Missouri Senate passes sales tax rise for roads

JEFFERSON CITY, Mo. -- The Missouri Senate passed a scaled-back sales tax increase for transportation funding Tuesday as supporters sought to make the bill more palatable to the chamber's Republican majority.

Senators voted 22-10 to send the proposed constitutional amendment to the House. It would levy a three-fourths cent sales tax if approved by voters at the November election. The state sales tax would rise to just below 5 percent, but in most areas the overall tax is higher.

House members backed a 1-cent sales tax increase earlier this month. Now the two chambers must agree on an identical version to send the issue to the ballot for voter approval.

The Senate's version is projected to generate $534 million annually during the 10-year lifespan of the tax. A 1-cent sales tax would pour $720 million per year into the state's coffers.

"It doesn't cure all the problems, but it does take care of a lot of issues," said sponsoring Sen. Mike Kehoe, R-Jefferson City. "It's a compromise."

The Missouri Transportation Department says it takes $485 million annually to maintain roads in their current condition but that the state's construction budget is projected to dip to $325 million in 2017.

The decline is due to a variety of factors. Federal highway funding has become more uncertain, and fuel taxes have flattened, partly because of more fuel-efficient vehicles. A bond-financed surge in construction during the last decade has dropped off, while the payments continue. Construction costs have also risen.

Transportation Department director Dave Nichols said after Tuesday's vote he was "excited" lawmakers were continuing to discuss the proposal. When asked about the reduced amount, he said it's up to lawmakers to decide how much money the department can put to use.

Some lawmakers said the Legislature would send voters a mixed signal by advancing a sales-tax increase the same year it passed an income tax cut for individuals and some business owners. The income tax cut is estimated to cost $620 million annually once phased in.

By reducing the scope of the proposed transportation sales tax Tuesday, the $534 million Senate plan would ensure the revenue for transportation would not exceed the reduction from the income tax cut.

"What message do we send to voters when we say we have enough revenue to institute a tax cut, but we don't have enough revenue that we need to raise taxes on most goods purchased in the state?" asked Sen. Jason Holsman, D-Kansas City.

If passed by the Legislature, the proposal would head directly to the ballot. Supporters contend voters would look favorably on the measure because they place a premium on good roads. Missouri voters rejected the most recent attempt to raise taxes, a 2012 initiative petition to increase the cigarette tax.

Under the legislation, the sales tax would need to be reauthorized by voters every 10 years, starting in 2024. The bulk of the revenue would fund construction for roads and bridges, but could also be used to construct or operate other facilities, including railroads, ports, airports and transportation for disabled people.

Ten percent of funds raised by the sales tax would also go toward local transportation projects. Cities could earmark a portion of those local funds to other forms of transportation, including air, rail, bicycle and pedestrian projects. The Transportation Department would also be tasked with developing an approved list of projects that could be funded through the sales tax before it takes effect.

The tax increase would not apply to purchases of food, and the constitutional amendment would bar the state from raising the gas tax or implementing toll roads during the sales tax's lifespan.

A similar measure cleared the House and Senate last year, but died in the closing days of the Legislature's session.

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Transportation is HJR68

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Legislature: http://www.moga.mo.gov