MOScout Daily Update: Cap Gains Cut Heads Back to House - VLT Bill Ekes Out Perfection Vote - Election Day - May Warns Senate and more…

Capital Gains Bill Advances

The Senate passed the big capital gains bill yesterday with a bipartisan vote 27-6.  Democratic Sens. Doug Beck, Karla May, Tracy McCreery, Stephen Webber and Brian Williams joined all the Republicans (except Sen. Mike Moon who presumably had single subject objections).

The vote came after the Senate’s Fiscal Oversight Committee passed it out 4-3.   Sen. Beck asked for clarification on the fiscal note as Missouri Independent published an article indicating that the cost would be substantially higher.  It was confusing response as staff agreed with MOIndy’s premise that Missourians had $13.3 billion in capital gains in 2022, the last year available for review.  But then what would seem like simple math – multiplying that by the tax rate of 4.7% –  yielded different results.  MOIndy (and my calculator) say it’s about $600 million – hundreds of millions more than staff’s analysis.

Meanwhile, the House sponsor Rep. Chad Perkins previously said that he plans to take “what the Senate sends back.”  That indicates that regardless of the ballooning fiscal note, the bill will be finding its way to Governor Mike Kehoe’s desk.

No one thinks that Kehoe, who ran on eliminating the income tax, will veto this bill.

But it surely will cause a little bit of heartburn for budgeteers.  It’s one more factor signaling tighter times ahead…

·       The state didn’t fully fund the foundation formula for the first time in years.

·       Economic forecasts now show a slowing economy.

·       Cuts from the federal government – including perhaps significant cuts to Medicaid (see below).

Driving the Day: Municipal Elections

It’s Election Day all across Missouri.  What folks will be watching tonight…

·       St. Louis Mayor – The police takeover was one of the top priorities of the Governor Mike Kehoe.  He may have a new partner in St. Louis as MOScout polls have shown Cara Spencer leading Mayor Tishaura Jones.

·       St. Louis Comptroller – Former Rep. Donna Baringer is in a tight race with long-time Comptroller Darlene Green.

·       Columbia Mayor – It’s a hot race with Mayor Barbara Buffaloe facing a tough challenge from Blair Murphy.  The latest twist: pastor caught stealing yard signs!

·       Chesterfield Mayor - Former Rep. Derek Grier is trying to succeed Bob Nation. He’s running against Dan Hurt.

·       Jefferson City Council – Senate staffer Erica Choinka is running in Ward 3 and lobbyist Kathi Harness is running in Ward 4.

And

Aligned looks at the scores of school board races and bond issues facing voters across the state.  Read it here.

·       The Kansas City Public Schools (KCPS) [is attempting] to secure its first bond approval since 1967—a $474 million general obligation bond aimed at extensive districtwide improvements.

·       Since 2015, Missouri has passed 531 bond measures, rejecting only 80 (85% success rate). Missouri requires either a 57.14% or 66.67% supermajority depending on the election date—April is among the more favorable windows.

·       Not all school bonds raise taxes. Some are structured as no-tax-increase bonds, allowing districts to issue new debt while maintaining the same property tax rate—typically by replacing retiring bond debt. Others do propose an increase to the district’s debt service mill levy, which can be a tougher sell to voters.

·       As Farmington R-7 puts it, “Bonds are for building, levies are for learning.” While catchy, it’s important to note that both bonds and operations rely on property tax revenues (levies) — the key difference is whether voters are being asked to increase, maintain, or repurpose those levies to fund capital projects or ongoing expenses like salaries and programs.

·       The Maplewood Richmond Heights School District, Strain Japan R-XVI, Sunrise R-IX, Williard R-II, Smithville R-II, Excelsior Springs 40, Park Hill School District, and Oak Grove R-VI are among those looking to voters for tax levy increases to boost teacher pay to help with recruitment and retention.

Follow-up on Medicaid Concern

Missouri Budget Project notes that any cut in federal funding for Medicaid will strain Missouri’s budget.  “Within the Department of Social Services (the bulk of Medicaid), GR only accounts for 14% of total Medicaid expenses. If the federal cuts move forward, Missouri would have to devote significantly more GR to Medicaid services.”

House Perfects VLT Bill

The House perfected Rep. Bill Hardwick’s bill to legalize and regulate video lottery terminals.  It included an amendment from Rep. Jeff Myers to create the Missouri Gaming Bureau to help with enforcement.

The perfection vote was so tight (74-70 with 25 absent) that its final passage is not a gimme. 

·       And Post-Dispatch’s Kurt Erickson correctly notes that it faces greater obstacles in the Senate where a couple senators can easily derail any change in the controversial issue.

May Warns Senate

Sen. Karla May, during debate on Sen. Travis Fitzwater’s virtual school bill yesterday, that she was on verge of being a “disruptive senator.”

I'm sick of being attacked. And if I continue to be attacked, I will attack back. I'm going on offense. And they do not want a disruptive senator this session.  Because I'm headed in that direction. And normally I'm really a person that is a negotiating person when it comes to issues and bills. But you're not getting ready to keep on pushing me and think I'm not going to push back.

Meet State Armor Action

Wall Street Journal profiles Michael Lucci, the force behind the Texas-based nonprofit, State Armor Action.  Read it here. State Armor’s lobbyist in Jefferson City is James Harris.

·       Lucci expects at least 20 states this year to vote on State Armor legislation. The bills reflect his hard line: Every China-based company is a potential military asset; any China-made component might be hardwired to Beijing; and the Chinese Communist Party has infiltrated deep into the U.S. heartland….

·       Nonprofits like State Armor have no obligation to identify their funding sources, and Lucci declines to name his…

·       State legislatures, which normally concentrate on tax, education and health issues, have already this year considered at least 421 bills related to China versus 160 in Congress, according to BillTrack50.com, an information service. State Armor alone is working on 70 such bills…

·       Lucci, like a growing number of conservatives, favors blocking Chinese participation from many American business sectors, even if doing so strains state economies and puts American jobs at risk.  Some of his initiatives have faced challenges, such as in Nebraska, where law-enforcement agencies have warned that barring state procurement from China could cut them off from access to high-functioning drones.  But generally, Lucci’s bills face limited opposition owing to widespread distrust of Beijing, particularly in Republican states where he is most active.

$5K+ Contributions

Missouri Leadership PAC - $8,000 from Missouri Leadership Forum.

Jason Law for St. Charles County - $5,001 from Bart Cooper.

Lobbyist Registrations

Mike Gibbons and Trish Workman added United Capital City Athletics.

Cassandra Allana Henderson added City of St. Louis Sheriff's Department.

Matthew Thompson added Kids Read Now, Inc.     

Olivia Wilson added FreedomCare, LLC.

David Barklage and Liz Henderson added Missouri Beverage Association.

Birthdays

Happy birthdays to Ron Leone, Mike Sutherland, PJ White, and Mike Thomson.