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Missouri Gov. Nixon vetoes business tax breaks

Published on NewsOK Modified: June 11, 2014 at 5:22 pm •  Published: June 11, 2014

JEFFERSON CITY, Mo. (AP) — Democratic Gov. Jay Nixon vetoed a package of special sales tax breaks Wednesday for Missouri power companies, restaurants, computer data centers and others, setting up another showdown with a Republican-led Legislature that already has triumphed over him on a historic income tax cut.

Nixon denounced the tax break measures as a "grab bag of generous giveaways" providing "secret sweetheart deals" and "special interest favors" that could bust a $425 million hole in the state budget while also jeopardizing hundreds of millions of dollars of local tax revenues.

While vetoing 10 bills, Nixon also said he would make "dramatic spending reductions" in the coming weeks to guard against the potential for lawmakers to enact the tax breaks by overriding his objections during their September session.

"My vetoes today are the first step toward restoring fiscal sanity to a budget process that has gone off the rails," Nixon said at a Capitol news conference.

Some Republican lawmakers and business groups immediately vowed to pursue veto overrides. They disputed Nixon's cost projections and defended the bills as a mixture of important business incentives and mere clarifications of existing tax policies that they contend have been misinterpreted by the courts and Nixon's administration.

"By vetoing these bills, he has reemphasized the fact that the focus of his tax and spend administration is on growing the size of government rather than growing our economy," said House Speaker Tim Jones, R-Eureka.

Republicans hold a two-thirds majority required for veto overrides in the Senate and are one seat short of that threshold in the House. But the GOP is likely to gain seats when special elections are held in August for four vacant House districts.

In May, Republicans got the support of a lone House Democrat to override Nixon's veto of legislation cutting the state's income tax rate for the first time in nearly a century.

Last year, the Legislature overrode 10 Nixon vetoes — the greatest single-year total in Missouri since 1833, when a different constitution only required a simple majority vote.

The newly vetoed bills include several passed in May during the Legislature's final day of its regular session that would exempt various categories of businesses from paying sales taxes on the equipment or electricity they use.

One bill would grant those tax breaks to computer data centers, which store or process electronic information. Business groups have pursued incentives for data centers for years while arguing that Missouri is missing out on some high-tech businesses. But the bill that passed was more far-reaching than one that Nixon had previously supported during a 2011 special session. Nixon's budget office estimates it could waive $152 million annually in state sales tax revenues and an equal amount in local revenues.

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