Déjà vu: Governor holds education hostage in effort to deter veto override attempts

Gov. Nixon announced on June 24 that he would withhold nearly a billion from K-12 and higher education and other public services. It is a maneuver the Democrat governor has used before in an attempt to pit the education community against Republican lawmakers and thwart an override attempt of numerous bills the governor has vetoed in recent weeks.

“The governor is putting politics ahead of policy, once again, and it is getting old,” said Missouri Chamber President and CEO Dan Mehan. “It’s petty and only hurts the students he claims he is trying to protect.”

Earlier this year, Missouri lawmakers succeeded in passing a number of bills to block an overreach of Missouri’s Department of Revenue and invest in some of tomorrow’s most promising employment sectors. Gov. Nixon vetoed these bills and Republican lawmakers countered by promising to override his vetoes. It appears lawmakers have the votes to be successful in this effort.

However, by threatening withholds, the governor is pulling the education community and other groups that rely on public funding into the fight.

Voters will have an opportunity to rein in Gov. Nixon’s ability to leverage budget withholds in legislative battles. House Joint Resolution 72, which passed the General Assembly in 2014, proposes amending the Missouri Constitution to require the governor to run future budget restrictions on education and other public services through the legislature. The legislation was sponsored by Rep. Todd Richardson, a Republican from Poplar Bluff.

The governor’s withholdings included line-item vetoes and temporary restrictions. The line-item vetoes are permanent cuts unless the Legislature votes to override. The governor has the option of restoring restricted funds at some time during the fiscal year.

Gov. Nixon’s recent budget actions that affect Missouri employers include:

  • A veto of a $900,000 increase to the Missouri Works Job Development Fund, a program to assist qualified companies with the training of employees in new jobs and the retraining or upgrading of the skills of full-time employees in retained jobs. Gov. Nixon also restricted $11.8 million of the program’s core budget, leaving only $2.1 million in operational funds.
  • A veto of all funding, $54,372, for the Small Business Regulatory Fairness Board (SBRFB). The board was established through legislation nearly a decade ago and is charged with investigating burdensome state regulations and excessive enforcement.
  • A veto of all funding, $700,000, for the Small Business & Technology Development Centers (SBTDC). SBTDCs provide a vast array of technical help to small businesses and aspiring entrepreneurs. MO SBTDC consisted of more than 100 business development specialists, instructors and staff located the statewide. In the last three years MO SBTDC staff have worked with 9,515 small businesses, providing 2,119 training courses serving 38,786 participants. A total of 6,483 jobs were created.
  • A restriction of $18.5 million for the Missouri Technology Company, leaving only $350,000 in operational funds. The Missouri Technology Company is a public-private partnership created by the Missouri General Assembly to promote entrepreneurship and foster the growth of new and emerging high-tech companies.
  • A restriction of all funding, $400,000, for a workforce development initiative called Certified Work Ready Communities.
  • A restriction of $4.3 million — half of the increase to Missouri’s tourism marketing approved by the Legislature.
  • Restrictions to education funding increases passed by the Legislature, including $100.2 million slated for public schools through the foundation formula, $15 million for public school transportation, $43.4 million for aid to colleges and universities and $18 million for scholarship programs.
  • Veto that will result in the closure of seven satellite tax assistance offices (Cape Girardeau, Jefferson City, Kansas City, St. Joseph, St. Louis, Springfield, and Joplin.)
  • Veto that will result in the closure of six Department of Natural Resources satellite offices (Adair, Cape Girardeau, Howell, Madison, Newton, and Nodaway.)

For more information on budget issues, contact Tracy King, Missouri Chamber vice president of governmental affairs, at tking@mochamber.com, or by phone at 573-634-3511.

The Missouri Chamber questions Gov. Jay Nixon’s veto rhetoric

This week, Gov. Jay Nixon rolled out another wave of rhetoric and threats about legislation passed in the 2014 Legislative Session, signaling upcoming vetoes to several tax reform bills.  The Missouri Chamber of Commerce and Industry criticized Gov. Nixon’s vague statements and questionable cost estimates.

Chamber President Dan Mehan

Chamber President Dan Mehan

“We hope that reporters will ask the governor to back up his claims of the costs of this legislation, because his numbers don’t add up,” said Dan Mehan, Missouri Chamber president and CEO.  “For starters, how can letting employers know ahead of time how a change in tax policy would impact them cost $100 million annually? Do we want to be a state where ambushing employers is a strategy for adding $100 million annually to the state coffers?”

Governor Jay Nixon

Governor Jay Nixon

Missouri’s tax collectors at the Department of Revenue write the state’s tax rules. Lately, the department has been changing the rules that relate to sales tax collection. The problem is that the DOR often doesn’t inform impacted businesses about the changes.

“The DOR is actually penalizing businesses for not following the rules they didn’t tell anyone about,” Mehan said.  “It is causing some businesses to close their doors, because they can’t afford the back taxes and penalties.  Any reasonable person would see that this is poor policy that should be changed.”

Senate Bill 662, sponsored by Sen. Kraus, will require the Department of Revenue to notify businesses when they make a change in their interpretation of the state’s sales tax laws. No longer will the state be able to change the rules without informing impacted businesses.  That provision is also contained in Senate Bill 584, sponsored by Sen. Bob Dixon.

The DOR also changed the intent of legislation passed in the 2013 legislative session that gave corporations a more advantageous method for filing taxes.  In Senate Bill 662, the true intent of the 2013 law was codified.  Yet the governor is claiming that holding the DOR to what the legislature intended will cost an additional $15 million annually.

The most disingenuous claims by the governor, however, center around his rhetoric of economic development incentives contained in some of the bills he promised to veto.  The governors’ comments ring ironic, after a session where he remained silent on the issue of economic development.

“If Gov. Nixon would seriously engage with lawmakers about economic development legislation during the legislative session, rather than wait until the session is over to find fault with other peoples’ ideas, he could reduce the number of times he uses his veto pen,” Mehan said.  “And, we would not have let another legislative session go by without an economic development bill.”

Senate Bill 584 contained a number of economic development incentives, including a tax exemption to attract more data centers to our state.

“Technology is the future,” Mehan said.  “One way Missouri can capitalize on the growth of this data-driven economy is by becoming a great state for data center development. Data center construction is growing exponentially and is expected to be $15 billion over 3-5 years. Companies are looking for sites now to build out data centers.  We can either provide attractive incentives to position Missouri well for this opportunity, or stand by and watch these companies locate in other states.”

Data center incentives were discussed at length during the governor’s 2010 Strategic Initiative for Economic Growth and was identified as a niche within the Information Technology Target Cluster as important to Missouri’s economic future.  In fact, an analysis done by the Department of Economic Development which was included in the Strategic Initiative shows that the data center industry has strong multiplier effects in terms of creation of additional jobs and wealth.

This change of heart is another reason the Missouri Chamber questions the governor’s message.  He claims that the provisions contained in legislation like SB 584 are new ideas.  This is also false.  This legislation was pre-filed and the provisions within have been discussed for years.

“It’s easy to throw out inflated numbers and blame special interests, when no one questions the governor,” said Mehan. “Gov. Nixon would rather fight the General Assembly than work with them as a leader.”