The state will begin catching up on its debt to counties for housing inmates in the coming year and find a way to pay the balance, Gov. Mike Parson promised a gathering of county commissioners in a meeting Friday in Columbia.
The budget proposal being considered by lawmakers includes $22 million toward the debt, Parson said.
"I don't how this has got to where it's got to over the years because we didn't budget the money, but it is one of the most ridiculous things I have ever seen that we don't pay the counties and the county sheriffs what we owe," Parson said.
The backlog of payments to the 114 counties and the city of St. Louis is about $32 million, Parson said at the annual training meeting of the County Commissioners Association of Missouri.
Prior to the meeting, several commissioners said what they most wanted to hear from Parson was how the debt would be paid and how he felt about legislation allowing counties to collect sales tax from online retailers.
They got half their wish. Parson didn't bring up taxes on internet purchases in his 20-minute talk but, as a former sheriff, he said he knows the difficulty caused when the state hasn't paid jail costs.
"This is foolish," Parson said. "We owe you the money, we need to pay our bill. Somehow, someway, I am going to figure out how to pay you what we owe you."
Speaking to reporters after his talk, Parson said he wants lawmakers to pass a bill to enforce the state sales tax with online retailers. In 2018, the Supreme Court ruled against Wayfair Inc. and other retailers who challenged a South Dakota law — now states may directly tax sales made by retailers who do not have a physical presence in that state.
For housing prisoners, the state pays counties $22.58 for every day that a person charged and convicted of a state crime is in jail for an offense that has a penalty that includes a state prison term.
That rate, which by law can be up to $37 per day, is virtually the same as 1998, when it was $22.50 per day.
For Boone County, the amount due officially is $799,236, Auditor June Pitchford said. The county has only submitted reimbursement requests through September and when all are processed, the state's debt to Boone County will be in excess of $1 million, she said.
The failure to pay the bill on time means the county was unable to hire additional deputies this year, Pitchford said.
"One of the requests in our budget for 2020 was additional law enforcement officers for the Sheriff's Department, but with our lagging sales tax revenue from untaxed internet revenue, and this, that was not possible," Pitchford said.
The cost of holding a prisoner in the Boone County Jail is about $65 per day, Pitchford wrote in an email.
The Boone County Jail has 246 beds and is generally at capacity, Pitchford said. The county pays $30 to $50 per day to other counties to house prisoners when there is an overflow.
When someone is held by Boone County for a federal crime, the county is paid $49 per day, she said.
When Pitchford took office, she said, the state paid $14 a day and that about covered the cost of housing inmates.
Lawmakers, as they work on the budget, can set the rate wherever they see fit to make the amount appropriated match the demands. While Parson's proposal is welcome, Northern District Commissioner Janet Thompson said, lawmakers need to embrace it.
"It is critically important that the legislature understand that our jails are all full of folks that are in there on state charges," she said. "We are not even being reimbursed for everything."
Tom Flanigan, a Jasper County commissioner and a former chairman of the House Budget Committee, said his former colleagues are reluctant to pay even the current amount.
"Because there is so much pressure on the budget and there are people who don't believe that $22.75 or whatever it is is a real number and want to negotiate it down," Flanigan said.
The high court decision in the Wayfair case struck down a key element of sales tax law that made online retailers exempt from collecting the tax — that the retailer could only be forced to collect the money if it had a physical presence, such as a store or warehouse, in the state.
While the tax collected at a retailer is called a sales tax, the same tax applied to an online purchase is called a use tax. Under Missouri law, residents who purchase more than $2,000 worth of goods shipped into the state from retailers who do not charge a sales must file a use tax return, though few do.
Some major online retailers, such as Amazon, have begun paying the 4.225 percent state rate because they have a presence in the state. They also pay the local tax rate applicable to the purchase.
Local governments have a variety of sales taxes available, which all must be approved by voters. But to charge a use tax in the same amounts, they must go to voters again.
In 2017, voters in Boone County, Columbia, Ashland and Harrisburg all rejected use tax proposals. In the years since, sales tax revenue to those governments have been flat or declining as more sales move online.
Commissioners want lawmakers to implement the Wayfair decision with a statute that does not require a new vote and which does not require them to lower other taxes to offset the new revenue.
"That kills us," Thompson said. "Both of these things are killing us and it is coming from the state and it is like, swim in your own lane, folks."
The major benefit of a use tax is that the money goes to the political subdivision where the purchaser lives, not where the retailer is located. For smaller cities and counties, that could add substantial revenue to their budgets.
"If the Legislature would put it in then we would't have to worry about passing the use tax because that would be tremendous for our county," said Bill Allen, Pike County western district commissioner.
For major shopping excursions, people in Pike County in northeast Missouri would drive to St. Louis before the advent of online shopping, Allen said. Now they shop from home.
"I am just as bad as everybody, I order off the internet," Allen said. "But I don't order stuff that I can buy locally."
Speaking with reporters, Parson did not offer any specifics about what should be in a bill implementing the Wayfair decision in Missouri.
"We need to start collecting that money," Parson said. "The argument is how are we going to spend it or what are we going to do. But not to collect that money is just a no-win situation of Missouri."
Missouri businesses are at a distinct disadvantage when online goods are available without sales tax, which ranges from about 5 percent to more than 10 percent depending on the purchaser's address.
If lawmakers can't agree on how to spend it or whether to cut other taxes, then the money should be set aside until a decision can be made, Parson said.
"If we end up doing nothing, at the end of the year we have just lost about $100 million and that's not a good business practice," Parson said.