Republican Gov. Mike Parson to approve a $700 million tax cut.
The governor’s proposal, however, hasn’t gained enough traction in the GOP-controlled House and Senate for the special session to be a slam-dunk for him, meaning the issue and resulting negotiations could delay any significant action for weeks.
Already, legislative leaders have slow-walked the start of the session hoping to find common ground on a plan that would reduce the state’s current 5.3% income tax rate to 4.8%.
At least two proposals are expected to be formally introduced on Wednesday, including one from Sen. , R-Springfield, and another from Rep. , R-Carthage.
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Hough is expected to be chairman of the Senate Appropriations Committee next year, while Smith heads up the House Budget Committee.
Smith said Tuesday he supports the governor’s call for a tax reduction, but is reviewing additional options, including a phased-in reduction that goes further than 4.8% in the coming years.
Smith also echoed Senate President , R-Sullivan, who recently said business tax cuts could be in the mix.
“We’d like to be more competitive with states on business taxes,†Smith said Tuesday.
Parson unveiled his tax cut plan last month after he vetoed election-year legislation that would have given Missouri taxpayers rebate checks worth up to $500.
The governor’s budget office said the plan would reduce the tax liability of married couples making $125,000 annually by about 11%. Senior citizens earning $20,000 annually would receive a 100% decrease in tax liability. Single adults making $25,000 annually would see a 32% decrease in tax liability.
Smith said the disagreements over the cuts are not a sign of dissatisfaction with Parson’s proposal.
“It’s more about exploring other options to see what we can bring to the table,†Smith said.
Lawmakers will already be in the Capitol for the annual veto session. With little on their plates, they could spend more time at various fundraisers for candidates running in the November election than they do in their respective chambers.
At least 80 members of the House and Senate have scheduled fundraising events in the capital city this week.
The delay comes after Parson spent weeks traversing the state to outline his plan.
The governor and his fellow Republicans say the timing is right for a tax cut after the state general revenue fund through July 31 had a surplus of more than $4.2 billion. Tax revenues have increased nearly 24% this fiscal year.
Along with a significant uptick in income tax revenue, Missouri’s budget has been fueled by more than $9.8 billion in federal pandemic aid since April 2020, according to figures released by Auditor Nicole Galloway.
Yet, even with the federal dollars, Missouri has struggled to provide necessary services because of a shortfall in workers. Lengthy waiting times for Medicaid applicants, for example, have drawn the scrutiny of federal health officials.
The , a think-tank that tracks state spending and revenue, has raised concerns that the tax break will be hard to reverse if revenues fall off and affect state services.
Under the Missouri Constitution, the Legislature is limited in its ability to raise taxes. Significant tax rate increases must be voted on by citizens.