Senator Brad Lager seeks to cap state spending with constitutional amendment

by Alexander Mallin
(MDN News) -- Republicans in the state Capitol said Thursday that they want to change the Missouri Constitution to cap state spending and possibly lower the state income tax. Sen. Brad Lager, R-Savannah, told the Senate Ways and Means Committee that he wants voters to put a spending limit on the General Assembly. It would prevent the government from exceeding the budget of the previous fiscal year, with an adjustment for inflation. Lager said its wrong for the legislature to encourage economic growth through tax cuts without addressing state spending. "All too often in this building the philosophy of 'starve the beast' happens," Lager said. "If you don't limit spending all you're going to see is bigger problems down the road." Lager said his proposal would ideally lead to Missouri eliminating the income tax, which he said would put it in better contention with its neighboring states.

"If we do not have the tools in place to at least be competitive at some point, we are going to lose economically," Lager said. "You can't just focus on the revenue side and think that we're going to make this journey. You also have to have a real and candid discussion about the cost side."

But Sen. Paul LeVota, D-Independence, said changing the state Constitution would be too drastic of a step.
"To me the scary part of this is tying the hands of future legislatures to not be able to do what they may need to do," LeVota said.

Jay Hardenbrook, Policy Director of the liberal-leaning Missouri Budget Project, said the proposed amendment could endanger certain state programs by cutting too much too fast. "We do have to address the spending side at the same time we're addressing the revenue side," Hardenbrook said. "But we need to do that with a scalpel and not a machete and we tend to think of this as more of a machete approach." Hardenbrook said if this measure had passed last year, the state would have had to cut an additional $87 million from the budget in order to follow it.

Lager said that after working 11 years in the Missouri capitol, he has run out of ideas to keep government expansion under control. "I don't have faith in elected officials," Lager said. "I have now painfully watched as both sides have grown the budget exponentially. I don't believe that's ever going to change. The only way we are going to slow the growth of government is when the people tell those who are elected, 'You can no longer do this'." The amendment is still being heard in committee; if passed through the General Assembly voters would decide on it in 2014.

Senate panel looks at slashing of business taxes

(MDN News) -- Republicans in the Missouri Senate are looking to dramatically lower the tax bills of business owners in the state, saying that the actions of surrounding state legislatures could leave Missouri's economy in the dust if lawmakers don't act quickly.

Sens. Eric Schmitt, R-St. Louis County, and Will Kraus, R-Lee's Summit, have each put forth proposals that would cut the state's corporate income tax rates and also allow business owners to deduct part of their business income on their individual tax returns.

Both senators told a Senate tax committee this week that the changes are necessary if Missouri wants to compete with states like Kansas. As of Jan. 1, some business income in Kansas is now exempt from the state's income tax and conservative lawmakers there are now pushing to eliminate the individual income tax altogether.

"The fact of the matter is, we are in a competition among other states," Schmitt said. "We don't operate in a vacuum. We're part of a larger decision-making process for business owners."

Schmitt's measure would cut the corporate tax rate from the current 6.25 percent to 3.125 percent by 2017 and would allow business owners to deduct half of their business income. The proposal from Kraus would allow a 25 percent deduction and would reduce the corporate rate to 3.25 percent by 2017.

A fiscal estimate attached to Schmitt's bill said it could cost the state as much as $200 million in revenue by 2016, while the cost of Kraus' bill was pegged at more than $924 million per year within three years.

Sen. Paul LeVota, D-Independence, said he is worried that taking that much revenue from Missouri's tenuously balanced budget could put vital state services, such as education or road construction, on the chopping block.

"We've seen the Kansas cut and now they can't fund their schools," LeVota said. "We see that we have cut and we've given away a lot of tax credits and now we can't fund our foundation formula. If we dig into tax policy that helps create jobs, which we all want to do, let's make sure that we're still paying for the basic obligations of the state."