Nixon puts hold on spending, cites tax cut bill

Nixon puts hold on spending, cites tax cut bill

Nixon puts hold on spending, cites tax cut bill

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by DAVID A. LIEB

AP

Posted on June 28, 2013 at 10:11 AM

Updated Friday, Jun 28 at 10:13 AM

JEFFERSON CITY, Mo. (AP) -- Gov. Jay Nixon froze $400 million of spending Friday for education, building repairs and state services because of concerns that legislators could override his veto of an income tax bill that he contends would drain state revenues.

Nixon announced the spending restrictions while signing a nearly $25 billion operating budget for the 2014 fiscal year that starts next Monday. He also said he has directed his budget chief to prepare a plan to eliminate 1,000 employee positions if the tax-cut veto is overridden.

The income tax cut "would undermine our fiscal foundation now and for years to come," Nixon said at a Capitol news conference.  It is "a dangerous experiment we simply cannot afford. These costs are real and immediate, if my veto is not sustained."

Earlier this month, the Democratic governor vetoed a Republican-backed bill that would have phased in a tax deduction for business income over the next five years. That bill also would have gradually reduced the income tax rate for individuals and corporations over the next decade.

Legislative projections presume the bill would reduce state revenues by more than $700 million annually once fully implemented. But the immediate cost would be smaller and each incremental tax rate reduction for individuals and corporations would take effect only if state revenues continue to rise by $100 million annually.

But Nixon says the annual cost would be higher and could hit as much as $1.2 million in the short term, based on other provisions in the bill link Missouri's tax rates to federal legislation about online sales tax collections.

Lawmakers would need a two-thirds majority vote in both chambers to override Nixon's veto during a September session.

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