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Tax Cuts Compromise

May 14, 1999
By: David Grebe and Clayton Bellamy
State Capital Bureau
Links: HB 490, SB 373, SB 294, HB 516

JEFFERSON CITY - They gave a million here and a million there, and three camps that only a day earlier were fighting over tax cuts came to an agreement on a tax cut package this year.

Facing the threat of a special session from Gov. Mel Carnahan, members from both parties sat down and hammered out a compromise Thursday afternoon, which the governor has said he will support.

"It includes all the governor's major proposals," said Brad Ketcher, the governor's chief of staff. "It does it in an affordable way and a broad-based way."

The governor insisted on a tax package not to exceed $200 million. Lawmakers began negotiations with cuts as high as $2 billion and whittled the total down to just over $200 million, and came to an agreement after debating all afternoon.

"I came in here and tried to get the number over 200 million," said Sen. Steve Ehlmann, R-St. Charles, "and now it's going down."

Sen. Ken Jacob, D-Columbia, criticized GOP members for excessive cuts, saying the budget must be cut in order to cut taxes.

"Nobody was talking about cutting the budget earlier," Jacob said.

The Corporate Franchise tax was the primary focus of dispute. Republican leaders earlier proposed eliminating the tax altogether, while Jacob said he wanted no reduction at all, and said he preferred the Earned Income Tax Credit, which offers tax relief to the poor.

"I'm trying to help the poorest of the poor," Jacob said. Lawmakers eventually agreed on a 25 percent reduction in the franchise tax.

The package includes:

* Increasing the income tax personal and dependent deduction by $900 -- from $1,200 to $2,100. Cost: $155 million.

* Lowering the corporate franchise tax from 1/20 of one percent to 1/30 of one percent, while raising the tax floor from $200,000 to $1 million. Cost: $32 million

* Allowing self-employed people to deduct 60 percent of health insurance expenses. Cost: $6 million.

* Easing the tax burden on pensions. Cost: $6 million.

* Exempt the purchase of research equipment for biotechnological, medical or veterinary purposes from the sales tax. Cost: $1.3 million.

* Exempt the purchase of vending and amusement machines from the sales tax. Cost: $1 million.

* Creating a tax credit for ADA compliance. Cost: $200,000.

Lawmakers dropped ideas for a state-level Earned Income Tax Credit, tax credits for employers who offer child care, and tax breaks for chip mills. Also nixed was a proposal to provide credits for donations to unplanned pregnancy centers, as long as those centers don't offer abortions.

Tax relief in other bills likely to see the governor's desk include credits for community development, helping distressed neighborhoods, agriculture and an exemption for off-campus textbook sales totalling $50-60 million.

IN OTHER LEGISLATIVE NEWS

The House just said no to off-track betting Thursday killing a bill that had already passed the Senate.

Republicans led the charge against the measure, but obviously had enough Democrats in tow to defeat the leadership-backed bill.

House Majority Leader Wayne Crump lamented the bill's death.

"It's a shame that high dollar lobbyists from Illinois and Kansas have kept an industry that would have helped agriculture from coming to Missouri," the Washington County Democrat said. He said lobbyists representing Fairmount Park, a track in Illinois, were the key force behind the defeat.

Rep. Matt Blunt, D-Springfield, voted to kill the bill.

"I'm against expanding gambling," he said. "And it's not going to help agriculture as much as they argued."

Helmets are optional for motorcycle riders over 21, if the governor signs a bill sent to him by the legislature Thursday.

It is unclear if Carnahan will sign the legislation. Missouri Highway Patrol superintendent Weldon Wilhoit will advise him not to sign the bill.

"We're concerned about safety," Wilhoit said. "There's also a cost issue. Rising medical costs, eventually we all share in that."

A trooper last week almost died in a motorcycle accident, but his helmet saved his life, Wilhoit said.

The city of St. Louis cannot jump on the bandwagon of cities suing the gun industry, if late-session legislation is passed.

Philadelphia, Chicago and New Orleans are among the cities suing the gun manufacturers for damages caused by the unauthorized use of firearms. St. Louis is expected to join them.

The proposal began as a bill introduced almost immediately after the voters' defeat of the concealed weapons ballot issue. Major conceal-and-carry supporter Crump co-sponsored the bill, which died early in the legislative process.

Thursday, House lawmakers tacked the measure onto a bill that increases judges' retirement and jury pay.

Alzheimer's patients may get better care if the governor signs a bill sent to his desk Thursday.

"It's going to allow Alzheimer's patients to stay in residential care facilities longer," said Rep. Tim Harlan, D-Columbia. Harlan said current safety rules often force Alzheimer's patients into skilled nursing facilities too early. Harlan sponsored the bill which appeared dead just a few weeks ago.

The bill also eases the current moratorium on new nursing home beds in some areas. It allows facilities that are nearly full to expand or buy new beds under some conditions. Presently, a full nursing home cannot expand - if there is a struggling home nearby.

Harlan said the bill isn't ideal - but is an improvement. "The for-profit nursing home industry is very powerful in this state," he said.

Child care workers will have to register with the state making it easier for parents to do background checks on child care providers.

The bill, which awaits the governor's signature, also disqualifies child care providers with felonies from receiving state funds to care for children.

Two Columbians, Rick McDowell and Debra Linneman, were instrumental in the bill getting passed. The two testified in the bill's hearing earlier this session that Joanne Palmer, their child care provider, was negligent leading to the death of their children from sudden infant death syndrome.

Linneman said at the hearing if the background checks were available she would not have hired Palmer based on her prior record.