Missouri Senate Bill 641 Would Exempt Disaster Payments from State Income Tax

Editor's Note -- Governor Nixon has vetoed this bill and it will be considered in the legislature's veto session. He said that it would require $50 million in retroactive refunds to farmers, which he says would blow a hole in the state budget. You can read his entire veto message here.

The Missouri Cattlemen's Association (MCA) today, Aug. 18, 2016, hosted a news conference at the Missouri State Fair to release an economic impact study on SB 641, sponsored by Sen. Dave Schatz (R-26). The study, conducted by University of Missouri Extension Economist Scott Brown, Ph.D., demonstrates the impact of drought on farm and ranch families and the history of disaster payments. MCA President Keith Stevens said the study confirms the importance of SB 641, which would exempt disaster payments from state income tax, and the need to override Governor Jay Nixon's veto.

"The bill is a fair and justified tax cut for farm and ranch families. Currently, our government taxes disaster assistance as income. No other disaster program is taxed as income by the federal and state government. It is just plain wrong," said Stevens. "This money is better served in communities who are struggling in the midst of a rare natural disaster."

The study, The Effects of Drought and Disaster Payments on the Missouri Cattle Industry, paints a picture of the effects of the 2012 drought on Missouri's cattle industry. Stevens said the study also concluded that the fiscal impact of SB 641 to the state's revenue was "hugely exaggerated." The study also showcases the importance of the cattle industry to Missouri's economy.

"The Missouri cattle industry remains important to Missouri agriculture and Missouri's general economy when the ripple effect of cattle revenue is taken into account," said Brown. "Current data shows that the Missouri cattle industry made up $1.4 billion of Missouri's Total Gross Domestic Product in 2014."

Brown's study concluded that SB 641 will result in more money being circulated in Missouri's economy.

"The income tax refunds available under SB 641 will come at an opportune time for cattle producers and rural Missouri communities who are dealing with lower cattle as well as other agricultural commodity prices," said Brown. "These monies will multiply through local communities as farmers and ranchers make purchases that might otherwise have to be delayed this year due to the cattle price situation."

Sen. Schatz also spoke at the news conference along with Rep. Bill Reiboldt (R-160), who handled the legislation in the Missouri House of Representatives.

"I am committed to advancing this state's number one industry. And a small part of that means overriding the Governor's erroneous veto of SB 641," said Sen. Schatz. "I believe fully that the majority of legislators truly understand the importance of Missouri agriculture to this state."

MCA was joined at the news conference by the Missouri Corn Growers Association; Missouri Dairy Association; Missouri Pork Producers Association; and the Missouri Soybean Association. The veto override session is Sept. 14, 2016.