State Budget

A new report by United for a Fair Economy looks at the tax structures of states and offers solutions for revenue shortfalls. Because every state has a regressive tax structure, the study examines the benefits of changing to a progressive model. A direct inversion to a progressive structure is presented here.

Currently,  the lowest 20% of income earners in Missouri pay 9.6% of their income in state and local taxes while the top 20% pay 6.7%. See state specific information here. Flipping those rates would raise an additional $4,278,926,329 for Missouri, eliminating our deficit and funding basic services.

Key findings of the report:

• Every state has a regressive tax structure that would benefit significantly from a direct inversion into a progressive structure.
• An inverted tax structure for every state would raise a combined $490 billion in new revenue, immediately eliminating state budget deficits.
• A cuts-only approach to state budget deficits is shortsighted—imposing immediate harm on families, while dampening economic recovery and compromising the future competitiveness of the American workforce.
• A progressive tax structure provides commonsense equity, economic efficiency, and adequate revenue to invest in communities and spur economic growth.

The report and Missouri-specific data are embedded below the jump.

"I'm very hesitant to derail anything that's a potential economic development or job-creation opportunity."

Senate Approps Chairman Kurt Schaefer on the GOP Callous Caucus' insistence on rejecting already-allocated federal dollars that would help Missouri communities

The Star's Jason Noble has a must-read takedown of a recent blog post by the Show-Me Institute's David Stokes: "Whatever you think about the tax itself and the public policy arguments behind its elimination, the blog post has some problems. It’s truthy at best and outright misleading at worst, and merits some examination."

The Show-Me Institute is part of the Rex Sinquefield network of organizations funded to advance his destructive and extreme political agenda.

A new audit released by Auditor Tom Schweich's office shows that Missouri tax revenues are well below the limits set forth by the Hancock Amendment in 1980.  Here's the money graf: 

For the fiscal year ended June 30, 2010, our review determined no refunds were due. In fact, total state revenue was $4.4 billion under the refund threshold. In addition, the Office of Administration, Division of Budget and Planning determined that net taxes and fees increased by $1.9 million, well below the $96 million annual limit.

For all of the hot air in Jefferson City about how Missouri is just two steps away from devolving into a socialist wasteland, it's worth remembering that we live in a low-tax/low-service state (our corporate taxes are especially low).

Indeed, in the most recent data I can find in a quick online search (see here and here), Missouri ranks around 46th in tax revenue per capita when compared to other states. 

UDPATE: 

False alarm. Sen. Jim Lembke and his three feckless followers had no intention of standing down and allowing the Missouri legislature to accept federal benefits to help the people who have had the hardest time in the job market.

Word was earlier today that the gang of four was ready to make a deal. Turns out it was just more grandstanding. Their “deal” was that Gov. Jay Nixon would have to find $3 worth of cuts for every $1 the benefits would cost.

Sure. Nixon should cut state services more deeply than he’s already had to, hurt more Missourians, probably lay off state employees and add to the unemployment rate — all of that so Lembke and company can back out of the jam they’ve gotten themselves into and declare victory. Don’t think so...

Breaking news from the Associated Press: "Sen. Jim Lembke told The Associated Press on Wednesday that he will end his filibuster against the reauthorization of the benefits that expired for about 10,000 Missouri residents on Saturday. But he says he will instead try to block the state from spending as much as much as $400 million of federal stimulus act money on such things as home energy efficiency programs for low-income residents and a study about high-speed rail service."

Sens. Jim Lembke and Brian Nieves "will seek to 'reject as many federal funds as they can,' likely including health and education funds."

The Beacon's Jo Mannies has posted a breakdown (distributed at Governor Nixon's Friday press conference) outlining what each of Missouri's school districts is expected to lose in fiscal years 2011 and 2012 if the extreme GOP plan to reject already-allocated federal education money is successful.  A filibuster to block acceptance of the federal money -- money that will go to other states if Missouri rejects it -- is led by Jim Lembke (R-Lemay) and Brian Nieves (R-Freedom Bunker), and has been publicly supported by Chuck Purgason (R-Caufield) and Jason Crowell (R-Cape Girardeau)

The filibuster is also supported by US Senate candidate Ed Martin.

Full breakdown below the jump. 

These people know crazy

...It's time to take a good hard look in the mirror.

“I know that we have, a certain, you would probably have to call them fringe, I would probably call them lunatic fringe, in the Senate that is holding up $189 million of education money that’s coming down from the federal government,” [Minority Leader Mike] Talboy stated.

It’s a delicate issue for [House Budget Chairman Ryan] Silvey, who hesitated to criticize fellow Republicans in the Senate, as Talboy worried about the impact on Missouri school districts.

“So catastrophic events for our students, either way,” Talboy suggested.

“Obviously, it’s not something I want to see happen. I think the House took a pretty strong position that we would like to see that money applied the way we asked it to be applied,” Silvey responded. “Use whatever adjective you’re comfortable with. It’s not going to be a good situation.”

The Post-Dispatch weighs in on the still-dumb filibuster from Sens. Jim Lembke, Brian Nieves, Rob Schaaf and Will Kraus that still hasn't gone away:

For the past month, against the will of an overwhelming majority of lawmakers, including the Republican leaders in the Senate, they have been refusing to make a technical change in state law to allow $105 million in federal funds to flow to the chronically unemployed.

Messrs. Lembke and Nieves and fellow conspirators Rob Schaaf of St. Joseph and Will Kraus of Lee’s Summit say they want to send a message to Washington that federal spending must be controlled. Their stunt would do no such thing.

It would, however, hurt the Missouri economy while causing unnecessary pain and suffering to workers left reeling from a lasting recession that has caused unemployment to hover around 9 percent for nearly two years...

Let’s explain it one more time: Rejecting federal money doesn’t mean it doesn’t get spent. It just gets spent elsewhere. Money spent on unemployment benefits is one of the best economic stimulus projects that exists. If there’s one thing economists agree on, it’s that when the unemployed get money, they spend it.

Most of it, we would surmise, goes to food to feed their families...

The House passed legislation to phase out the state's corporate franchise tax today, which will cost the state up to $87.5 million in lost revenues every year when it's fully enacted. 

As far as I know, no plan has been put forward detailing how many teachers will lose their jobs if this becomes law.  Or how high tuition will need to go.  Or how taxes will need to be raised on working people so that the already wealthy can pay a little less.

The Missouri House voted today to use $189 million in federal education money for public schools today, ignoring bizarre calls from some Republican politicians to send the money to other states. The decision to use the money is hardly controversial, but the lunatic wing of the Republican Party called for Missouri to reject the alleged "bribe."  For instance:

• Ed Martin repeatedly directed followers to a St. Louis Tea Party action page asking Show-Me State legislators to "send DC's Education Bribe back where it came from."
• About the money approved today by the House, Sen. Brian Nieves wrote, "If I'm walking down the street and find a line of people taking stuff out of a damaged store front and I know that if I don't grab that 42 inch LCD TV, the guy behind me is going to anyway.... Doing something that is wrong is still wrong even if every body else is doing it! Kind of sounds like something our Mothers likely told us. The federal government has NO business in our schools anyway!"

Sen. Luann Ridgeway (R-Smithville) likes the idea of increasing the tax burden for Missouri's working families with a higher sales tax, but she doesn't support Rex Sinquefield's initiative petitions that would wreak havoc on the state budget.  As reported by the Tribune's Rudi Keller:

A legislative supporter of the concept, Sen. Luann Ridgeway, R-Smithville, said the total revision of state taxes required in one step by the initiative proposals is a bad idea. Ridgeway said she is working on rewriting her proposal, which is awaiting a Senate hearing.

The Missouri Constitution should provide a framework for change but not dictate the details, she said.

"It is such a massive debate with all the teeny-tiny moving parts, and proponents are trying to swallow this apple whole," Ridgeway said."“We in this current General Assembly are trying to write rules that over the years need to be implemented. We need to break this apple down into slices."

Ridgeway's proposal to replace Missouri's income tax with a much higher sales tax is SJR1.

The crazy train may have already left the station, but that didn't stop Ed Martin from endorsing the extreme plan put forward by Sens. Jim Lembke, Jason Crowell and Brian Nieves in which Missouri would send $189 million in federal education dollars allocated for Show-Me State schools to other states around the country. 

Late this morning, Martin called on supporters to "melt the phones and jam the inboxes in Jefferson City," directing them to a "St. Louis Tea Party Special Alert."  Via St. Louis Activist Hub:

The action alert declares the funding to be a "bribe" from U.S. Secretary of Education Arne Duncan, and asks supporters to ignore unspecified "liberal lies" about the money. 

DC is shoving $$$ for education (strings attached) down Missouri's throat. Senators Lembke and Nieves are trying to #senditback...

Don't Listen to the Liberal Lies

If Missouri takes Arne Duncan's bribe, it will simply INCREASE general spending, not education spending.  That's just the way government works. 

By returning this bribe (and its burdensome handcuffs), we'll send a message--and instill fiscal responsiblity [sic] in both Jeff City and Washington.

Perhaps Martin and his tea party tribe are unaware that Republican budget leaders are supporting the acceptance of this alleged bribe?   Senate Appropriations Chairman Kurt Schaefer (R-Columbia) told the Associated Press this weekend that extreme conservatives could "make a statement by not taking the money, but by doing that, all you’re doing is penalizing grade-school kids."   And House Budget Chair Ryan Silvey (R-Kansas City) says the same:

Silvey said he believes Missouri should use the federal money, because rejecting it only would redirect it to other states.

"Missourians are paying federal taxes regardless, so I think that Missourians - and the state - should avail itself of the federal taxes that our citizens have paid," Silvey said.

Due to lack of interest, the House Budget Committee will not be worrying about the budget they actually have to balance. 

Sen. Jim Lembke (R-St. Louis):  Since there hasn't been rioting in the streets since Governor Jay Nixon put forward his budget proposal, students and teachers might not care if the General Assembly decides to make $189M in completely unnecessary cuts to the state education budget.

Sen. Brian Nieves (R-Washington) joins Sen. Jim Lembke (R-Lemay) and Sen. Jason Crowell (R-Cape Girardeau) in the insane effort to reject $189 million in federal education funds that have already been allocated by Congress -- funds that will be sent to other states if Missouri doesn't accept them.

Nieves posted a similar message on his personal Facebook page last night, where he equated using the already-allocated money to pay teachers to stealing televisions.  From his Facebook conversation :

Bottom line... The Feds simply do not have any money to give us. Every time a state holds out it's hand for Federal dollars that had to be barrowed from China, we directly contribute to our children being strapped with more debt!...

Today in the Star: "Thanks to the governor and legislature, Missouri has parked itself in the nation’s ashtray...It’s time for the state’s leaders to step up. Missouri’s cigarette tax should be in line with its neighbors and the national average. At 17 cents a pack, it’s making the state the butt of a bad joke."

Speaking Wednesday night at a Webster University forum hosted by former Governor Bob Holden, Senate President Pro Tem Rob Mayer (R-Dexter) told audience members that he has "a lot of concerns" about Rex Sinquefield's plan to hike sales taxes while inflicting huge damage to the state budget, and said that he does not expect a legislative version of Sinquefield's proposal will pass this session.

Here's video of the relevant exchange from Show Me Progress.  Mayer is on the left, Holden is in the middle and Missouri State Budget Director Linda Luebbering is on the right.

A partial transcript:

MAYER: There's a lot of things that I have concerns about that, that 'fair tax.' And I probably shouldn't be this frank and candid with you, but I can't see us passing that 'fair tax' in this session. Now, I'm just one Senator and I probably shouldn't make that kind of statement, but there's a lot of details in that tax, in that proposal, that concern me. And you make a good, you ask a good question-- how much does the sales tax have to be? You know, they talked about seven and a half percent or eight percent. But just, what, this last year, the realtors I guess, passed, wasn't it some time of petition that would exclude them from that. And then, you know, then you start taxing attorneys and CPA services. And you know, then you get into this issue, well, certain ones want to be exempted out. And then everybody else wants to be exempted out. And before long, you're talking about ten, twelve, thirteen percent. So, I mean, the concept intrigues me, but for me, there's got be be a lot -- I've got to have a lot of answers.

Via the Associated Press and KWMU, I see that Sens. Jim Lembke (R-Lemay) and Jason Crowell (R-Cape Girardeau) are calling on the General Assembly to reject $189 million (!) from the federal government that has already been allocated to help school districts keep or rehire teachers.  From the AP's story on the matter:

"The state of Missouri should take a stand," said Lembke, R-St. Louis. "If the federal government's not going to live within their means, then we've got to show them how to do that."

Sen. Jason Crowell, R-Cape Girardeau, said he also is opposed to using the federal education money. Crowell said Missouri has relied on too many one-time patches for its budget and accepting the federal money would only delay cuts that would have to be made when the federal money is used up.

Senate Appropriations Committee Chairman Kurt Schaefer, R-Columbia, declined to say whether he believed Missouri should accept or reject the special allotment of federal money.

Posted this afternoon by the Tribune's Hank Waters:

Gov. Jay Nixon’s State of the State speech is an excellent plan for managing scarce funds in the coming year.

I kept looking through Nixon’s proposals for obvious weak spots and must say his outline leaves little room for serious criticism...