Legislative Issues

West County Democrats
Legislative Update
February 12, 2017

Federal Items:

The new tax law is now in effect.  Significant changes to individual and corporate tax rates are being implemented, with the greatest savings – as advertised – going to the richest people and companies.   Unfortunately, many middle class and working class families may find their effective tax rate has increased due to changes in the personal exemption deduction.

Major funding cuts to safety net programs (including Medicaid and Medicare) will be required in coming years to help offset the impact of the lost tax revenue.  For example, Missouri may be looking at an annual loss of $2 billion in Medicaid funds.

Congress finds itself preparing for the 2019 Budget prior to approving a 2018 Budget.

Another short-term fix to the debt ceiling and budget spending authorization passed Congress in December.  They must re-visit the same issues by January 19th.  It is very probable that Congress will never pass a unified budget for the current federal fiscal year.  The lack of a true budget has left many good programs – including the Children’s Health Insurance Program – in limbo.

While attention has focused on Capitol Hill and the White House, the web of ultra-conservative appointees to critical positions in the federal bureaucracy is having a tremendous, horrible impact on government policy.

For example, the head of the Centers for Medicare and Medicaid Services is a conservative activist who had been critical of the Medicaid Expansion.  (She has been praised by the American Enterprise Institute for her work at reducing Medicaid participation in Indiana.)  The bureaucrat is developing new rules to add a work requirement to Medicaid.

State Items:

Last week the House Ethics Committee made it official:  the Missouri Legislature has different rules for white men than it does for black women.  Note that Senator Maria Chapelle-Nadal lost her committee slots and was reprimanded for an ill-advised social media post in which she hoped that someone would eliminate President Trump.  Meanwhile, on a party line vote, the House Ethics Committee declined to in any way sanction Rep. Warren Love who advocated ‘hanging’ (as in ‘lynching’) those who vandalize Confederate statues.  Further, as noted by Rep. Sarah Unsinger, the committee asked Rep. Love what sort of punishment he would accept before deciding to not act.

The House has already proposed 721 new bills and the Senate 319 bills for consideration this session.  Fewer restrictions on firearms, more restrictions on abortion and a variety of new rules for those getting government benefits are in the mix.

A proposal to eliminate real estate tax on every home owned by the same people for 30 years (and remove personal property tax on every vehicle more than 10 years old) has been proposed by Rep. Rick Brattin.  While the proposal sounds nice, it would devastate school district revenue: that may not be enough to stop the proposal.

Also proposed are schemes to eliminate or severely reduce the state income tax – without meaningful plans to offset the lost revenue.

Tax cuts passed over former Governor Jay Nixon’s veto in 2014 took effect on January 1st.  In addition, Missouri will lose an unknown amount of revenue beginning this year due to the revised federal tax rates.

Missouri’s revenue streams are prone to disturbance.  Under the best of circumstances the flow of income and sales taxes may vary by hundreds of millions of dollars a year from the best predictions of state, university and private economists.  The estimated reduction in Missouri revenue for the next budget year ranges from $100 million to $600 million.

The smallest loss guess comes from the Kenneth Lay Professor of Economics at Mizzou and his colleagues.  The Missouri Budget Project and others lean towards greater revenue losses.

No matter what the actual impact is on state revenue, it is very likely that the legislature will be forced to reduce spending on education and Medicaid.  It is also virtually certain that Missouri state workers will not receive a pay increase in 2019.

Submitted by Glenn Koenen, WCD Member

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