As Missouri lawmakers return to Jefferson City for Wednesday's veto session, they're being asked to take a hard look at taxes, government spending and public policies.
At the heart of the discussion are Gov. Jay Nixon's roughly 100 line-item vetoes in 13 of the 15 budget bills lawmakers passed last May, stripping about $144 million from the legislative spending plan.
"The choice facing members of the General Assembly is a simple one," Nixon told reporters at a news conference last week. "They can vote for fiscal discipline and for balanced budgets - and sustain my line-item vetoes - or they can vote to spend money that we don't have, and grow the size of government by overriding those line-item vetoes."
But the political debate throughout the summer also has focused on 10 more bills, making sales tax changes or exemptions that lawmakers passed on May 16 - the legislative session's final day.
Nixon has dubbed those 10 bills - passed more than a week after lawmakers finished their work on the budget package - the "Friday Favors," and he argues they helped "blow up" the budget.
"Clearly, I believe that those (bills) were one portion of the reason this budget is $800 million out-of-balance," the governor said during last Thursday afternoon's news conference in his Capitol office, "and those vetoes need to be sustained, also."
If lawmakers override Nixon's "Friday Favors" vetoes, the sales tax changes and exemptions would go into effect in mid-October - and the governor's administration predicts they will cost the state budget about $217 million for the rest of this business year, through next June 30, and then about $440 million to $450 million each year after that.
And the sales tax bills will drop local government revenues as well, wherever voters have authorized extra sales taxes for transportation or capital improvements, fire and ambulance services or various city services.
In Jefferson City, for example, the Parks, Recreation and Forestry department gets most of its income from a half-cent sales tax.
Although there's not a complete agreement, the Legislature's Fiscal Oversight division reached similar predictions when it calculated the impact of those 10 bills after the session had ended.
But the Associated Industries of Missouri, a generally conservative, pro-business lobbying group, and its Taxpayers Research Institute of Missouri said at the end of July those estimates are too high.
"After a thorough review of case law and the actual language in (seven of) the tax bills, our findings confirm what supporters of the legislation have known all along: The cost to state and local budgets due to the package of seven bills will be less than $20 million dollars," the groups said in a July 30 news release, "and may in fact result in protection from tax losses from refund claims by providing needed clarification of existing statutes."
Last week, AIM President Ray McCarty said he "stands by" that analysis.
"The Missouri Department of Revenue has recently taken a very aggressive stance on tax issues, particularly since 2011," McCarty said, citing testimony taken this summer by the state Senate's Interim Committee on Tax Administration Practices. "These aggressive tax positions mean the Department of Revenue is not applying statutory changes in a way that favors taxpayers.
"Rather, they are very narrowly interpreting the statutes and trying to create tax liabilities where none have existed before."
While the Legislature's "Oversight Division prepares fiscal notes based on responses received from government agencies," McCarty said, "we took a different approach and looked at the actual impact of each piece of legislation using a "real world' analysis."
The Revenue department analyzed the AIM analyses after they were released 5 ½ weeks ago.
"AIM's documents only analyze seven out of the ten tax exemption bills vetoed," the department said, adding those three not-analyzed bills "together would reduce state and local revenue by more than $100 million annually."
The department also argues some of the vetoed bills change current law.
"The burden of proof for claiming a tax exemption is on all taxpayers under current law," the department said, but three bills - House Bill 1455 and Senate Bills 584 and 829 - "would change current law to shift the burden to DOR when a taxpayer tries to claim a refund based on any of the more than 200 tax exemptions, which means that the taxpayer no longer has to prove eligibility for the claimed exemption.
"This is unprecedented (and) will result in an unknown negative fiscal impact."
In emphasizing his version of fiscal responsibility, Nixon said again last week - as he has done many times since becoming governor in January 2009 - that upholding his vetoes is the best way to ensure that Missouri keeps its AAA bond rating with all three national ratings agencies.
"The ratings agencies watch this stuff very carefully," the governor told reporters Thursday. "One of the most important parts - that gets noted in pretty much every one of our bond-rating pieces - is the need to keep spending in control.
"You've seen other states get down-rated in the last few years. I don't want that to happen here."
Keeping a good bond rating should be important to every Missourian - not just numbers crunchers, he said.
"First of all, it makes us a great place to invest money," the governor explained. "When you're one of the few states with triple Triple-A, the highest rated bonds, (that) is an important marker for not only national, but international, investment - that you control your budget and have accounting systems in place that are predictable, strong and good."
The AAA bond ratings also make government projects - like Missouri's $200 million plan to replace the Fulton State Hospital with a modern, state-of-the-art mental hospital - "much cheaper," Nixon said. "With that AAA credit rating, we won't have to pay as high an interest rate."
And the state's rating affects what local governments and school districts have to pay to borrow money for their projects, the governor noted.
"It allows the costs for Missourians to be a lot smaller," he explained. "If you have a good credit score, you pay a lower interest rate - it's just that simple.
"And, when you have a perfect AAA credit rating, you get the lowest rating of anybody around, so that the taxpayers get a lot more for the money."