Tax Cuts, Medicaid Among Top Priorities As Legislators Gather

Photo by Nicole Lunger
Several familiar subjects, including tax cuts and Medicaid expansion, were among the main topics of conversation Wednesday in Jefferson City as the 2014 legislative session opened. | Photo by Nicole Lunger

Tax cuts were on the forefront of the minds of legislators and business lobbyists as Missouri began its 2014 legislative session Wednesday.

In his opening address, House Speaker Tim Jones, R-Eureka, said Democratic Gov. Jay Nixon failed to cooperate on tax reform during the 2013 session.

“Our governor has said no to lower taxes and policies that would create a vibrant business environment,” Jones said. “That is, in large part, why our state has lost 30,000 jobs during his tenure and ranks near the bottom of the country for job growth.”

Tim Jones | Photo courtesy of Tim Jones
Tim Jones | Photo from timwjones.com

Broad-based tax cuts are a top priority for House Republicans, some of whom have already introduced bills that would reduce income taxes. Although tax reform is not among their top priorities, Democrats expressed concern that Republicans seem unwilling to practice bipartisanship.

Tax relief is also among top priorities for the Missouri Chamber of Commerce and Industry and Associated Industries of Missouri. AIM President Ray McCarty said part of why broad-based tax reduction is important is because it helps businesses — no matter their size, location or organizational structure. “We’d like to see some broad-based tax relief so they can use that money to reinvest in their business and buy equipment or hire people or whatever they need to do to get the economy going again,” McCarty said. “We think that it is not only necessary as an economic stimulus but as a way to compete with other states.”

McCarty said companies are likely to go across the border to states with lower taxes. A location outside of Missouri might be particularly appealing to high-tech companies because they are easier to move, he added.

“Reducing the tax burden on Missouri’s job creators and workers has been part of our agenda for more than a decade,” Dan Mehan, president of Missouri Chamber of Commerce and Industry, said in a release that highlighted the organization’s goals of the session. “But while legislative efforts have been blocked in Missouri we’ve watched our neighboring states pass us by and take our jobs with them in the process.”

Democrats, on the other hand, argue that Missouri taxes are among the lowest in the nation already.

“So if we are in this position and we don’t feel that we can encourage business to come here currently, how we do believe doing the same thing, continuing to lower business taxes, will bring us more business?” asked Rep. Jill Schupp, D-Creve Coeur.

She said the special session that allowed for billions of dollars in incentives for Boeing proved the legislature had the ability to be flexible, nimble and quick. Schupp said that money needs to be available for the state to be able to jump on other opportunities in the future.

Rep. Jill Schupp, D-Creve Couer | Photo from jillschup.com
Jill Schupp | Photo from jillschup.com

The Missouri Chamber is also supporting changes in unemployment regulations to help businesses. For states that are in debt to the federal government for borrowing unemployment insurance funds (Missouri owes $308 million), the penalty was raised from $42 per employee to $63 per employee in January, according to the Chamber.

“Missouri employers bear the weight of this problem, because employers fully fund the system through federal and state (unemployment insurance) taxes,” Mehan said. “Employers have every right to demand a more cost-effective approach to paying down the debt and greater measures of accountability to root out fraud.”

Unemployment is also a major focus for AIM, though with a different emphasis. During the last legislative session, unemployment reform was passed in the General Assembly, but vetoed by Nixon. The federal government also had an issue with one provision. The feds said that if an employee is fired for doing something outside of the workplace, he or she is entitled to unemployment benefits.”The rest of the bill was very good stuff,” McCarty said. The bill will reappear in the General Assembly in the 2014 session.

“If you know the rules and you violate them and you get fired,  should you really get unemployment?” McCarty asked. “And that’s what we want to see, tighten that up as much as you can.”

Another focus for AIM will be the minimum wage. The efforts against a minimum wage hike will be two-pronged. One will be focused on the minimum wage index and the other will be on the minimum wage increase. Some Democrats will be pushing for an increase of the minimum wage from $7.50 to $8.25.

McCarty said that the actual minimum wage does not directly affect most of AIM’s members, because manufacturing often pays higher than minimum wage. However, it does push the wage structure up, and it also limits the number of entry-level jobs, which might in turn limit the number of qualified applicants in the future.

Ray McCarty, president of Associated Industries of Missouri | Photo by Gwen Girsdansky
Ray McCarty | Photo by Gwen Girsdansky

However, Democrats said that education improvements — one of their top priorities — would help develop a stronger applicant pool.

Rep. Jacob Hummel, D-St.Louis, the minority floor leader, said his party’s absolute highest priority will be Medicaid expansion, which he said could create 24,000 jobs. Schuppe said that Medicaid expansion will be necessary for rural hospitals, because many of them might close without it.

AIM is in favor of Medicaid expansion, which Democrats called their top priority Wednesday during a press conference. However, McCarty said expansion needs to come after transformation.

“It raises a lot of questions, because people don’t understand initially until we explain why we have the position,” he said. “We don’t think expanding the current system is a good idea. But we think it is a good opportunity for us to look at how Medicaid works and change it.”

AIM wants more people to have Medicaid because often uninsured people go to the emergency room for things like the flu because they can get treated and they don’t have to pay for it. The hospital pays a tax that pulls more money from the federal government to cover the unpaid emergency room visits.

“If we don’t take the (federal subsidy for) Medicaid expansion, it makes it worse for hospitals, which makes it worse for every other employer in the state because they are not getting as much money to pay for that uncompensated care,” McCarty said.

Bills that have been introduced can begin getting referred to committees on Thursday.


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