Special interest giveaways throw budgets out of balance, reduce state and local revenues by $776 million annually

May 28, 2014
Members of the General Assembly failed to account for special interest handouts in the budget sent to the Governor’s desk
St. Louis, MO

The special interest giveaways passed in the final hours of the legislative session would reduce state and local revenues by more than $776 million annually, Gov. Jay Nixon announced today.  On May 16, the legislature passed more than a dozen special tax carve-outs and loopholes, which were not accounted for in the Fiscal Year 2015 budget passed the week before.  As a result, the Governor said, the budget as passed by the General Assembly is out of balance and will need to be corrected.

“While this Friday free-for-all will benefit a select few special interests, its far-reaching fiscal impact has thrown the budget dangerously out of balance,” Gov. Nixon said. “From special breaks for fast food restaurants to power companies, the only thing these giveaways have in common is that they were not accounted for in either the state budget or in the budgets of the cities, counties, and fire districts they would affect.  By going on a $776 million special interest spending spree, members of the legislature have broken their own budget, and I’m prepared to fix it.”

The fiscal analysis conducted by the Office of Administration’s Division of Budget and Planning of House Bills 1296 and 1865, and Senate Bills 584, 612, 662, 693, 727 and 860 finds that they would reduce state and local revenues by more than $776 million annually.   This includes a $425.1 million annual reduction in state sales tax collections and a $351.4 million reduction in local sales taxes, which provide revenue for county and city services as well as other local districts such as fire and ambulance districts.

The impact on state revenue includes sales taxes that are dedicated to K-12 schools (also called the Proposition C sales tax), Highways, Conservation, State Parks, and Soil and Water Conservation Programs.

“It’s the same simple truth that Missouri families live by when they balance their checkbooks each month: when you reduce the amount of revenue coming in, you have to reduce the amount of spending that goes out,” Gov. Nixon said. “But instead of owning up and taking responsibility for the fiscal consequences of their actions, members of the legislature just skipped town and left their fiscal mess behind.  Now someone has to clean it up – and as Governor, it’s my responsibility to do just that. Writing bad checks might be what they do out in Washington, DC – but it’s not what we do here in Missouri.”

A summary of the fiscal impact available here.