Capitol Perspectives: The legacy of Missouri’s 2023 legislative session

by Rudi Keller, Missouri Independent

Gov. Mike Parson on Thursday signed the tax cut he said a week earlier was responsible for his decision to veto most of the 201 spending items he cut from the state budget.

The bill, exempting Social Security benefits and public pension payments from income tax, would reduce state general revenue by an estimated $309 million annually. It would also allow counties to hold a vote on whether people 62 or older should be exempt from increases in their annual property tax bills.

The bill passed with broad bipartisan support – only two House members voted against it – but not without some misgivings among Democrats, said Rep. Peter Merideth, D-St. Louis. 
Under current law, exemptions allowed for retirement income are phased out for single taxpayers earning more than $85,000 and married couples with incomes above $100,000.

“I was not thrilled with it,” Merideth said. “But honestly, to me, it was the best of the options presented.”

The Republican House leadership was pushing for a $1 billion cut in corporate and income taxes. The bill’s property tax language began as a cap on increases in assessments for all property owners. 

“Many of us agree that there is a real problem with seniors right now that are on fixed incomes dealing with inflation and property taxes are a big part of that,” Merideth said.

Homeowners around the state, especially in metropolitan areas, are seeing massive increases in their assessments due to the recent rise in real estate prices. And while provisions in the constitution require rates to be rolled back when overall assessment increases exceed inflation, individual property owners could still see big increases if their property assessment went up more than the general average.

Parson’s decision to cite the tax cut for retirement benefits as a reason to veto spending items is not playing well with lawmakers. Budget leaders from both chambers said this week they will consider overrides, and said fiscal policies pushed by the governor, more than the retirement exemption, are doing more to reduce state revenues.

“Maybe the governor’s concerned about what possible, further tax reductions that the legislature may be looking at, but that’s not necessarily how, in my opinion, you build this budget,” Senate Appropriations Committee Chairman Lincoln Hough, R-Springfield, said in an interview this week.

Missouri took in $13.2 billion in general revenue in the year that ended June 30. The state was also holding surplus funds of nearly $8 billion. Parson vetoed $555 million in spending, including $365 million in general revenue appropriations, from the $16 billion in general revenue items in the budget.

Growth in state revenue slowed, however, to 2.7% during fiscal 2023 and is expected to be just 0.7% in the current fiscal year. It is a large income tax cut passed last year, not the retirement exemptions, responsible for slowing growth, Merideth said.

“It’s one thing to blame this tax cut,” Merideth said, “but really, the real tax cut that’s gonna be costing us money is the other one.”

State Sen. Tony Luetkemeyer, R-Parkville and sponsor of the bill, could not be reached Friday morning for comment.

Automobile sales tax
Tucked into a bill that will ban texting while driving for all motorists is a provision requiring automobile dealers to begin collecting sales tax at the time of a purchase.

​​At a February hearing, Missouri Association of Auto Dealers lobbyist Jay Reichard estimated that up to $60 million in auto sales taxes were delinquent. The dealers are paying an extra administrative fee for the new computer system, estimated to cost $120 million, and the system is designed for dealers to collect the tax.

Every motorist on the road knows if a fellow driver has paid the sales tax on a vehicle by looking at their license plate. If it is a paper temporary tag, the tax is still due because it must be paid at the state license office at the time a person registers their ownership of the vehicle.

“We think this is a great thing for our customers,” Reichard said in a May interview. “They want to go to one place and get the job done.”

Auto dealers are the only retailers who do not collect sales tax at the time of sale, he noted.
For an article in May, The Independent found a half-dozen temporary tags in a short period in Columbia, including one that had expired on Christmas Day.

The texting provision, which currently applies only to drivers under 21, will take effect on Aug. 28. 

​A driver could not be cited for a violation, however, unless the officer stops the car for another reason. That is similar to the law governing seat belt violations.

After two years of drama and gridlock, the Missouri Senate showed up in January determined to put the conflict between the conservative caucus and GOP leadership in the past. 
Submerged but ever-lurking, factionalism finally torpedoed the apparent comity in the session’s final week, and the Senate sank into the depths of filibusters and procedural hijinks.
More than 3,000 non-budget bills were introduced during the 2023 session of the Missouri General Assembly. Only 43 found their way across the finish line. 
But while a host of big-ticket policy proposals died in the session’s waning days, lawmakers did manage to sign off on the largest budget in state history, promising historic investments in infrastructure projects, public education and the state’s social safety net. 
So who were the big winners and losers of the legislative session? 


WINNERS

Lincoln Hough​No one had a bigger impact on the state’s $50.7 billion budget than Sen. Lincoln Hough. 
The Republican from Springfield took over as chairman of the powerful Senate Appropriations Committee this year. And after the House made massive cuts to the governor’s proposed budget, a bipartisan parade of lawmakers found their way to Hough’s fourth-floor office with hat in hand. 
Not only did Hough restore nearly all the money the House removed, he tripled the funding to rebuild Interstate 70. Then for good measure, in one of the rare moments when the conservative caucus wasn’t killing bills in the final week, Hough decided he’d take a turn by upending a virtual schools bill that many saw as a vehicle for more sweeping education measures. 
Hough just won re-election to a second term. That means he could be shaping the budget for the next three years — a lifetime in the age of term limits. 


Missouri DemocratsWith less than a third of legislative seats and no statewide office, Missouri Democrats couldn’t have asked for a better legislative session.
The budget pumped money into a host of programs Democrats championed — expanded pre-kindergarten programs, raises for direct care workers, increases in child care subsidies and more. On the policy side, a years-long effort to expand postpartum Medicaid coverage from 60 days to one year finally came to fruition. 
In the Senate, Democrats got to sit back for the third year in a row as Republican infighting killed a host of bills they hated. Changes to the initiative petition process, a corporate tax cut, state control of the St. Louis police department, education bills targeting “critical race theory” and a host of others fizzled out despite being priorities for the GOP supermajority. 


‘Gray market’ slot machinesAs video lottery machines proliferated in convenience stores, truck stops and other locations across the state, the companies that owned them made high-profile enemies. 
The Missouri Gaming Commission deemed the machines gambling devices, which are prohibited outside of licensed casinos. The state highway patrol considers them illegal. And in the Missouri Senate, the president pro tem and appropriations chair —Dave Schatz and Dan Hegeman — vowed to legislate them out of the state. 
But term limits drove Schatz and Hegeman out of office last year, and debate this year over these slot-machine-like games was focused on how to establish regulations instead of whether they should be allowed at all. 
That debate once again became latched to the push to legalize sports wagering, dooming both proposals and leaving the status quo in place. Sen. Caleb Rowden, the current president pro tem of the chamber, said as the session ended that a host of priority bills met their demise because a small group of legislators “want slot machines in gas stations.”
With few local prosecutors willing to bring illegal gambling charges, and the attorney general’s office recusing itself from litigation filed by a gray-market gaming company, the question of the machine’s legality seems unlikely to resolve any time soon.


Heavy constructorsHighway contractors were already in line for years of work under the limited plan for I-70 proposed by Gov. Mike Parson but the $2.8 billion for widening the highway statewide, plus a study in preparation for doing the same on Interstate 44, promise decades of work. 
There’s also money for building construction projects that include a $26 million state warehouse in Jefferson City, a $43 million veterinary hospital at the University of Missouri and a $300 million psychiatric hospital in Kansas City.


Kansas CitySometimes the best bet is to fly under the radar. 
Republican ire this year was focused like a laser on St. Louis. Efforts to return to state control of the city’s police and allow the governor to appoint a special prosecutor to step in for the city circuit attorney continued to pick up steam as the session wore on. 
The only thing that stopped the bills was Circuit Attorney Kim Gardner’s decision to resign. 
Meanwhile, fresh off a Chiefs Super Bowl victory, Kansas City saw $50 million added to the budget for improvements at Arrowhead Stadium in advance of the 2026 FIFA World Cup. There was also $300 million appropriated to replace an aging psychiatric hospital in the city. 
When the push to usurp local control of the St. Louis police was set aside, it cleared the path for legislation containing Blair’s Law — a longtime priority of Kansas City lawmakers that bans celebratory gunfire and is named after a local girl who was killed by a stray bullet in 2011. 


LOSERS

LGBTQ+ communityNo issue garnered more legislative attention this year than the push to limit access to puberty blockers, hormone therapy or gender-affirming surgeries for transgender minors. 
Multiple marathon committee hearings, along with impassioned — and at times ugly — debate in both the House and Senate ended with legislation making its way to the governor’s desk. Lawmakers also mandated student athletes compete as their sex assigned at birth. 
As debate raged, Missouri Attorney General Andrew Bailey launched an investigation into clinics that provide gender-affirming care and pushed for an emergency regulation that would block access to care for children and adults. 
While most didn’t pass, Missouri led the nation in the number of anti-LGBTQ bills introduced this year, causing advocates to label 2023 “the most dangerous legislative session in recent history.”
Democrats are already sounding the alarm for next year, with Senate Minority Leader John Rizzo of Independence proclaiming on the session’s final day: “When you throw red meat to rabid people, they don’t stop being hungry.”


Tort reformersRepublican efforts to enact changes to the judicial system have historically run into a wall of Democratic opposition. But with GOP supermajorities, those Democrats rarely held off legislation for long. 
But this year, when a bill seeking to modify the statute of limitations came up for debate in the Senate, a handful of Republicans joined the opposition. 
Trial attorneys have had GOP legislative allies in the past. But in recent years, they’ve begun supporting more Republicans, especially those aligned with the conservative caucus, who have found common ground defending the 7th amendment of the U.S. Constitution protecting the right to trial by jury.
“Some people say we’re for trial attorneys,” Sen. Mike Moon, R-Ash Grove, said during Senate debate earlier this year. “No, we’re for people. They should have a chance for redress.”


MoDOT employeesFor the third year in a row, lawmakers rejected the Department of Transportation’s request to implement a market-based pay system to stem turnover. A decision in a court case filed by the Highways and Transportation Commission asserting it has authority to implement raises even without legislative approval has been pending since February 2022.
While the court mulls the question, lawmakers pushed for a constitutional amendment stripping the Highways and Transportation Commission of its long-standing control of the multibillion-dollar state road fund. The effort faltered, but if the court sides with MoDOT it could give the proposed amendment renewed momentum.


‘School choice’ advocatesLast year saw lawmakers create a scholarship program for private schools and a funding increase for charter schools. 
Most anticipated supporters would build on those wins this year, and those expectations grew after the school testing data showed Missouri students doing worse across the board from pre-pandemic scores. 
But even a modest open enrollment bill barely squeaked out of the House before stalling in the Senate. And a bill seeking to fix the state’s virtual school law ran into a buzzsaw of opposition.
Proponents aren’t going anywhere, are well funded and are eyeing 2024 legislative elections. But 2023 proved resistance hasn’t softened, and any changes to the state education system faces an uphill fight. 
The Independent’s Rudi Keller contributed to this story. 

Missouri Gov. Mike Parson made improving access to child care a major part of his 2023 legislative agenda, declaring during his annual State of the State address in January that “early childhood care is essential to our state’s success.”

Since then, lawmakers have worked to enact his recommendations, but the proposals have faced roadblocks on their way to his desk. 

The Missouri General Assembly adjourns for the year at 6 p.m. on May 12. Here are where Parson’s major child care priorities stand: 

• $56 million to expand pre-k to all four-year-olds eligible for free or reduced-price lunch: The House’s version of the budget removed this funding — some lawmakers raised concerns school districts wouldn’t be ready to host pre-k, or that it was too costly, and others argued a universal program would be fairer. The funding was restored by the Senate, and most expect it to remain as lawmakers finish up their work on the state’s $50 billion budget this week.

 

• $78 million to increase child subsidy rates: The House also removed this from its budget only to see the Senate restore it. Critics of the increase argued the rates had been improperly set. This funding is also expected to remain in the budget when it heads to the governor for his signature.

Parson has also pushed to create tax credits to “improve child care facilities, support employers who support their workers with child care assistance, and allow more of our dedicated child care workers to earn a pay increase.”
Unlike his budget proposals, the tax credits face a more uncertain future due to opposition from conservative lawmakers in the Senate. 

• A child care contribution tax credit, which would allow donors to child care providers to receive a credit equal to 75% of a qualifying donation, up to a $200,000 tax credit. 

 

• Employer-provided child care assistance tax credit, which would allow employers to receive tax credits equivalent to 30% of qualifying child care expenditures.

 

• Child care providers tax credit, which would allow child care providers to claim a tax credit equal to the provider’s employer withholding tax and up to 30% of a provider’s capital expenditures on costs like expanding or renovating their facilities. 

 

• The Supporting Use of Child Care for Economic Stability and Security (SUCCESS) Tax Credit, while not a part of Parson’s agenda, was added onto a bill that includes the other three credits. It’s sponsored by Rep. Hannah Kelly and would provide parents up to $1,800 per year, per child, in child care refunds. ​

by Meg Cunningham, The Kansas City Beacon

The Missouri Senate on Thursday passed a proposed constitutional amendment that would increase the amount of voter support needed for constitutional amendments proposed by citizens to become part of the state constitution.  

The Republican-led measure, which would require voter approval before it is put into place, passed with a party-line vote of 24-10. It is the product of delicate maneuverings in which GOP lawmakers have sought to make it harder for citizens to enact laws and policies through the initiative process without appearing to undercut a rite of populist government in the state. 

While Republicans have discussed reining in the process for several years — and Gov. Mike Parson has called for a higher bar for passing initiative petitions — the task gained urgency for GOP lawmakers this year because of the possibility that groups may attempt to pass an initiative petition returning some access to abortion procedures in Missouri.

Currently, initiative petitions that are certified by the secretary of state need simple-majority support of more than 50% of voters who cast ballots in a statewide election. If voters were to approve the measure, HJR 34, initiative petitions or lawmaker-proposed constitutional amendments would either need support from 57% of voters or from a simple majority across the state and in five of Missouri’s eight congressional districts. 

What happens now?The Senate made changes to the constitutional amendment that originated in the House, meaning the measure will need another round of approval from the lower chamber before it is finally agreed to and passed. The General Assembly is set to adjourn for the spring on May 12. 

If lawmakers can agree on a version of the amendment, it would not go to the governor for his signature. Because it proposes changes to the state constitution, it would have to be approved by voters. It would appear on the November 2024 statewide ballot, and is expected to be heavily contested. 

In debate on the Senate floor Thursday, Sen. Jill Carter, a Republican from Newton County, noted that some attempts in Republican-led states to raise the threshold for constitutional amendments to pass have not been able to garner voter support. 

“South Dakota’s 55% majority failed in 2018,” Carter said. “They tried to require 55% and it failed. Fifty-five percent is lower than the 57% we’re talking about right here… so I just have a little bit of concern about the 57% threshold based on all of these other election results that similar language has been tried.” 
Measure to alter constitutional amendments could be on shaky groundThe measure passed earlier by the House would require at least 60% voter support to pass an initiative petition. Republican lawmakers in the Senate voiced their concern about that threshold and eventually amended the measure to require 57% voter support. 

Some major policy changes have come from voter-supported initiative petitions in Missouri. For example, in 2020, Missourians approved expanding Medicaid with 53.2% of the vote. In November, marijuana legalization passed with 53.1% of the vote. 

The Senate version of the constitutional amendment would also limit lawmakers from trying to alter voter-approved changes to state law for five years after their passage, unless the change has 57% support in both chambers. In the past, the General Assembly has undone some voter-approved changes. 

The House Democratic Caucus pointed to the Senate’s watered-down version of the House’s constitutional amendment as an indicator that lawmakers know the measure could be on shaky ground once it is in front of voters. 

“It started at two-thirds, then they lowered it to 60 percent then, they lowered it again to 57 percent,” the caucus said in a tweet. “Because they know voters will reject efforts to take power away from them. Government belongs to the people, and we’ll fight to keep it that way.” Members of the GOP have pointed to the state’s current simple-majority provision as one that could disenfranchise rural voters due to the state’s concentrated population centers. Harrisonville Sen. Rick Brattin, a Republican, said increasing the threshold by votes required and where those votes of support come from will keep the state constitution from becoming a book of state statutes. 

“That is not what the constitution is meant to be,” Brattin said. “So it is supposed to be something where you do have broad support, but everybody has weighed in on it. But currently if you look at the past adoptions of these initiative petitions, particularly…. there’s only a certain percentage that comes from certain areas, and it fails abysmally everywhere else. Yet, it’s still adopted. And that’s what needs to be rectified.” 

Allegations of dirty tricks 
Advocates of expanding access to abortion in Missouri have been eyeballing the initiative petition process as a means for undoing the legislature’s strict ban on the procedure. 

Opponents of the measure have accused Republicans of trying to deceive voters with the ballot language on the proposed constitutional amendment.

As written, the ballot summary would ask Missourians to approve allowing only U.S. citizens and Missouri residents to vote on any constitutional amendment. That provision is already in place in Missouri. The summary would then ask if lawmakers should be able to alter voter-approved state law changes, and then — at the bottom — ask if the threshold for passage of constitutional amendments should be raised. 
​
“Some politicians in Jefferson City are hoping they can trick voters with racist language while they rig the rules for this power grab,” Caitlyn Adams, the executive director of Missouri Jobs with Justice Voter Action, said in a news release.

     The Missouri Senate on Tuesday night fell into an intramural fight among Republicans over whether to use the budget to put limits on diversity, equity and inclusion programs in state government.
     The heated argument continued over nearly six hours before a bipartisan vote defeated an amendment from Sen. Denny Hoskins that would have banned diversity, equity, inclusion and belonging initiatives in funding for public schools.
     After the defeat, several Republicans voiced opposition to budget increases for the coming year, arguing that it was a violation of conservative principles. But only one attempt was made to cut any funding. That defeated amendment targeted $50 million for stadium improvements in Kansas City in advance of the 2026 FIFA World Cup matches.
     When it was over, the fiscal 2024 operating budget went back to the Missouri House with only minor changes from the $49.9 billion proposal approved last week by the Senate Appropriations Committee. 
     The Senate wrapped up the debate at about 4 a.m. Wednesday morning.
     Work on all budget bills must be completed by May 5.
     Hoskins, R-Warrensburg, first tried to impose a blanket ban on state departments using appropriated funds for the diversity programs. Hoskins’ proposal was a narrower version of language added in the House to every budget bill that state agencies warned would interfere with purchasing, contracts and payments for medical services.
     His supporters, mainly from the disbanded conservative caucus, argued that fealty to the state Republican Party platform demanded they back Hoskins’ amendment.
     “The consequences to the members of this chamber will be permanent damage,” said Sen. Bill Eigel, a Republican from Weldon Spring and a likely candidate for governor in 2024.
Other GOP senators said they were more concerned about functional public services than party ideology.
     “This will keep people on Facebook happy, but I don’t know what it will do to state government,” said Sen. Mike Cierpiot, R-Lee’s Summit.
     Hoskins’ amendment was ruled out of order by Senate President Pro Tem Caleb Rowden, R-Columbia. The language had no place in an appropriations bill, Rowden ruled, because the Missouri Supreme Court had made clear that substantive policy questions cannot be settled in  an annual appropriation bill.
     “This is designed to set policy, not to spend a specific amount of money,” Rowden said.
     The next attempt was to place even narrower language in the budget line allocating $4 billion to support public schools. 
​     Democrats, who had remained silent throughout the earlier debate, denounced the renewed effort. Senate Democratic Leader John Rizzo of Independence said the amendment was the latest right-wing outrage demanding the attention of lawmakers. Another similar issue this year is the debate over gender-affirming treatments for minors and participation in sports based on gender. 
     “Next year there will be another acronym that is the scariest thing in the world and if we don’t do it now the sky will fall,” Rizzo said.
     And Black senators said they were personally offended by the attempts to limit programs encouraging diversity and inclusion.
     “You have embedded the structural, systematic discriminatory racism in the policies and laws of this country,” Sen. Karla May, D-St. Louis, said. “And yet, you want to say we don’t need diversity, equity and inclusion. I mean, you can’t make this up.”
     Hoskins’ amendment was defeated on a 14-18, with nine Republicans joining the nine Democrats present in opposition.
     The next step in the budget process will be House-Senate negotiations over the vast differences between the chambers. Meanwhile, the Senate Appropriations Committee will hold hearings on four bills setting the state construction budget for the coming year.
     The Senate operating plan spends almost $4.3 billion more than the House from all funding sources and $3 billion more from the general revenue fund. One large item, in the construction budget in the House and the operating budget in the Senate, is funding to widen Interstate 70.
     The House funded Gov. Mike Parson’s $859 million plan to widen three stretches totaling 55 miles, plus $180 million more for other road projects. The Senate plan incorporates Appropriations Committee Chairman Lincoln Hough’s proposal to spend $2.8 billion on I-70, with $1.4 billion from general revenue surplus funds and $1.4 billion from bond debt.
     Other major Senate additions to the budget include:

• $461.6 million, including $117 million from general revenue, to raise rates paid to agencies that care for people with developmental disabilities, allowing those agencies to set a base wage of $17 an hour to attract staff.
• $300 million, including $135 million general revenue, to build a new psychiatric hospital in Kansas City to replace a facility built in 1966.
• $55.8 million to expand funding for school-based pre-kindergarten programs.
• $43 million to build a new veterinary hospital and $25 million to build a research slaughterhouse at the University of Missouri.
• $5.1 million to increase payments to counties for housing inmates sentenced to terms in the Department of Corrections.

     There were dozens of other smaller items added to the budget at the request of individual senators and House members, Hough said during the debate.
     “There were billions of dollars worth of asks that the committee did not approve, either for members of the committee or others here,” he said.
     The question as the budget goes to negotiations isn’t whether the state can afford any of the budget items but whether House and Senate members can agree on any particular item.
     The revenue estimate made in December anticipated significant slowing of the double-digit growth in tax receipts experienced since 2021. Parson’s budget projected a $4.9 billion general surplus on June 30 and, if revenue and spending matched his proposal, a $3.8 billion surplus at the end of fiscal 2024.
     However, revenues have remained higher than anticipated, though slower than recent history. Through Tuesday, general revenue growth for the fiscal year is 8.2%, which would add about $880 million to the surplus if sustained to June 30.
     Budget officials acknowledge that the December estimate is low but have not released revised figures.
     The operating budget passed by the House would spend about $600 million less than estimated revenue in the coming year, while the Senate budget would exceed it by about $1.9 billion.
     The most bipartisan vote during the budget debate came when Sen. Rick Brattin, R-Cassville, tried to use the budget to block a landfill project near Kansas City. He proposed a $200,000 amendment to study the wide ranging environmental and economic impacts of the project that would also have barred any landfill construction during the study.
     “I would hope the body would support an environmental study to potentially protect my constituents from a harmful sort of endeavor coming into my community,” Brattin said.
     Sen. Mary Elizabeth Coleman, R-Arnold, said the amendment wasn’t based on an objective reason to oppose the landfill. She reminded Brattin that she is on a committee that heard his bill to block construction.
     “All of the testimony was ‘NIMBY, not in my back yard, I don’t want this here, it is impacting me,’” Coleman said.
     That wasn’t good enough, she said.
     “For the rest of the body,” Coleman said, “it is imperative we evaluate policy based on the impact to the state and not on one single district.”
     The Senate was evenly split on the roll-call vote, with 11 Republicans joined by four Democrats in support and 11 Republicans joined by four Democrats in opposition, defeating the amendment on a tie.

This is an editorial: An editorial, like news reporting, is based on objective facts, but shares an opinion. The conclusions and opinions here have been derived by the guest contributor and are not associated with the news staff.

     Missouri lawmakers returned to the State Capitol on Jan. 4 for the start of the 2023 legislative session. This week, we learned our committee assignments, and I have once again been assigned chairman of the Senate’s Commerce, Consumer Protection, Energy and Environment Committee. I was also named vice chair of the General Laws Committee and was selected to serve on the Appropriations Committee and Fiscal Oversight Committee.
     We have a lot of work to do and hundreds of bills covering a wide-range of issues facing our state to consider this session. You can visit my Senate webpage at senate.mo.gov/Cierpiot to view all of my sponsored bills.
     One bill in particular I’d like to see move forward is Senate Bill 14, which modifies provisions relating to amending birth certificates. This act prohibits amending a birth certificate when the sex of an individual has been changed by non-surgical means. Additionally, no birth certificate shall be amended if the sex of the individual was changed for reasons other than a medically verifiable disorder of sex development. I don’t believe a birth certificate is a living document. You can’t change your place of birth, so why should you be able to change your gender?
      I am also sponsoring the following bills related to tax savings for Missourians:
      Senate Bill 15 modifies the Senior Citizens Property Tax Relief Credit. Current law authorizes an income tax credit for certain senior citizens and disabled veterans. Senate Bill 15 would adjust the maximum credits each year to adjust for inflation. This bill also increases income limits so more people can benefit.
     Senate Bill 104 reduces the assessment percentage of personal property, such as cars and boats. Current law requires personal property to be assessed at 33.3% of its true value. Beginning with the 2024 calendar year, this act would reduce the percentage by 1% a year through the 2035 calendar year. Beginning with the 2036 calendar year, personal property shall be assessed at 20% of its true value.
     Senate Bill 105 reduces the assessment percentage of real property. Current law requires residential real property to be assessed at 19% of market value. Beginning with the 2024 calendar year, this act lowers assessments by 1% a year through the 2026 calendar year. Beginning in 2027, the rate falls to 15%.
     Senate Joint Resolution 11 exempts non-commercial vehicles in excess of 10 years old from property tax. This constitutional amendment must be approved by voters.
     Knowing it has been challenging for many Missourians to keep up financially, I will continue fighting to reduce financial burdens for Missouri families by cutting taxes across the board and putting more money back in your pockets.
    Lastly, non-profit organizations, or civic, educational or cultural organizations that operate as non-profits, may receive funding for humanities-minded projects through the Missouri Humanities Council. The organization’s Major Grants program may provide grants up to $10,000 for qualifying projects. The next submission deadline is February 1, 2023. For more information, you can contact the Missouri Humanities Council at 314-781-9660.
     As always, I am honored to serve the citizens of the 8th Senatorial District, and I look forward to helping move our state forward. Please feel free to contact my office in Jefferson City at 573-751-1464. For information about committees or sponsored legislation for the 2023 session, please visit my official Missouri Senate website at senate.mo.gov/Cierpiot.

by Rudi Keller, Missouri Independent

     For the first time in its history, the only real limit on what Missouri can buy on a cash-and-carry basis is the imagination of the people spending the money.
     The state treasury is bulging with more than $6 billion in surplus cash, the result of 28 months of double-digit revenue growth and federal payments tied to COVID-19 relief and recovery. If growth rates continue at current levels, general revenue in the current fiscal year could approach $15 billion.
     Three years ago, the general revenue fund took in $8.9 billion.
     Some foresee a slowdown starting next year, as inflation-fighting policies slow the economy and the state sees the actual impact of recent tax cuts. Lawmakers and Gov. Mike Parson’s administration are trying to account for those uncertainties as they negotiate the budget baseline for the coming legislative session, said Sen. Lincoln Hought, R-Springfield.
     “It is almost kind of a wait and see game,” said Hough, who is expected to chair the Senate Appropriations Committee next year.
     But the large surplus promises to smooth any downturn while also allowing for new spending initiatives. 
     The first priority should be state agencies at or near a crisis due to staff shortages and turnover, said state Rep. Peter Merideth, D-St. Louis.
     Merideth is the ranking Democrat on the House Budget Committee.
     The Independent has documented staff turnover in the Children’s Division at nearly 50%, with children in foster care missing visits with parents and rushed abuse investigations. There are hundreds of people waiting for beds in Department of Mental Health facilities due to a lack of staff.
     To maintain minimum staffing, the mental health department uses expensive contract professionals. To cover the cost, the department is asking for a $22 million supplemental appropriation through June 30.
     Those agencies need targeted spending to recruit staff, Merideth said. And state employees generally need a raise, he said.
     “I think we need a very large investment and an increase in investment in what our state workers are paid, especially those state workers that take care of our most vulnerable,” Merideth said.
     Last year, at the urging of Parson, lawmakers gave state employees the largest pay raise in decades, at least 5.5% for everyone on the state payroll, and approved a new base wage of $15 an hour for state jobs. 
     State agencies have submitted their budget requests for the coming fiscal year, and the next step in crafting the state budget is an estimate of revenues. Jim Moody, a lobbyist and former state budget director under Republican Gov. John Ashcroft, said he expects recession and tax cuts to start slowing state revenue in the second quarter of 2023.
     “It is hard for me to imagine that in that quarter, it is going to keep pace with last year,” Moody said.

Revenue buoyancy     From 2016 to 2019, state revenues grew at a steady, if unspectacular, rate. 
     Income tax and sales tax receipts mirrored inflation and grew about 6.5%. As profits increased, corporate income tax receipts rose at double the inflation rate.
     In the three years since, sales tax revenue has grown 50% faster than inflation, income tax receipts at double inflation and corporate income taxes at almost five times the inflation rate.
     Whether the current rush of revenue is high tide or a new base level will play out over the next couple of years.
    The top income tax rate will fall to 4.95% for 2023. Triggered steps in earlier cuts will reduce taxes on many businesses.
     Moody estimates the cumulative effect of those cuts will be to reduce revenue by about $680 million in 2023.
     By the time those cuts are taking hold, he said, the inflation-fighting interest rate hikes engineered by the Federal Reserve will be slowing economic growth.
     The economic slowdown, if one is coming, will be felt in the first half of next year, Moody predicted.
     “By April through June of next year,” he said, “you could have a confluence of things that turn things pretty quickly.”
     So far, the only noticeable impact of interest rate hikes on state government has been to increase the surplus. General revenue interest earnings, $50 million so far this fiscal year, are more than double the earnings for all of fiscal 2022.
     Tax receipts are rising faster than inflation through a combination of factors. Sales tax has been augmented by more revenue from internet retailers, while consumers are spending from savings and taking on large amounts of new debt.
     Income tax receipts reflect rising wages and investment gains. The state minimum wage, $11.15 an hour, is up 42% since 2018, or  $7,000 more a year for full-time work.
     When the state set $15 an hour as a floor for its employees, large private employers near state facilities in central Missouri responded by boosting their starting pay. 
     The Dollar General warehouse in Fulton, where the state operates a prison, a mental health hospital and the Missouri School for the Deaf, is now offering $20.50 an hour, up from $17 at the start of the year.
     The decline in revenue due to tax cuts is predictable. The impact of a recession is uncertain.
     In the mildest recession of the past 30 years, state revenues continued to grow. In the worst, starting in 2008, revenues declined for three consecutive years and took five more years to recover to pre-recession levels.
     When lawmakers met in special session to cut taxes, Hough negotiated higher thresholds for revenue growth to trigger future cuts.
     “We will see very quickly what kind of impact that really has,” Hough said. “The unknown is, where does this economy go?”
​
Spending demands

     This year’s $49 billion state budget, passed by lawmakers in May, is the state’s largest in history.
     While state budgets generally grow from year to year, two items totaling more than $5 billion were new. The largest, at $2.9 billion, was a one-time appropriation of federal COVID-19 recovery funds. 
     Much of the money will be used in local projects. Recipients for one big piece, $410 million in grants to improve local water systems, were announced Thursday.
     The second is the continuing expense for expanding Medicaid to cover lower-income adults from 18 to 64. The program budget was set at $2.5 billion this year, with no general revenue needed to cover the state’s 10% share.
     In the coming year, the Department of Social Services anticipates the cost of Medicaid expansion will increase by $373 million, again without needing general revenue for the state share.
     Public education gets the biggest portion of general revenue. Funding through the foundation formula, which is the main source of state support, has been stagnant for several years.
     But public schools got a boost they didn’t expect when lawmakers included $214 million to cover the full state obligation for student transportation. It was the first time since 1991 that the state had paid its full share.
     The one-time extra cash has helped but the state needs to address public education’s staffing challenge, said Melissa Randol, executive director of the Missouri School Boards Association.
     “We have a crisis in Missouri with our salaries impacting our teaching workforce,” Randol said. “We need more than just one-year commitments without the ability to sustain that long-term.”
    Missouri ranks 47th in average teacher pay and second-to-last in the nation in starting salaries at $33,234. 
     Lawmakers also funded a program proposed by Parson to help districts boost minimum teacher pay to $38,000 and resumed state funding for the Career Ladder program, which helps districts pay more for teachers with advanced education.
     In its budget request for next year, the Department of Elementary and Secondary Education is seeking funds to implement some recommendations of the Teacher Recruitment and Retention Blue Ribbon Commission.
     The commission recommended changing state law to set the minimum at $38,000 a year, estimating the cost at $29.5 million per year. Increasing the average teacher pay by $1,000, the commission estimated, would cost $81 million. 
     In its budget request for 2023, the department asked for the minimum pay funding but not the money to raise average salaries.
     The biggest new item in the education budget is $77 million for increasing foundation formula payments to charter schools under a law passed this year. The department has also asked for $233 million to continue fully funding transportation, up $19 million, and $31.8 million to expand the Career Ladder program.
     Hough and Merideth said they expect bipartisan support for continuing full transportation funding and for the requests stemming from the task force report.
     But Merideth said he’s skeptical how far lawmakers will go to put money into education or other needs.
     “I am not going to take for granted we have a huge surplus until we are doing the things our state needs to do,” Merideth said.
    And Randol said she’s waiting to see the money in a spending bill.
     “My grandfather said, ‘don’t tell me what your priorities are, show me your checkbook and I will know what your priorities are.’”
For the first time in its history, the only real limit on what Missouri can buy on a cash-and-carry basis is the imagination of the people spending the money.
The state treasury is bulging with more than $6 billion in surplus cash, the result of 28 months of double-digit revenue growth and federal payments tied to COVID-19 relief and recovery. If growth rates continue at current levels, general revenue in the current fiscal year could approach $15 billion.
Three years ago, the general revenue fund took in $8.9 billion.
Some foresee a slowdown starting next year, as inflation-fighting policies slow the economy and the state sees the actual impact of recent tax cuts. Lawmakers and Gov. Mike Parson’s administration are trying to account for those uncertainties as they negotiate the budget baseline for the coming legislative session, said Sen. Lincoln Hought, R-Springfield.
“It is almost kind of a wait and see game,” said Hough, who is expected to chair the Senate Appropriations Committee next year.
But the large surplus promises to smooth any downturn while also allowing for new spending initiatives. 
The first priority should be state agencies at or near a crisis due to staff shortages and turnover, said state Rep. Peter Merideth, D-St. Louis.
Merideth is the ranking Democrat on the House Budget Committee.
The Independent has documented staff turnover in the Children’s Division at nearly 50%, with children in foster care missing visits with parents and rushed abuse investigations. There are hundreds of people waiting for beds in Department of Mental Health facilities due to a lack of staff.
To maintain minimum staffing, the mental health department uses expensive contract professionals. To cover the cost, the department is asking for a $22 million supplemental appropriation through June 30.
Those agencies need targeted spending to recruit staff, Merideth said. And state employees generally need a raise, he said.
“I think we need a very large investment and an increase in investment in what our state workers are paid, especially those state workers that take care of our most vulnerable,” Merideth said.
Last year, at the urging of Parson, lawmakers gave state employees the largest pay raise in decades, at least 5.5% for everyone on the state payroll, and approved a new base wage of $15 an hour for state jobs. 
State agencies have submitted their budget requests for the coming fiscal year, and the next step in crafting the state budget is an estimate of revenues. Jim Moody, a lobbyist and former state budget director under Republican Gov. John Ashcroft, said he expects recession and tax cuts to start slowing state revenue in the second quarter of 2023.
“It is hard for me to imagine that in that quarter, it is going to keep pace with last year,” Moody said.

Revenue buoyancy