Bill reining in unemployment fraud heard in the Missouri House

The House Workforce Development and Workplace Safety Committee brought Missouri one step closer to stamping out fraud in the unemployment system during a public hearing on Senate Bill 510, sponsored by Sen. Will Kraus (R-Lee’s Summit.) For several years, Missouri has worked to repay millions of dollars borrowed from the federal government to cover unemployment insurance claims, when the unemployment insurance fund became insolvent. Blocking fraud would help bring solvency back to the fund.

The Missouri Senate passed Senate Bill 510 in March, sending it to the House committee. The proposed legislation would keep employees who are fired for workplace infractions such as stealing and doing drugs from receiving unemployment insurance benefits. Sen. Will Kraus sponsored a similar bill, Senate Bill 28, which was vetoed by Gov. Jay Nixon during the 2013 Legislative Session.

“We need this bill because people are getting benefits when they have done things like stealing, and that’s not right.” Sen. Kraus testified.

Many states were on the indebted list following the recession, when state unemployment funds were unable to keep up with the increased number of claims. Most have taken steps to reduce or eliminate outstanding debt. Missouri is one of 13 states that remain on the indebted list. Missouri currently owes $270 million to the federal government. In addition to penalties, interest on the debt grows at a rate of approximately $12 million a year.

“The Missouri Chamber has worked with Sen. Kraus for the last three years to reform the unemployment system, and this bill is a great start,” Tracy King, vice president of governmental affairs for the Missouri Chamber, testified. “In reviewing cases, I’ve found many people were given benefits for egregious behavior, and those that were denied could appeal and then were given a positive appeal. Employers are paying into this fund, and we need to put a stop to the abuses that are draining the fund.”

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

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Senate challenges proposed tax cut compromise

The Missouri Senate debated a tax cut bill this week but a vote was delayed as more discussion is needed about the proposal.

Senate Bill 509, sponsored by Sen. Will Kraus, R-Lee’s Summit, would lower Missouri’s personal and business income taxes depending on different criteria.

For example, Sen. Kraus’ proposal would cut the state’s 6 percent income tax rate by a quarter percent. But it would only happen if revenues increase by $200 million and if schools are fully funded.

Likewise, businesses would receive a new 25 percent deduction on the first $100,000 of certain business income dependent on whether the General Assembly passes new laws to limit tax credits. The same trigger would bring an extra .15 percentage cut to those who pay the top income tax rate.

Sen. Kraus has promoted the proposal as a compromise. Last year, the General Assembly passed tax cut legislation that was vetoed by Gov.  Nixon.  However, Gov.  Nixon has hinted he would approve the language Rep. Kraus is currently proposing.

“I believe this meets the group goal of broad-based tax reform,” Sen. Kraus said. “I believe the triggers are reachable and well within our means to be able to do over the next couple years and meet our obligations for education.”

During discussion on the bill, some senators expressed concern that the bill places too many conditions on the tax cuts. Other senators remained apprehensive that the tax cut could undermine existing state programs and lead to funding challenges in future years.

The bill did not reach a vote in the Senate.

SB 509 is just one option the General Assembly is considering this year as lawmakers work toward cutting taxes.

The Missouri House has already passed House Bills 1253 and 1297, sponsored by Rep. T.J. Berry, R-Kearney, and  Rep. Andrew Koenig, R-Manchester, respectfully. These House bills would reduce the amount of business income taxed by 50 percent and cut the state’s corporate tax rate from 6.25 percent to 3.125 percent. Also on the table is reducing the individual income tax rate from 6 percent to 5.3 percent. All of the proposed tax cuts would be phased in gradually over several years. The bills also contain wording that would protect important state functions, such as education, from the possibility of reduced funding. The tax cuts would only be triggered in years when there was either stable tax revenue or revenue growth.

The proposal by Reps. Berry and Koenig awaits a committee assignment in the Senate.

As lawmakers consider the many options on the table, the Missouri Chamber will continue supporting broad based tax relief for Missouri businesses and all Missourians.

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