Kansas City Star. August 29, 2022.
Editorial: Mike Parson is talking to Sam Brownback’s ‘tax experiment’ architect. Beware, Missouri
Missouri Gov. Mike Parson has called a special session of the state legislature, asking it to consider permanent income tax cuts that would cost the state about $700 million a year, or more.
The session begins Sept. 6, right after Labor Day.
We urge lawmakers to approach Parson’s plan with extreme caution, and skepticism. A permanent tax cut could cripple Missouri’s budget in future years, threatening education, health care, public safety and a host of other essential services.
Parson, and other Republicans, don’t see any danger. They point to an end-of-year surplus of $4.9 billion, a record, built on higher incomes, more sales tax collections and federal grants.
“We believe that the state can pay the bill,” Parson said last week.
But reality is more complicated. Some of that end-year surplus will actually be used over the next several months on state programs, pension payments and debt. The governor’s own budget, issued earlier this year, projected a $1.6 billion ending balance in July 2023 — less than a year from now — before any tax reductions.
If a recession hits and jobless claims grow, that surplus could shrink further.
Additionally, some of this year’s $4.9 billion surplus was built on federal spending enhancements for Medicaid, which are not permanent. When those go away, state money will have to pay for more Medicaid expenses.
Other federal funds will also eventually end. The result? A permanent $700 million tax reduction could mean a spending squeeze in as little as two years, according to the Missouri Budget Project, a left-of-center think tank.
“Relying on the current surplus to fund permanent tax changes isn’t fiscally sustainable, or responsible,” said Amy Blouin, director of the Missouri Budget Project.
Missouri House Minority Leader Crystal Quade of Springfield called the tax cut plan a “textbook example of fiscal irresponsibility.”
ARTHUR LAFFER ADVISED KANSAS ON TAX CUTS
We went through this with Kansas, remember? A decade ago, Kansas reduced its top income tax rate from 6.45% to 4.6% (Parson’s plan would cut the top rate from 5.3% to 4.8%). Then-Gov. Sam Brownback called his plan an “experiment” designed to promote economic growth.
As state revenues plunged, lawmakers scrambled to cover budget shortfalls by slashing spending. State accountants spent sleepless nights shifting money from one account to another just to keep Kansas afloat. Legislators argued endlessly over ways to restore the state’s budget.
So it’s beyond scary to learn Parson is talking with tax-slashing “trickle down” economics activist Art Laffer — the same man who advised Brownback and Kansas — to design a new tax structure in Missouri. Fool me once, shame on you. Fool me twice … you know the rest.
Parson insists the comparison isn’t accurate. “We’re not going to do what Kansas did over there. It won’t even be close,” Parson told reporters last Tuesday. And, to be fair, Parson’s plan is less drastic than the Brownback approach.
But the tax rules are different in Missouri, and they make a bet like the one Parson is asking legislators to make much riskier. Parson eyes a $1.6 billion surplus as plenty big enough to allow the state to return $700 million to taxpayers. But what happens if Parson’s projections are wrong, or if the state’s economy falters? That surplus will melt away quickly. And unlike Kansas, Missouri lawmakers can’t generally raise taxes on their own.
If lawmakers follow Parson’s lead to impose permanent cuts to the tax rate, then any subsequent increase will have to be approved by the voters in a statewide initiative. Lawmakers facing a deficit likely wouldn’t be able to wait on voter permission to boost revenue. Instead, they’d be forced to make cuts to education, colleges, mental health services, senior services, transportation and infrastructure would be on the table. Just like Kansas.
There are alternatives. A one-time fully refundable credit to taxpayers would put extra funds in Missourians’ pockets, and help the poor too, without threatening spending in lean years. Missouri should also consider serious tax reform, which would include raising rates on wealthier residents while cutting them for low-income taxpayers.
Revenue-neutral tax reform would protect important public programs while making the tax system more even and fair. That should be the goal in every state.
We know. In an election year, pushing through a major tax cut looks like good politics. With costs growing for families, extra dollars in pockets seems like a good idea.
But an overly-aggressive tax cut, built on the shifting sands of the economy and federal largesse, could mean problems for Missouri long after Parson has left office. As legislators gather for the special session, they should look farther down the road, not just around the corner.
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St. Louis Post-Dispatch. August 27, 2022.
Editorial: Missouri’s worst-in-the-nation stinginess toward poor kids speaks volumes
Missouri is alone among the 50 states in its policy preventing low-income kids who participate in a federal summer meals program from taking the food off the distribution-site premises. This kind of callous stinginess toward poor children says much about the hard-hearted attitudes of the state’s current leadership.
The Summer Food Service Program, funded by the federal government and administered by the states, is meant to ensure that kids who rely on school lunches during the school year are able to get comparable meals when school is out.
Low-income kids throughout the country used to be required to eat the meals on site, but during the pandemic, a “grab-and-go” option was added. That turned out to be better for adults who couldn’t get their kids to the food sites at the appointed times and allowed the service providers to disperse multiple days’ worth of meals to families so the kids wouldn’t have to return each day. After the U.S. Department of Agriculture resumed pre-pandemic rules for the program, a provision was added allowing states to apply for waivers to allow the grab-and-go option to continue.
An NBC News analysis last week reported that just one state — Missouri — has declined to seek the waiver.
It means Missouri kids are now required to eat on premises where the meals are disbursed, while their counterparts in other states can take the food home. The impact has been dramatic — and troubling. NBC found that in some regions of Missouri, participation in the program has dropped by more than 90%, with sites that used to serve thousands of kids now serving just hundreds. Program workers attribute the drop largely to the fact that low-income families often lack flexible transportation and work schedules to get kids to the sites at appointed times to eat.
A spokesman for Missouri’s Department of Health and Senior Services, which administers the program, told the network the concern is that, “If the children aren’t there (on premises), you can’t always guarantee those kids are the ones getting the meals.”
So they suspect, in other words, that the parents are using the kids to secure these modest meals so the adults can eat them? Is there some reason to suspect that? And if so, why is it apparently only a problem in Missouri, and not the other 49 states, where this specter of systemic cracker and fruit-juice theft apparently isn’t a concern?
That’s nonsense. In a state that has fought to refuse Medicaid expansion (even after voters demanded it) and is now contemplating an income tax cut that will give outsized benefits to the wealthy while refusing to pay teachers and social-service workers living wages, it’s clear what’s going on: Missouri’s poor are, as usual, the last people on the minds of Missouri’s Republican leadership. But they can still vote.
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St. Joseph News Press. August 28, 2022.
Editorial: Return the money to the people
Gov. Mike Parson didn’t encounter much pushback when he rolled into St. Joseph to promote $700 million in income tax cuts and agricultural tax incentives for Missourians.
An audience of community leaders and area politicians — many of them Republicans from the Northwest Missouri delegation — responded favorably to what Parson describes as the largest income tax cut in Missouri history.
With Missouri sitting on an eye-popping $4.9 billion in general revenue, it’s hard to argue with the idea that some of that money ought to go back to the citizens of the state. Parson wants the legislature to reduce the top individual tax rate from 5.3% to 4.8%, increase the standard deduction by $2,000 for individuals and $4,000 for married joint filers and eliminate the bottom tax bracket. Every Missourian would earn their first $16,000 tax-free. For married filers, the figure would be $32,000.
But clearly, the governor feels the need for a preventative strike before the legislative special session that begins Sept. 6. Democrats and liberal think tanks are lining up against this tax proposal, calling it a reckless path to massive budget cuts when the federal largess dries up.
In remarks in front of City Hall, Parson argues that the state’s rosy financial picture, and thus the rationale for tax cuts, is not due to the smoke and mirrors of federal stimulus.
It’s an argument the governor shouldn’t have to make. Even if federal funds contributed to a strong budget position, where do you think that money came from? All too often, politicians see federal money as free money, but taxpayers always are the ones who foot the bill. They should be able to get some of that money back in return.
Perhaps the two sides in this debate could stipulate that Missouri’s budget benefited from federal funds but also gained a certain advantage from a COVID policy, much derided in some quarters, that kept people working and the economy going more so than in states with strict lockdowns.
The pandemic (along with stimulus and monetary policy missteps) also led to sharp price increases that impact consumers at the pump, the grocery store and every time they pay a utility bill. Inflation acts as a tax on everyone — hitting low-wage earners the hardest — and further adds to the need for lasting tax relief so that Missourians can better weather this storm.
Besides, if Democrats feel that a tax cut of this magnitude means that the budget cannot support the administrative state in the long run, then the majority Republicans should heed their warnings and begin to dismantle it. Why wait until there’s a crisis?
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