Tax cut push by Missouri Republicans begins with $300M capital gains legislation

by Rudi Keller, Missouri Independent
January 22, 2025

Missouri Republicans took their first legislative steps toward a promised tax cut on Tuesday, with a Senate committee debating a $300 million exemption for  profits from the sale of a farm, business or assets like cryptocurrency.

The proposal to exempt long-term capital gains from Missouri income tax would help bring investment and jobs to the state, said state Sen. Curtis Trent.

“The capital gains tax is a tax that punishes investment,” said Trent, a Republican from Springfield. “It makes it more difficult to attract dollars, and with the jobs and business growth into the state of Missouri, it disincentivizes savings and investment by individuals.”

Trent presented the bill to the Senate General Laws Committee, which he chairs. No vote was held.

The bill is the first of many ideas for cutting taxes expected to get traction this session. Gov. Mike Kehoe campaigned for office on a promise to reduce, and eventually eliminate the state income tax.

Flat tax proposals aim to put Missouri on path to eliminate income tax

Kehoe has not discussed the details of his plan publicly, but is expected to include his ideas when he presents his budget and policy message on Jan. 28 to the General Assembly.

On Wednesday, the Missouri House will hold its first hearing on tax proposals, with bills to eliminate all tax brackets to create a flat tax, to repeal the corporate income tax and to create a fund to finance future tax cuts before the Special Committee on Tax Reform.

Missouri has healthy fund balances in the treasury — $4.1 billion in just the general revenue fund as of Dec. 31 — but tax receipts are expected to fall slightly or remain flat for at least the coming 18 months.

The capital gains tax cut would reduce general revenue — about $13.4 billion in the year that ended June 30 — by about $300 million annually, the fiscal note for Trent’s bill states.

Repealing the corporate income tax would reduce revenue by about $900 million annually. 

No fiscal note has been prepared for the proposal to eliminate tax brackets and charge all taxpayers the current top rate, 4.7%, for all taxable income. The major impact of that change would be to increase, by about $70, the tax each individual pays on portions of taxable income below $9,000.

Trent’s bill heard Tuesday would eliminate the state income tax on capital gains by allowing taxpayers to deduct the portion of their income reported as long-term capital gains on their federal returns. For someone with about $50,000 in capital gains income, the savings would be more than $1,500, which is what someone who only had wage income of that amount would pay in state income tax.

Income from long-term capital gains is easily identifiable from federal returns because it is treated differently than income from wages. Under federal tax law, profits on assets held for more than a year are taxed at lower rates than wages or the gains from assets sold after a short period.

“It unfairly taxes inflation, and we have been in a high inflation environment for the last several years,” Trent said. “The increase in the value of an asset is not necessarily because of true gains in that asset’s value, but just in the devaluation of the currency.”

Only eight states, including Tennessee, exempt all capital gains from income taxes. Two states that border on Missouri, Arkansas, and Oklahoma, have special treatment for some capital gains. For example, Oklahoma exempts capital gains on the sale of Oklahoma property owned for at least five consecutive years, or the sale of stock in an Oklahoma company or partnership held for at least two consecutive years.

Business and farm groups testified that eliminating the tax on capital gains would promote the transfer of agricultural land from retiring farmers to new owners, encourage small business owners to expand and preserve family fortunes.

“This would be very helpful for small businesses that have had a rough few years,” said Brad Jones, lobbyist for the National Federation of Independent Businesses.

The main opposition to major tax cuts this year is likely to come from groups concerned about possible future spending cuts.

Brian Colby, a lobbyist for the liberal Missouri Budget Project, testified in opposition, citing the “large fiscal note and no offset on revenue losses.” 

Missouri Independent is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Missouri Independent maintains editorial independence. Contact Editor Jason Hancock for questions: [email protected].

Regulators warn Blue Springs hospital that lab’s ‘deficient practices’ could put patients at risk

by Suzanne King, Beacon: Kansas City
January 22, 2025

Regulators recently warned officials at St. Mary’s Medical Center in Blue Springs that “deficient practices” at its laboratory, including lax testing procedures and insufficient training, could endanger patients.

The Missouri Department of Health and Senior Services informed hospital officials that they had found the lab to be in “immediate jeopardy,” the most severe level of noncompliance in health regulation.

The state’s Dec. 20 letter said the finding was based on a “complaint survey” completed on Dec. 17. This survey, or inspection, included an onsite visit Dec. 10-11, a phone interview Dec. 16-17 and additional documentation, the state’s report said.

Citing federal regulations, the letter said a finding of immediate jeopardy was made because the lab’s noncompliance “has already caused, is causing, or is likely to cause, at any time, serious injury or harm, or death, to individuals served by the laboratory or to the health and safety of the general public.”

In a written statement, the hospital acknowledged the finding and said it had submitted a corrective action plan to the state. 

"We take survey findings very seriously and have taken proactive steps to implement changes addressing issues identified by the Missouri Department of Health and Senior Services," the hospital said.

The hospital’s statement said the hospital is fully operational with "comprehensive laboratory services."

“No St. Mary’s patients were ever identified as being harmed throughout the survey process,” the statement said.

The Missouri Department of Health and Senior Services (DHSS) conducts surveys of health care facilities in the state on behalf of the U.S. Centers for Medicare and Medicaid Services (CMS). 

In this case, said Sami Jo Freeman, a DHSS spokeswoman, CMS identified concerns and directed the state agency to perform a complaint investigation into the laboratory, which led to the immediate jeopardy findings.

Freeman confirmed that St. Mary’s officials had responded to the state report in writing. 

“Their response has been forwarded to, and is currently under review by, CMS, who will decide if the response is adequate and decide the next steps,” Freeman said in an email.

St. Mary’s, an 80-bed hospital owned by the for-profit chain Prime Healthcare, said the immediate jeopardy finding was related to blood bank processes and based on inspections conducted in October 2023, a month before the hospital shifted blood bank services to St. Joseph Medical Center, another Kansas City-area hospital owned by Prime.

St. Mary’s statement said blood bank services “will continue to be provided to St. Mary’s patients uninterrupted through this partnership.”

A hospital spokeswoman did not explain why the blood bank process had been shifted to St. Joseph Medical Center in 2023. 

She also didn’t answer questions about more recent issues raised in the state’s December report. The report said the laboratory “failed to provide blood bank procedures for all blood bank processes that started October 2023.”

The hospital spokeswoman also declined to respond to questions about concerns raised in the report that did not involve blood bank services.

A finding of immediate jeopardy could result in fines, onsite monitoring and the loss of Medicare accreditation. Such a finding is relatively uncommon. One study from 2021 found that less than 3% of hospital citations reached that most serious level.

In 2022, St. Mary’s Hospital faced another immediate jeopardy finding, according to a database of inspection reports. That time regulators raised concerns about physical force used against patients in the hospital’s emergency department. The immediate jeopardy finding was removed after the hospital implemented an action plan, which included the dismissal of an employee directly involved, executives spending more time in the department and staff education.

The state’s December report cited a range of problems with St. Mary’s laboratory, many of them relating to testing procedures, documentation, quality control and training. 

Overall, the report said, the lab’s director “failed to provide overall management and direction of the laboratory.” 

This included failure to “ensure overall operation” of the lab’s blood bank; failure to properly train staff before they performed patient testing; a lack of remedial actions when “significant deviations” were identified; and quality control lapses, such as a failure to ensure that follow-up crossmatch testing was performed.

The lapses, regulators said, could lead to inaccurate patient test results, which could cause issues or delays of patient diagnosis and treatment. The failures, the report said, “have a significant potential to cause patient harm.”

The position of lab director is currently posted as an open job on the hospital’s website. It isn’t clear who was director during the period of time covered by the inspection.

The state also called out the lab’s failure to maintain analytic systems, including a lack of laboratory procedures and a failure to perform and document quality control measures. 

For example, the report found that the lab didn’t document the inspection of whole blood before issuing it. In one case in November, the report said, blood was given to a patient “without units being labeled and proper procedure was not followed.”

The report said the lab also did not perform alarm inspections on a blood bank refrigerator, and lacked or failed to document certain test control procedures. 

The state called out problems with the lab’s procedures for urinalysis, saying the machine used in tests, a urinalysis centrifuge, was operating at the incorrect speed. In another instance involving a test for vitamin B12 levels, a test control was not within acceptable limits for several hours, the state said.

This article first appeared on Beacon: Kansas City and is republished here under a Creative Commons license.

Jon Patterson easily wins race for Missouri House speaker over right-wing challenger

by Rudi Keller and Clara Bates, Missouri Independent
January 8, 2025

The Missouri legislature made history Wednesday as Republicans elected the first Asian-American speaker of the House and the first woman to be president pro tem of the state Senate.

In the House, state Rep. Jon Patterson of Lee’s Summit won an overwhelming victory over a challenger from within the Republican conference, state Rep. Justin Sparks, helped to the 152-10 victory by votes from minority Democrats.

State Sen. Cindy O’Laughlin, a Republican from Shelbina, was elected unanimously to be the upper chamber’s top job after two years as the GOP floor leader.

At a news conference after the House session, Patterson called the challenge “disappointing” and said Sparks forced the vote for personal reasons.

“This was not about Amendment 3 (which restored abortion rights) or any policy agenda,” Patterson said. “This was a person with an oceanic ego who took it upon himself to make this day about himself.”

Patterson, the majority leader in the previous General Assembly who was nominated months ago by the Republican conference. Sparks’ bid was always a longshot because he needed at least 30 votes to prevent Patterson from winning a majority on Republican votes alone.

When Democrats nominated their floor leader, state Rep. Ashley Aune of Kansas City, she withdrew and urged colleagues to support Patterson, ending any chance Sparks had of blocking the election.

In nominating Patterson, Republican state Rep. Phil Amato of Arnold told a story about meeting and playing golf with him, only later to learn he is a surgeon.

“Right then and there I knew this man had his feet firmly planted on the ground,” Amato said.

Aune, who represents the 52 Democrats in the chamber, said she was encouraged that Patterson will be a fair leader who will represent the chamber well.

“I am confident,” she said, “he will be a speaker for all 163 members.”

At a Democratic news conference after the session, Aune said she told Patterson ahead of the vote that she intended to withdraw. She received no promises but said she and Patterson have a respectful relationship and she expects that to continue.

“We work very well together, and while I haven’t been given explicit assurances,” Aune said, “what I will say is I do trust him to be fair and to listen to me and to my caucus members when we have an issue.”

Sparks based his campaign on a call for changes to the House rules and objections to the fundraising tactics of the House Republican majority. In nominating Sparks, freshman state Rep. Bryant Wolfin of Ste. Genevieve said the chamber needs reform.

“The speaker holds a level of authority that would make even a monarch blush,” Wolfin said. “The culture in this building discourages dissent and rewards obedience to leadership over the service to our constituents.”

The odds against Sparks’ bid are shown by the rarity of successful efforts to block the majority party’s nominee from becoming speaker. The last time was in 1996, when 11 Democrats voted present and four joined Republicans to prevent the election of state Rep. Sam Leake to replace outgoing Speaker Bob Griffin, who resigned midway through a term.

The defeat forced Democrats to select a new candidate, state Rep. Steve Gaw, who was able to unite his caucus.

After winning the election, Patterson told the House in a prepared speech that he wanted to address issues unfinished from last year, enact bills to help cities recruit and retain police officers and limit the availability of abortion, made legal again in Missouri by a voter-enacted constitutional amendment.

“While we respect the will of the voters, we must clarify the provisions of Amendment 3 and make Missouri the most pro-life state it can be,” Patterson said.

That does not include attempting to repeal Amendment 3, Patters said at his news conference. He also said he does not support efforts to roll back the provisions of Proposition A, which raised the minimum wage to $13.75 per hour and requires most employers to provide paid sick and family leave starting May 1.

“We may take a look at some of the provisions, but I have not heard serious discussions about repeal, and I don’t favor delaying implementation,” Patterson said.

The unfinished business, Patterson said, includes legislation to prevent the state from seizing Social Security benefits from foster children who qualify for disability benefits or whose parents have died. He also called for increased funding for mental health services for children.

“We must prioritize the most vulnerable among us, especially our foster children,” Patterson said.

Other unfinished business, Patterson said, is legislation to encourage businesses to provide on-site child care and expansion of existing child care centers.

“Missouri’s families continue to be burdened with trying to find childcare spots that are too hard to find and too expensive,” he said.

In the Senate, O’Laughlin set an agenda focused on issues affecting children, including the foster care system, education and health. 

“When families and communities are strong, when children are well nourished and well educated and when our streets are safe, Missouri thrives,” she said.

O’Laughlin said the state needs to address the “root causes of poverty and addiction” in child welfare cases.

“If you take a hard look at our child welfare system, you will see a system that is failing,” she said. “Failing to meet families where they are, failing to understand their struggles and failing to provide meaningful assistance in their time of need.”

O’Laughlin also advocated for a “refocus on results that matter” in education, pointing to the state’s low rate of children being about to read at grade level, and for a tough-on-crime approach that doesn’t “release[] dangerous individuals back onto the streets to reoffend.” 

She emphasized her role as the first woman elected president pro tem of the state Senate. 

“And as a woman, I’ve seen firsthand how the role of the family has been transformed and sadly, too often, trivialized,” she said. “Mothers have been undervalued. Fathers have been dismissed. And the institution of marriage has been diminished.”

Several women who previously served in the Senate attended in celebration. 

“We must support strong, healthy families, expand access to quality education, ensure safe neighborhoods and set high expectations for the next generation,” O’Laughlin said. “This is the foundation for success and prosperity.”

Missouri Independent is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Missouri Independent maintains editorial independence. Contact Editor Jason Hancock for questions: [email protected].