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Rep. Veit: Revenue director's resignation leaves questions

Rep. Veit: Revenue director's resignation leaves questions

March 17th, 2019 by Bob Watson in Local News

In this Jan. 16, 2019 file photo, Rep. Rudy Veit discusses issues on the floor of the House Chambers in the Missouri Capitol.

Photo by Mark Wilson /News Tribune.

State Rep. Rudy Veit is frustrated he and other lawmakers still don't know the state of Missouri's revenue picture — with just under 3 1/2 months left in the state's business year.

"A month ago, we were like $250 million behind on revenue," Veit, R-Wardsville, told the News Tribune on Friday. "Now, we're $325 million or $350 million behind on revenue, but they still predict it's all going to get here."

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As of Thursday, Missouri government's tax revenues were down by more than $333 million total, compared to this same time a year ago — and individual income tax revenues were down by $463 million.

The revenue shortfall appears to be tied to the 2017 federal tax law changes intended to reduce the income taxes people paid.

And, because Missouri's income taxes are linked with the federal taxes Missourians pay, the state also is feeling effects from the changes that began Jan. 1, 2018.

Veit, who's a member of the House Special Committee on Government Oversight that was formed in February to investigate the situation, noted: "We were told one thing at the beginning — mainly that it was a withholding error and based on the tables — and the tables were wrong.

"And I felt some relief, because I thought, 'If the tables are wrong, all the money we expect to come in is going to be here.'

"Then we were told — two weeks ago or so — that the tables weren't really wrong, and they didn't account for much error."

So now, Veit and others aren't sure if Missouri will take in enough money to pay for items included in the 2018-19 budget lawmakers passed a year ago that pays for state operations through June 30.

Legislative proposals

The revelation that some Missourians owed taxes this year when they'd received refunds in the past prompted several lawmakers to introduce bills that would soften the surprise financial blow.

But none of them appear close to being passed and sent to Parson ahead of next month's mid-April tax deadline.

The farthest along appears to be state Sen. John Rizzo's bill that — according to the bill summary — would allow "taxpayers with an outstanding tax liability of less than $200, and who timely remit an individual tax return, to pay such tax liability by June 15, 2019, rather than April 15, 2019, (and) to enter into a payment plan for such tax liability to pay his or her tax due over the four month period between June 15, 2019, and October 15, 2019."

Rizzo's Senate Bill 299 was endorsed last week by the Ways and Means Committee, which recommended the full Senate debate, and pass, the bill.

Rizzo, D-Independence, told reporters Thursday: "The (Revenue) Department has not done a very good job of being forthright with Missourians on surprise refunds they may be seeing in the next 30 days, or so.

"We've seen the department be a little misleading on how they've handled" the situation, and notifying the public about it.

Rizzo's measure contains an emergency clause, so it would go into law as soon as Parson signed it — assuming it also wins approval in the House, first.

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That's a scenario that's possible but would require unusual fast-tracking to get a final Senate vote, then committee hearings and public debate in the House.

Even then, Parson, by law, would have two weeks to consider what to do with the bill before signing or vetoing it — and April 15 is just four weeks from Monday.

Sen. Lincoln Hough, R-Springfield, has introduced a separate proposal to allow "taxpayers filing a timely return for the 2018 tax year to remit any tax due under a payment plan entered into with the Department of Revenue, (with) all tax due to be paid no later than October 15, 2019."

That bill was assigned to the Appropriations Committee, which has not yet scheduled a hearing on it.

Three similar bills have been filed in the House.

The proposal from Rep. Dean Dohrman, R-LaMonte, prevents penalties for delayed payments on outstanding income tax liabilities for the 2018 tax year, as long as a taxpayer timely files their return and establishes a payment plan with the Revenue department.

No interest can be charged on the outstanding income tax liability before May 15, 2019.

And the bill's provisions expire on Dec. 31.

The Special Committee on Government Oversight held a public hearing on Dohrman's bill Wednesday but has not yet recommended full House debate on it.

House Minority Leader Crystal Quade, D-Springfield, has introduced two bills — neither even has been assigned to a committee.

One measure is similar to Rizzo's, while the other would prevent any interest or penalties on late tax payments, as long as the tax return was filed on time.

Trying to get answers

The House committee raised questions multiple times with state Revenue Director Joel Walters, who delivered the differing explanations over time.

Former Gov. Eric Greitens appointed Walters to the Revenue director's job two years ago, and he stayed in the post when Greitens resigned and then-Lt. Gov. Mike Parson became governor.

Walters submitted his resignation letter Thursday, telling Parson he would leave the job — and state government — this coming Friday.

This past Friday, Parson named Ken Zellers, the department's chief operating officer, as acting director effective this coming Friday.

In a Thursday news release commenting on Walters' pending resignation, House Speaker Elijah Haahr, R-Springfield, said he wants the special oversight committee "to continue its work in investigating this issue and working with the new director to ensure Missouri taxpayers are protected."

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Rep. Robert Ross, R-Yukon and the special committee's chairman, added: "As legislators, we have a duty to hold bureaucrats accountable when they're not forthright with the taxpayers, and I've never shied away from that."

When asked what he thought the committee will do next, Veit told the News Tribune: "(Ross) asked (Revenue officials) to bring some documents, and sooner or later, we're going to have to come up with an answer (of) why revenues are running so far behind schedule compared to last year and the years before."

Withholding taxes are designed to help taxpayers pay a little bit at a time, out of each paycheck, but the variety of exemptions allowed had, in the past, given people an interest-free savings account that promised they would get some money back when they filed their tax returns each year.

Under the new federal tax system, those "overpayments" will be more difficult.

Veit — who is an attorney but notes he's not a tax specialist — said the Revenue department must make sure Missourians understand if they want to keep getting money at the end of the year, they'll need to fill out new W-4 withholding forms and authorize their employers to hold back money in addition to the amount required by their exemptions.

Also, Veit said, the department must "make it very clear that people should not be expecting and counting on large refunds at the end of the year because the amount of their refunds (now) are easier to predict and (will) be more accurate under the new system."