Nixon Says Senate Bill 509 Would Drain $620 Million From Public Schools

JEFFERSON CITY, Mo. – Gov. Jay Nixon today issued the following statement regarding data requested by the Missouri School Boards Association showing the impact Senate Bill 509 would have on local school districts across the state.

“These new numbers show that if the legislature succeeds in punching a $620 million hole in our state budget with this unaffordable giveaway to special interests, it’s our students and schools who will pay the price,” Gov. Nixon said. “Senate Bill 509 would drain hundreds of millions of dollars annually out of our K-12 schools -- weakening our economy, undermining our stable business climate, and putting full funding of the foundation formula out of reach. Missourians want good schools and good jobs, not another dangerous scheme to defund our K-12 classrooms.”

According to the fiscal estimate produced by the legislature, Senate Bill 509 would reduce state revenues by more than $620 million annually when fully implemented.  K-12 education is heavily dependent on general revenue, so public schools are affected disproportionately by measures that reduce the general revenue budget, such as Senate Bill 509.

“Missouri already has the sixth lowest taxes in the nation and even the conservative Tax Foundation has slammed these ill-conceived gimmicks for failing to create jobs or generate economic growth,” Gov. Nixon said. “For our state to succeed in today’s high-tech global economy, we need to our students to be prepared to compete worldwide. But instead of investing in public education, this legislature has chosen to funnel money away from our classrooms and into the pockets of lawyers and lobbyists who need it the least.  The choice facing members of the legislature has never been clearer: they can support Senate Bill 509 or they can support public schools, but they cannot do both.”

Senate Bill 509 includes a 25 percent tax deduction for so-called “business-income.”  This type of income is often reported by wealthier individuals, such as lawyers and lobbyists, with LLCs or corporate partnerships.  In February, the right-leaning Tax Foundation wrote that “special carve-outs like this simply encourage individuals to structure themselves as pass-through entities for tax reasons, even if there is no economic or business reason for doing so.”

Instead of the unaffordable approach taken by Senate Bill 509, Gov. Nixon has laid out a proposal to fully fund the K-12 foundation formula and give working families a responsible tax cut by reining in wasteful tax credit expenditures.

Over the coming days, the Governor said his administration would continue to review the bill to identify any additional unintended consequences or drafting errors.

A link to the breakdown of district funding levels if Senate Bill 509 becomes law is available here.  The data was generated using the same methodology used by education groups in assessing the impact of House Bill 253 last year.