JEFFERSON CITY, Mo. — Missouri’s governor will be calling lawmakers back to the Capitol to lower the state’s income tax rate for all Missourians.
This comes after the governor rejected a tax rebate plan passed earlier this year by lawmakers. He said he didn’t like that not everyone in the state would benefit.
“There’s nothing wrong with what they were trying to do to get money back to the people of this state, we fundamentally agree with that, we think this is a better plan and we think this is something forever,” Gov. Mike Parson said during a press conference Friday.
Parson said he hopes by Jan. 1, the state’s income rate will be 4.8%. Currently, it’s 5.4%.
“Right now, Missouri is positioned very well to give money back to Missourians,” said Parson. “And I think we all know what we’ve set in place over the last four years. If you let Missourians earn their money, spend their money, they’ll spend their money and the economy will grow,” Parson said.
He also wants to lower the standard deduction.
“The first $16,000 of earned income for single filers and $32,000 for joint filers will be tax-free,” Parson said. “We will better achieve what Missourians were promised through permanent relief.”
Hours before his announcement, he vetoed a plan to give Missourians a $500 non-refundable tax credit based on last year’s filing. It was estimated to cost the state up to $500 million and would be based on last year’s filing.
The legislation said individual filers could get a rebate of up to $500, and married couples could see up to $1,000. However, there was an income cap in place, not allowing any individual who makes more than $150,000 a year or married couples with annual incomes over $300,000 to receive the rebate. Parson’s reason for vetoing the tax rebate was because the General Assembly did not authorize spending the funds out of the correct amount which would violate the constitution.
“Some Missourians would have received somewhere between $100 and $200 while many others would have received nothing,” Parson said.
After the income tax cut, he said the state will still have money left over. His call for a special session also includes reauthorizing tax credits for farmers for six years.
“At a time when we are facing historical high fuel prices, record-high fertilizer costs, this is not the time to take half measures when it comes to Missouri’s farmers and our agriculture industry,” Parson said.
Under the legislation passed by lawmakers this year, the tax credits expire in two years, the governor saying that’s not enough time to get new projects started using the credits. Parson is asking for a six-year sunset provision.
A handful of agriculture groups support the governor’s call for a special session after they were disappointed the tax credit programs were only authorized for two years.
The tax incentives are important to farmers, rural businesses, meat processors, and biodiesel producers and to establish “urban farms.”
“Every dollar invested in these programs, taxpayers see a two and three-fold return but with short extensions, that is in serious jeopardy,” Parson said. “Agriculture in Missouri is the top economic driver. It’s only right that we provide farmers and ranch families the foundation of the economy with the same opportunities provided in other programs.”
The governor said he is still working with lawmakers on a date for the special session. The House chamber is currently under renovation, with the floor stripped down to wood and a new carpet being installed.
According to the Office of Administration, the project is set to be complete at the end of August, a few weeks before the veto session.
Also, this week, Parson signed more than a dozen pieces of legislation into law, including the $47 billion budget, the largest in state history. The spending plan is roughly $10 billion more than last year’s budget. It includes increasing the baseline pay for teachers, along with fully funding the Medicaid expansion population and school transportation formula.
Parson did issue 32 line-item vetoes which total around $644 million, which includes the $500 million for tax rebates.
The Show-Me State has the lowest teacher pay in the nation and is nearly 20% under the national average which is why lawmakers have given initial approval to raise it to $38,000 a year. But if there are districts that have teachers already making $38,000, they won’t see the extra money. Lawmakers also allocated $214 million for school transportation, the first time it’s been fully funded since 1991.
Nearly a quarter of a billion dollars is being spent to increase minimum teacher pay from $25,000 to $38,000. The state would pay for 70% of the raise and the rest is on the district, but the money is only available for schools where currently teachers make less than $38,000. According to the Department of Elementary and Secondary Education (DESE) roughly 4,000 teachers make between $25,000 and $35,000 a year. This increase will cost the state more than $21 million.
There’s also $37 million dollars for the Career Ladder program in the budget, giving raises to experienced teachers. Under the state statute, teachers who take professional credits, mentor students, or participate in extracurricular activities fall under the program.
Higher education is also getting a boost in funds, with $10 million going to community colleges and an overall 5.4% funding increase for all colleges and universities.
There’s also $50 million in the budget to help students recover from learning losses that occurred while schools were shut down during the pandemic.
Other budget items approved by the Senate committee, $2.4 million to fully fund the twice-daily Amtrak service that runs between St. Louis and Kansas City, known as the River Runner. The train was reduced to one trip a day back in January due to a lack of funding.
There’s also $2.5 billion in the budget to fully fund the state’s Medicaid program, costing $2.5 billion. Nursing homes and other providers will also see a rate increase from the state to care for low-income Missourians.
The ARPA budget totals $2.7 billion, most of it going to infrastructure projects and increasing broadband across the state. This money, although it doesn’t have to be spent until 2026, will be used for things like sidewalk and intersection improvements and wastewater projects.
Within that budget, Parson vetoed an $83 million line item for building a new Missouri State Highway Patrol academy saying, “This item cannot be approved as the cost of the project is significantly higher than the appropriated amount.”
He also said the property where the facility was to be built has “legal encumbrances.”