The Missouri Senate is set to pass two bills out of its chamber Wednesday as a part of a special session centered around an income tax cut and a set of agriculture tax credits.
However, both bills differ from what Gov. Mike Parson initially requested, with one of them containing enough changes to require an expansion of the scope of the session by Parson.
Senators gave first-round approval of each bill on Tuesday. They were initially heard on Monday in the Senate Appropriations Committee before being voted out of committee.
The first bill senators approved on Tuesday contains a permanent income tax cut. The call for another tax cut from Parson came after he vetoed a bill that gave a one-time, nonrefundable income tax credit to some Missourians.
Some of the provisions Parson asked for included raising the standard deduction, eliminating the bottom tax bracket and reducing the individual income tax rate to 4.8%.
Under the legislation the Senate advanced, the individual income tax rate would fall from 5.3% to 4.95% starting in the next calendar year. Additionally, it allows for the rate to lower again to 4.8% in 2024, depending on state revenue collection.
However, the rate could go even lower than Parson requested, eventually down to 4.5%. It also sets up more thresholds that would have to be met for the rate to decrease.
“It just makes the guardrails a little bit higher than what they've been in the past. And it's a standard that can be met, and I think will likely get met. But it just gives us some good protection there,” said Sen. Andrew Koenig, R-Manchester.
The bill, which is a combination of legislation by Koenig and Sen. Lincoln Hough, R-Springfield, also does not increase the standard deduction.
Democrats spoke against the legislation on the Senate floor, saying the surplus in state funding that is going towards this tax cut could be spent elsewhere to better benefit the state, such as increasing teacher pay or even sending out checks to working families.
“I don't want to build the state's decisions on crises and disasters that may bring in more money down the road, because those dollars are supposed to go to make up for what we lost during the pandemic,” said Sen. Jill Schupp, D-Creve Coeur.
Democrats also spoke on how little some families could be getting back as a result of the income tax cut compared to wealthier people.
“When was the last time you looked at your state tax bill and thought, ‘Wow, that's a lot lower than I thought it was’? You've never said that. Because that tax cut was never for you. And neither is this one,” said Sen. Greg Razer, D-Kansas City.
The cost of the tax cut is estimated to be more than the $700 million first outlined by Parson.
In addition voting for the tax cut, the Senate also gave first-round approval to a bill containing agriculture tax credits. The legislature passed a similar bill last session, but the sunset date was after two years. Parson vetoed it and instead asked for a six-year limit.
While the bill does contain the six-year sunset, it also contains other agriculture language that is not related to tax credits. Some of that language includes provisions on land surveys and commercial log trucking.
Sen. Denny Hoskins, R-Warrensburg, introduced the amendment containing those extra provisions, which was later approved by senators.
“Should this pass out of both bodies or the House version that includes these four items in there, the governor would have to expand his call in order to include those,” Hoskins said.
He said he has spoken with Parson on expanding the scope of the session, and Hoskins said the governor expressed support of those added items.
If both bills pass the Senate, they would go to the Missouri House, which will convene at 10 a.m. Wednesday for special session and then again at 2 p.m. for veto session.
Follow Sarah Kellogg on Twitter: @sarahkkellogg
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