Missouri legislative update


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Missouri legislative update

  1. 1. Missouri Legislative Update CLE Seminar for In-House Counsel June 24, 2014 St. Louis, MO Rodney Boyd Partner, St. Louis Dentons +1 314 259 5825 rodney.boyd@dentons.com
  2. 2. June 24, 2014 2014 Legislative Priorities • The Leaders • House Speaker Tim Jones (R-Eureka) • Right-to-Work and Tax Cuts • Senate President Pro Tem Tom Dempsey (R-St. Charles) • Student Transfer Fix and Tax Cuts • Governor Jay Nixon (D) • Increase Funding for Education, Medicaid Expansion, Bonding for Capital Improvement Projects
  3. 3. June 24, 2014 Other Top Legislative Priorities • Normandy School District Funding (HB 2014) Signed by Governor • Criminal Code Revisions (SB 491) Pocket signature • Transportation Tax (HJR 68) On August ballot • Unemployment Benefits (SB 510) Passed • Revenue Bonds for Capitol Improvement (SB 723 & HB 2021) Passed • Paycheck Protection (HB 1617) Failed • Tax Credit Reform (HB 1498) Failed
  4. 4. June 24, 2014 Tax Cuts (SB 509) Senate Sponsor: Sen. Will Kraus House Sponsor: Rep. TJ Berry • Status: Passed • Vetoed by the Governor on May 1st. • The Senate overrode the Governor’s veto on May 5th (23 for and 8 against) • The House overrode the Governor’s veto on May 6th (109 for and 46 against) • The bill is similar to a bill vetoed by the Governor in 2013 (HB 253). • The bill is considered to be a $620M dollar tax cut. • The bill would gradually cut the top personal income tax rate from 6% to 5.5%. The cut would take effect in increments of 0.10 percentage points over five years. • The bill would also phase in a 25% deduction for business income reported on individual tax returns. • No reductions would go into effect unless the state’s revenue collected in the previous year exceeded the amount of revenue in any one of the three prior years by at least $150 million. • The bill would allow an additional $500 personal income tax deduction for individuals earning less than $20,000. • None of the provisions of the bill would take effect until 2017. The soonest the full effect of the tax cut would take effect is 2022.
  5. 5. Tax Exemptions SBs 584, 612, 662, 693, 727, 829, 860 HBs 1296, 1455, 1865 • Status: Vetoed • The legislature passed 10 bills in the final days of the legislative session creating 17 new tax exemptions. • Gov. Nixon has criticized the legislature's actions, saying that the cuts could reduce state and local revenues by as much as $776 million. “Not a penny of it (was) accounted for in the budget that was sent to my desk,” Nixon said of the exemptions shortly after the Legislature adjourned. • Supporters contend that many of the exemptions clarify existing law and that the Governor's projections are grossly overblown. • The most notable is a sales tax exemption for electricity and equipment used by computer data centers. • One would overturn a March Missouri Supreme Court decision denying a “processing” tax break for the soap and chemicals used by commercial laundries. Another provision would overturn state court and Revenue Department decisions charging sales tax on the use of fitness centers, under an interpretation that they are places of recreation. June 24, 2014
  6. 6. June 24, 2014 Increased Funding for Education • Status: Appropriation bills sent to the Governor on May 9th • The Legislature and the Governor failed to reach a Consensus Revenue Estimate (CRE) • The Governor projected 5% growth in state revenue • The Missouri House and Senate projected 4% growth in state revenue • The Governor requested $278M more for increased education funding. • The Legislature gave $115M and agreed to total of $278M if state revenues are collected above 4% growth. The Legislature also introduces a new two tiered budgeting system for education. It includes the creation of a new surplus revenue fund for the purpose of funding education through general revenue and holding money in a fund to determine if the appropriate projected revenue has been reached. • The Senate granted a 3% increase for all higher education institutions but blocked public colleges and universities from offering in state tuition to students living in the U.S. illegally. • The Budget does not include additional money for Medicaid expansion as requested by the Governor. • The final Budget was approved at more than $26B • The new state fiscal year begins on July 1, 2014.
  7. 7. June 24, 2014 Normandy School District Funding (HB 2014) House Sponsor: Rick Stream • Status: Passed • Missouri lawmakers authorized up to $2 million of state aid to help the financially strapped, unaccredited St. Louis-area school system remain open through the remainder of the school year. • The state rescue for the Normandy School District was included in a $327 million budget bill given final approval by the House and Senate that covers unanticipated state expenses for the fiscal year that ends June 30. It now needs only the signature of Gov. Jay Nixon. • Lawmakers approved the additional spending for the 2014 budget on the same day that the Senate Appropriations Committee worked on a separate budget plan for the 2015 fiscal year that starts this July. • The Normandy School District is financially strained, in part, because of a state law that requires unaccredited school districts to pay for the costs of students who chose to transfer to other nearby school districts. • The state Department of Elementary and Secondary Education has projected that Normandy could finish the year with about $63,000, which wouldn’t leave much room for unexpected costs. • Story by David Lieb - Associated Press (April 9, 2014)
  8. 8. June 24, 2014 Student School Transfer Bill (SB 493) Senate Sponsor: Sen. David Pearce House Sponsor: Rep. Rick Stream • Status: Passed • The issue emanates from a small one sentence provision in a 1993 law (SB380) which allows unaccredited school district students to have the option of transferring to an accredited school district. The sending districts must pay both tuition and transportation costs for the student. • The issue was litigated in St. Louis and went to the Missouri Supreme Court which upheld the transfer provision in July 2013. Transfers began in St. Louis with the Normandy and Riverview Garden School Districts. Over 3000 students (20%) in both districts began to transfer in August of 2013. It created a financial crisis for the Normandy school district. • SB 493 seeks to fix the transfer crisis by creating a framework in which students may transfer, how receiving districts may limit class sizes, and how sending districts shall pay the costs of the transferring students. • Governor Nixon indicated that he will veto the bill because of the provision that allows public funds to pay for students who transfer to private schools.
  9. 9. June 24, 2014 Transportation Tax (HJR 68) House Sponsor: Rep. Dave Hinson Senate Sponsor: Sen. Mike Kehoe • Status: Placed on the August ballot • The House Joint Resolution (HJR) imposes a temporary three-quarters of one cent sales and use tax for transportation purposes. • The tax would be a temporary tax to improve the state highway system, city streets, county roads and the state transportation system. • Gov. Nixon opposes the initiative and placed it on the August ballot as a means of hurting its chance of passage.
  10. 10. June 24, 2014 Limiting Unemployment Benefits (SB 510) Senate Sponsor: Sen. Will Kraus House Sponsor: Rep. Mike Cierpiot • Status: Passed • The bill would allow Missouri residents to collect unemployment benefits for 20 weeks only when the state’s average unemployment rate is at least 9 percent. • The maximum duration of jobless benefits would decrease one week for each one-half percentage point drop in the unemployment rate, and bottom out at 13 weeks when the state’s jobless rate is less than 6 percent. • The bill has been predicted to make Missouri’s jobless benefits timespan one of the shortest in the Nation. Florida and North Carolina both have linked the duration of jobless benefits to the unemployment rate with the potential for their payments to halt after 12 weeks. • During the first quarter of 2014, the average state unemployment rate was between 6% and 6.5%. That would equate to 14 weeks of jobless benefits under the bill. • It passed in the House 101-49 and it cleared the Senate 24-8. • Rep. Jay Barnes stated, “As the economy is better, the need for unemployment benefits decreases and so too should those benefits.”
  11. 11. June 24, 2014 Criminal Code Revisions (SB 491) Senate Sponsor: Sens. Bob Dixon and Jolie Justus: House Sponsor: Rep. Stanley Cox • Status: Passed • The 1,100 page bill would overhaul Missouri’s criminal laws and make a substantial change in how the state would handle drug offenders. The bill was heavily endorsed by the Missouri Bar committee of prosecutors and public defenders. • The bill would alter some of the following sections in the Criminal Code: Create new felony and misdemeanor classes, changes privileged communications for clergy in their ministerial capacity regarding elder and vulnerable person abuse, modifies the definition of a dangerous felony, deals with repeat offenders, repeals several assault offenses, alters current law on property crimes, deals with leaving the scene of a crime and many more categories.
  12. 12. June 24, 2014 Revenue Bonds for Capitol Improvement (SB 723 & HB 2021) Senate Sponsor: Sen. Michael Parson House Sponsor: Rep. Rick Stream • Status: Passed • These bills authorize the issuance of revenue bonds ($600M) for certain state and university projects and pledge the State to make future appropriations to repay the full cost of bonds for such purposes. • There is bipartisan agreement among legislators and Gov. Jay Nixon about the need to replace old buildings such as the Fulton State Hospital. But the Senate legislation assumes a longer bond repayment period than a proposal from House leaders and goes further by also allowing bonding for improvements at other state facilities. • "We have an obligation to the taxpayers of the state of Missouri to take care of state buildings, to maintain them," said Sen. Mike Parson, R-Bolivar, who sponsored the legislation. • "We'll be putting our children and grandchildren in debt that they will eventually have to pay off. I don't like the idea of that," said Sen. Rob Schaaf, R-St. Joseph, who had held up the legislation. "That said, the bill does have good intentions." • The Fulton State Hospital project was approved through the State budget process. Bonds will be issued. It is predicted to cost $210M
  13. 13. June 24, 2014 Medicaid Expansion (HB 1901) House Sponsor: Rep. Noel Torpey Senate Sponsor: Sen. Paul LeVota • Status: Failed • This was one of Governor Nixon’s main legislative priorities. Governor Nixon used quite a bit of political capital to move Missouri forward on Medicaid expansion. Former Missouri US Senator Kit Bond was utilized as a lobbyist on behalf of the MO Chamber of Commerce to help with the passage of the bill but nothing moved the State Senate from the position of saying no to Medicaid expansion. • The House Government Oversight and Accountability Committee held numerous meetings on the bill but it never got enough traction to send the bill to the full House for debate and a vote. • The bill would have expanded Medicaid eligibility to residents who earn up to 138% of the federal poverty rate. • There were several members of the Senate who vowed to filibuster any proposals regarding Medicaid expansion. Those Senators included Sens. Kurt Schaefer, Brad Lager and John Lamping. A lot of the opposition was based on opposition to the Affordable Care Act (ACA). Others believed the state could not afford the continuation of care after the federal money ran out. • Senator Ryan Silvey did propose a plan in the Senate but it also failed to advance. • Organizations in support of Medicaid expansion included: The Missouri Chamber of Commerce and the Missouri Hospital Association.
  14. 14. June 24, 2014 Right-to-Work (HB 1770) House Sponsor: Rep. Eric Burlison • Status: Failed • The bill was one of the top priority bills for Speaker of the House Tim Jones. • The bill was perfected in the House (78 – 68), but was four votes shy of the 82 required for a Third Reading by the House. This was not a bill the Senate found to be a priority for this session. There has been a tremendous lobby effort by organized labor to kill this bill. It was one of the top priorities for organized labor across the state. • The bill stipulated that “no business may enter into exclusive contracts with labor organizations, and that no business or organizations may require the payment of dues or membership in a union as a condition of employment.”
  15. 15. June 24, 2014 Paycheck Protection (HB 1617) House Sponsor: Rep. Holly Rehder Senate Sponsor: Sen. Dan Brown • Status: Failed • Proponents of this bill call it “paycheck protection” and opponents call it “paycheck deception”. • The bill requires member of public employee unions, such as state workers and teachers, to submit written permission annually for any dues or fees to be deducted from their paychecks. • All first responders, such as firefighters and EMTs would be exempt from the provisions of the bill. • The way the bill was constructed, it would have bypassed the Governor and gone straight to a statewide vote of the people.
  16. 16. June 24, 2014 Economic Development / Tax Credit Reform (HB 1501) House Sponsor: Rep. Ann Zerr Senate Sponsor: Sen. Eric Schmitt • Status: Failed • HB 1501 would have: • Created state and local sales and use tax exemptions for data storage centers and allows municipalities to enter into loan agreements, or sell, lease, or mortgage municipal property for a technology business facility project; • Reauthorized the Distressed Areas Land Assemblage tax credit with a $48 million cap; • Create the Missouri Angel Investment Incentive Act to encourage individuals to provide seed-capital financing for emerging Missouri businesses engaged in the development, implementation, and commercialization of innovative technologies, products, and services. • Established the Missouri Export Incentive Act to encourage foreign trade through Missouri's international airports. • The bill would also reduce the cap on Historic tax credits from $140 million to $90 million for projects over $275,000 and $20 million for projects under $275,000, place an initial cap of $130 million on Low Income Housing tax credits and phase it down to $110 million by 2019, and prohibit these two programs from being used on the same redevelopment project.
  17. 17. June 24, 2014 Other Bills of Interest • Oral Chemotherapy Medications (SB 668) Signed by Governor • Telecommunications (SBs 649, 650, 651, 653) Signed by Governor • Nursing Mothers & Jury Duty (HB 1320) Signed by Governor • Changing Presidential Primary (SB 892) Signed by Governor • Innovation Campus Tax Credit (HB 1459) Passed • Hemp oil use for children with epilepsy (HB 2238) Passed • Balanced Budget (HBs 2001-2014) Passed • Voter ID (HJR 47) Failed • Tax Increment Financing Reform (SB 774) Failed
  18. 18. © 2014 Dentons Dentons is an international legal practice providing client services worldwide through its member firms and affiliates. This publication is not designed to provide legal or other advice and you should not take, or refrain from taking, action based on its content. Please see dentons.com for Legal Notices. Thank you! Rodney Boyd and Brian Grace Dentons US LLP One Metropolitan Square 211 North Broadway, Suite 3000 St. Louis, MO 63102 USA