It was another busy week in Jefferson City. Numerous bills and proposals continue to be discussed and debated, yet there is still much work to be done during the final five weeks of the 2018 legislative session. The Missouri Constitution requires lawmakers to truly agree and finally pass a balanced budget during the legislative session. While the Senate is working to approve its version of the state’s 2019 operating budget, we are also discussing ways we can improve our state’s economic environment—balance is key. One of the biggest questions facing lawmakers is how we will drive economic development across the state, cut taxes for our families, small businesses and corporations, and retain a healthy budget that will fund our state’s necessary services.
I believe Senate Bill 674 plays an important role in achieving that goal. This measure is a reasonable and sustainable approach to reforming our tax code because it cuts tax rates while maintaining an appropriate balance for our budget. This bill lowers the corporate tax rate from 6.25 percent to 3.5 percent beginning Jan. 1, 2019. It also closes a corporate tax loophole that allowed an affiliated group of corporations to have 50 percent or more of its income derived from sources within Missouri to file a consolidated return.
Senate Bill 674 also requires all corporations to use a single-sales factor income allocation method. This means Missouri corporate taxable income is based exclusively on the percentage of sales made in Missouri, not on the location of property or employees. Most states are going toward a single-sales factor method. This can be a more attractive option for computing Missouri taxable income.
Missouri’s corporate tax code is complex and outdated. A simplified code will help broaden the overall tax base and lower rates at the same time. By lowering the corporate tax rate and closing this corporate tax loophole, we will make Missouri more attractive to businesses looking to move here or stay in the state. Senate Bill 674 is now in the hands of the Missouri House of Representatives.
The Missouri Senate’s Appropriations Committee has been working through the 13 appropriation bills that make up the state’s operating budget for the 2019 fiscal year. The 13 appropriation bills make up the state’s $28 billion operating budget, which includes general revenue, state dedicated funds and any incoming federal funds. As lawmakers, we must review each department’s proposed budget request in order to make the most fiscally responsible decision possible. We must make sure that our budget reflects our priorities and that it supports the needs of all taxpayers.
Throughout this budget process, there will be numerous discussions surrounding funding for elementary and secondary education. I believe we must do everything we can in order to meet the educational needs of students across the state. As we consider our funding options, it’s important to keep in mind that K-12 education is the foundation for preparing our youth for success in their future endeavors.
State lawmakers have until Friday, May 11, to truly agree and finally pass all 13 appropriation bills and send them to the governor’s desk for his consideration.
The Missouri Senate also approved Senate Joint Resolution 27, a measure that – upon voter approval – would modify term limits and impose a gift ban on members of the Missouri General Assembly. Currently, lawmakers can serve no more than eight years in the Missouri House and eight years in the Missouri Senate. If approved by the voters, SJR 27 would still cap legislative service at 16 years; however, lawmakers would be allowed to serve all of those years in one chamber. The resolution still must receive approval from the Missouri House before heading to the ballot box for approval by the voters.
Thank you for reading this weekly column. Please contact my office at (573) 751-3678 if you have any questions.