MO: Sales Tax Increase for Transportation Heads to Missouri Ballot

May 14--JEFFERSON CITY -- The Missouri Legislature, which is cutting income taxes, wants you to increase your sales taxes.

The House voted Wednesday to place on the Nov. 4 statewide ballot a proposal to raise the state sales tax by three-fourths of a cent per dollar for transportation projects.

If approved by voters, the tax would add about 8 cents to a $10 purchase. It would take effect Jan. 1, 2015.

Supporters said the increase was needed to bolster a shrinking road construction budget and provide funding for mass transit, ports, bike paths and other modes of travel.

"It's a no-brainer to me," said Rep. Don Phillips, a retired highway patrolman and a Republican from Kimberling City. "One way or the other, we are going to pay for our roads."

House Speaker Tim Jones, R-Eureka, opposed the tax increase and the Republican majority split on it, so the proposal needed Democratic votes to pass. Unhappy with the Legislature's override last week of the governor's veto of the income tax cut, some Democrats had threatened to bolt.

But in the end, enough Democrats stayed on board and the measure passed 105-43. Earlier, the Senate had passed it on a bipartisan vote of 22-10.

The tax increase would generate an estimated $534 million a year, with 90 percent of the money going to state projects and 10 percent to local projects. It would run for 10 years.

Critics say sales taxes are hardest on low-income people because a higher percentage of their income goes toward buying essential items. However, the 3 percent general fund portion of the current state sales tax of 4.225 percent is not applied to groceries or prescription drugs, and the increase would not be, either.

In the House, the measure passed with 73 Republican and 32 Democratic votes. The opposition was also bipartisan: 30 Republicans and 13 Democrats.

Officials have been warning for years that the Missouri Department of Transportation is approaching a funding cliff. They say the road construction budget will drop to $325 million in 2017, the lowest it has been since 1992. It was $1.3 billion five years ago and currently stands at about $700 million.

After the House vote, MoDOT's director, Dave Nichols, issued a statement praising the Legislature's move.

"Today is a great day for the future of transportation in Missouri," he said.

Nichols said in an interview that the highway commission would work with regional planning agencies to develop a specific list of projects that would be funded. That list will be finalized by September, before the November vote on the tax increase.

"The intent is not to sell a lot of bonds," Nichols said. For the most part, "it's going to be pay-as-you-go."

Earmarking a sales tax for transportation would represent a change in how roads are funded. The transportation agency has relied mainly on the motor fuel tax, vehicle sales tax, vehicle registration and drivers license fees for its state funding.

The state fuel tax is 17 cents a gallon and was last raised in 1992. But Nichols said polling and grass-roots meetings have found more support for raising the sales tax than the fuel tax. Also, it would take too large an increase in the fuel tax to get the level of funding that the department needs, he said.

Another problem with relying on the fuel tax is that as drivers use more energy-efficient cars or drive less, they pay less in fuel tax.

Still, even some of the plan's supporters said they had qualms about raising the sales tax. Said Rep. Bill Otto, D-St. Charles: "We're taxing my seniors who don't own cars to pay for the roads."

Several opponents were seeking recognition when the House cut off debate after only a half-hour. Rep. Jeremy LaFaver, D-Kansas City, later got in a dig with a post on Twitter. He referred to the Legislature's enactment last week of a $620 million state income tax cut, which will be implemented starting in 2017.

"Last week we heard that tax cuts create jobs. This week apparently tax increases create jobs. Hard to keep up," he tweeted.

An unusual coalition of labor and business leaders lobbied for the proposal and helped keep the bipartisan majority intact. Last week, when Democrats threatened to mutiny, House Majority Leader John Diehl, R-Town and Country, called them "crybabies."

In an interview Wednesday before the vote, Rep. Chris Kelly, D-Columbia, said: "The crybaby caucus has folded its tent. The highways here are in very bad shape. I'm not crazy about (the sales tax increase) but you can't just sit in the mud and continue to go backward. If somebody's got a better plan, roll that puppy out. But nobody has."

The measure is HJR68.

Virginia Young is the Jefferson City bureau chief of the Post-Dispatch. Follow her on twitter at @virginiayoung.

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