On Wednesday, I had the opportunity to present SB673 before the Senate Government Accountability and Fiscal Oversight Committee. SB673 would make changes to Missouri's unemployment insurance program by correlating the length of time an individual is eligible for unemployment benefits to the unemployment rate.
When Missouri's unemployment rate is high, individuals can receive benefits for longer periods of time, up to the state maximum of 20 weeks. However, as the unemployment rate goes down, the length of time an individual can receive unemployment compensation will also be reduced. As the unemployment rate drops, there are more jobs to be found and less time for benefits to be needed.
Additionally, SB673 would require the state to bond the balance of unemployment insurance debt if the debt reaches a specific level. In 2008 when the economy slowed and many jobs were lost, Missouri borrowed from the federal government to cover the influx of unemployment claims.
As a result of this borrowing, employers across Missouri have been paying a penalty, a tax really, per employee for the last three years. This year, employers are paying an additional $63 per employee to retire the debt owed to the federal government. As you know, a business's costs ultimately end up in the price of the product they sell which, in turn, you and I pay for. These per employee assessments are greatly inhibiting hiring, profitability and the prospect of growth. SB673 would have Missouri bond a large unemployment insurance debt balance so that employers are not assessed ever increasing penalties per employee to pay off the debt.
While current projections have the state paying off the outstanding balance by November, bonding is a viable option that must be considered should Missouri ever find itself in this position again due to another economic downturn. For the past two years the Missouri State Unemployment Council has recommended that the state bond the balance to save employers money, but the governor has not acted on these recommendations. This is terribly unfortunate and I want to help ensure that employers are not put in this position again.
I was disappointed to hear the Missouri Department of Labor and Industrial Relations and the AFL/CIO testify in opposition to SB673. Their claim that SB673 is unnecessary just does not conform to the reality faced by small businesses across the state who continue to be bogged down with penalties resulting from Missouri's borrowing.
On Wednesday, I also presented SB674 which grants authority to the Capitol Commission to sell food, drinks, and merchandise as part of the Capitol's centennial celebration. The Capitol Commission has played a critical role in designing and protecting the interior of the building, and continues to do so today even as we work toward investing in long-overdue improvements.
Over the next 10 years, the Capitol will have a variety of celebrations to mark and commemorate centennial milestones. In order to increase the awareness of these centennial celebrations, and as a mechanism for raising additional funding for the Capitol Commission, SB674 would allow the commission to authorize the sale of food, beverages and merchandise in the Capitol for centennial events. These events enable the public-private partnerships necessary for improving and maintaining the Capitol as the "people's house" and the seat of state government in Missouri.
Just as the Capitol building is a foundational structure in Missouri, so too is the Missouri State Penitentiary. Even as construction work is underway to sustain and improve the historical components of the MSP site, SB674 will grant the commissioner of administration authority to award contracts to vendors for the sale of items, food, and beverages for events held on the MSP site. This authority will allow the site to continue to grow as tours resume this spring.
On Thursday I had the great privilege of participating in a Missouri Press Association discussion on transportation funding. As the sponsor of SJR48, I was given the opportunity to discuss the merits of my proposal to allow Missourians to vote on a temporary one cent sales tax devoted exclusively to transportation. The Missouri Association of Social Welfare provided a counter position, and then we were both asked questions by the press. MASW did not deny the need for improvements to Missouri's transportation infrastructure. However, based upon my understanding, they perceive raising the gas tax is a better option because a one cent sales tax disproportionately affects low income Missourians.
Data I have reviewed from the Bureau of Labor Statistics show that low income families ($15,000-$19,999) spend about 86 percent of their income on items that are not taxed by SJR48. These include food, gasoline, prescription drugs, utilities, health care and housing. This leaves 14 percent of their income to be spent on items that are taxed. This 14 percent amounts to about $2,800. Of this amount, based upon a sales tax of 5.225 percent, $146 would be paid in sales tax. This equates to $28 more than they pay currently with a sales tax of 4.225 percent. Simplified further, this increase equates to $2.33 per month, or eight cents a day. Meeting the state's transportation funding needs via a gas tax increase would require an increase of approximately 25 cents a gallon. Several national trip organizations suggest that the average American utilizes 1.5 gallons of gas per day, which means that increasing the gas tax would impact the average consumer by 37 cents a day. Even if low-income Missourians are using half as much gasoline as the average American, an increase in the gas tax would be permanent and still cost them 18 cents a day, more than double that of a temporary one cent sales tax.
At the end of the day, Missouri still has 32,000 miles of roads and 10,400 bridges in need of maintenance. Additionally, Missouri has many improvements that need to be made to our transportation infrastructure in order to ensure our future economic growth and viability. All Missourians, whether low-income or high-income, rural or urban, are affected by Missouri's transportation system. Even in yesterday's setting, no one argued the existence of transportation infrastructure needs or that additional funding was unnecessary. The problem exists, and I believe you deserve the opportunity to decide for yourselves on the November ballot.
My purpose and my intent is to serve the constituents of the 6th Senatorial District. If you are in the Capitol during the coming weeks and months, please stop by your office in Room 220.
State Sen. Mike Kehoe, R-Jefferson City, represents the 6th District.