A Republican push to cut Missouri's income taxes failed Wednesday as the state House fell significantly short of the threshold needed to override a veto by Democratic Gov. Jay Nixon.
The vote marked a major victory for Nixon, who had traveled extensively across the state warning that the tax cut could jeopardize funding for public education, mental health care and other state services.
Nixon described the bill as "fiscally irresponsible" and asserted on Wednesday that it "would have defunded our schools and weakened our economy."
"Today's vote represents a defining moment for our state and a victory for all Missourians," Nixon said.
Republican legislative leaders had touted the tax cut as an important means of spurring the economy and competing for businesses against Kansas, Oklahoma and other states that have recently cut income taxes. But GOP leaders were unable to hold together their supermajority, as 15 members sided with the Democratic governor.
The House voted 94-67 for the veto override — significantly shy of the 109 votes required for a two-thirds majority. As a result, the override never was considered by the Senate.
House Speaker Tim Jones called the failed override attempt "only a temporary setback" and was joined by the state's largest business associations in vowing to try again next year to pass a new tax-cut bill.
"We will not be swayed from our efforts to provide Missourians with the tax relief they deserve, and we will make a tax cut our top legislative priority when we return for the 2014 legislative session in January," said Jones, R-Eureka.
The tax cut was one of the most high-profile issues among Nixon's 33 vetoes this year, which also included a measure attempting to nullify some federal gun-control laws.
Nixon had leveraged his veto by withholding $400 million from education, building projects and other services because of concerns that the tax cut would bust a hole in the budget. He said at a news conference Wednesday that he will act quickly to release most of that money.
The Missouri tax-cut battle was one of the most the intense yet in what has become a nationwide effort by conservatives in state capitols to slice income taxes that for decades have formed the financial foundation for many government services. About a dozen states already have cut income taxes this year, including sweeping changes to tax codes in Kansas and North Carolina and a ratcheting down of rates in Arkansas, Indiana, Ohio, Oklahoma and Wisconsin.
"We have got to have a plan to help retain jobs in Missouri, attract new companies to Missouri, so we can keep people employed," said House Speaker Pro Tem Denny Hoskins, R-Warrensburg.
The bill's sponsor, Rep. T.J. Berry, R-Kearney, warned that Missouri "will be the farm team for other states" unless it does more to aid businesses.
Page 2 of 2 - But Democrats warned that the tax cut would zap funding for vital state services while primarily benefiting the wealthy and providing comparatively little tax relief for middle-class families.
"This bill wrecks Missouri. Let's sink it," Rep. Jill Schupp, D-Creve Coeur, said during debate.
The legislation would have gradually reduced Missouri's corporate income tax rate from 6.25 percent to 3.25 percent and lowered its top tax rate for individuals from 6 percent to 5.5 percent over the next decade, so long as state revenues continued to rise by at least $100 million annually. It also contained a five-year phase-in for a new 50 percent tax deduction for business income reported on individual tax returns — a provision that supporters said was intended to benefit small businesses.
Another part of the bill would have triggered an additional Missouri income tax cut if the federal government enacted a law making it easier for states to collect taxes on online retail sales.
The bill's price tag was in dispute. Legislative researchers put the eventual annual cost at $540 million. Nixon contends Missouri could have lost $1.2 billion in tax revenues in a single year.
In addition to raising budgetary concerns, Nixon also cited an apparent drafting error in the bill that would have imposed state sales taxes on prescription drugs.
The months preceding the veto override vote resembled an election-year-style campaign.
Retired investment firm executive Rex Sinquefield poured nearly $2.4 million into a marketing campaign promoting Missouri's income tax cut bill that was coordinated with some of the state's largest business associations. Texas Gov. Rick Perry even waded into the debate, headlining pro-tax-cut events in the St. Louis area and running ads in Missouri denouncing the veto and encouraging businesses to consider relocating.
Education groups were at the forefront of the opposition. A teachers' union ran ads against the tax cut, and more than one-fifth of Missouri's local school boards passed resolutions against it. They warned of potential teacher layoffs, overcrowded classrooms, longer bus rides and the elimination of extracurricular activities if the income tax cut led to a reduction in school funding.