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View from the 24th Story

A Message from Representative Chris Kelly
Volume 2, April 2009

Legislative Update: House Passes $700M Bond Issue

The current condition of the economy is pressuring both the national and state governments to create jobs and stimulate economic activity. At the same time, our state has a tremendous need for new and upgraded facilities in higher education.

Together with Republican House Majority Floor Leader Steven Tilley, I introduced House Joint Resolution 32 (HJR 32) to place a Fifth State Building Fund before the people. Like the first four State Building Funds, the Fifth would be a constitutional amendment requiring a public vote. Its purpose would be to stimulate the state's economy by providing money for repair, maintenance, and capital construction on all of the state's campuses.

HJR 32 proposes a bond issue of $700 million. That number would allow all of the public higher education institutions in the state, from each of the University of Missouri’s four campuses to each of the community colleges, to complete their top construction priority. This funding would also complete a number of the projects promised, but never finished, when sufficient funds failed to materialize from the sale of MOHELA assets. Bond funds will help construct facilities to educate future nurses, automotive technicians, engineers, scientists, and leaders in every profession throughout Missouri.

A Fifth State Building Fund has many advantages:

A.    The bonds would provide money for each public higher educational institution in Missouri to meet its top construction priority and meet long-ignored higher education needs. The building program will provide a large number of good private sector jobs and quickly get money into Missouri’s economy.

B.    In the current economy, investors are seeking safe places for their money with a safe return. Few investments are safer than the General Obligation Bonds of an AAA-rated state.  Bonds could be sold at a favorable rate of interest.

C. The federal Recovery and Reconstruction Act provides a 35% subsidy for interest paid on certain bonds for state construction. Therefore, in addition to the currently low interest rates, the cost to the state would be 35% less because of this subsidy.

The current budget contains a line item for $46 million for the payment of the Third State Building Fund.  After FY2010, this amount drops significantly and is fully paid off in FY2014. As debt service for the Third State Building Fund drops, the debt service for a Fifth State Building Fund would rise, making a good, if not perfect, fit. This timing provides a window of opportunity for Missouri to meet the debt service on the General Revenue (GR) portion of the bond issue without a tax increase by using the line item now in the budget for payoff of the Third State Building Fund.

HJR 32 was passed by an overwhelming coalition of Republicans and Democrats in the House and is before the Senate. If passed, it could come to the voters as early as this August in a special election or in the November 2010 general election.  If the governor calls a special election and the voters support the Amendment, the Legislature could come into special session, adopt the enabling legislation, and get people to work by the end of 2009.

I believe Missouri voters will support such a program enthusiastically. The job creation and economic development aspects enhance its prospects. The benefits of dealing with the long overdue building needs at our universities and colleges will be apparent to a large number of our fellow citizens.

A general obligation bond is the simplest, most conservative, and proven method to meet state building needs. The market understands, the legislature understands, and the voters understand. This plan can play a big part in restarting our state’s economy and in alleviating our construction backlog.

Congress has acted, but the federal government can’t solve all our problems. The 35% federal interest subsidy provides a great incentive for us to proceed on our own.

Missouri needs to create jobs for its citizens and build for its future. HJR 32 packs a one-two punch: jobs now and an investment in our future through higher education.

I believe that those of us who are fortunate enough to enjoy relatively high incomes should pay a greater share of public expenses.

Most Democrats believe, almost as an article of faith, that an income tax accomplishes this purpose. Forty-nine percent (49%) of Missouri's revenue comes from income tax. The assumption is that those with higher incomes are being taxed relatively more than those with lower incomes.

But in order for higher-income Missourians to shoulder a larger share of the tax burden, the income tax must be progressive--that is, the rate must rise as income rises.

Missouri's tax rates do rise with income, from zero to 6%. What most people do not realize, however, is that any family making more than $9000 annual taxable income is taxed at the same rate of $315 plus 6%. By most definitions, that is a "flat", regressive tax.

Read Chris' full position paper here.

Most people don't realize that the schedule for a State Legislator during the Legislative Session isn't a walk in the park -- at least for one who is dedicated to making things happen.  To give you a glimpse of what one typical day is like, check out Chris' schedule for Thursday, April 16th. 

1:20 AM                      Session ends at Capitol after heated and contentious votes on Voter ID bill, DNA profiling, and Quality Rating System for Daycare.  Chris drives back to Columbia.

7:30 AM                      Presentation to Columbia Rotary Club on the MO House Budget

8:00 AM-10:00 AM      Meeting of the House Elections Committee in the Capitol, Hearing Room 6

8:00 AM-10:00 AM      Simultaneous meeting of the House Budget Committee in Hearing Room 3.  He alternates attendance.

8:30 AM-9:30 AM        Hearing on HJR32 in Fiscal Review Committee in the South Gallery.  Chris must attend as the sponsor of HJR32.  HJR32 authorizes the issue of state bonds to fund higher education building improvements and construction.   Committee voted the bill out as “Do Pass”.

9:30 AM-10:00 AM      Meeting of Democratic Caucus in Hearing Room 2.  Attended briefly, but returned to Budget  Committee meeting.

10:00 AM-5:00 PM      House Session scheduled

10:00 AM-10:15 AM    Chris presents a resolution on the House Floor honoring State Champion Central Missouri Eagles' hockey team as team members soak in the honor.

10:30 AM                    On motion of Representative Kelly, HCS HJR 32 (Fifth State Bond Issue) was read the third time and passed by a vote of 131-28.

11:00 AM-11:10 AM    Live radio interview via phone with St. Louis radio station on sponsored legislation        

11:30 AM-12:00 PM    Lunch in back of Chamber           

12:00 PM-6:00 PM      Session continued. Among other debates, a sales tax holiday was approved by the House with Rep. Kelly and 55 other Representatives dissenting.

3:30 PM-4:30 PM        Scheduled to join "Thomas Jefferson" in the Southern Boone County Schools' new learning garden, but Chris couldn't attend.  The session continued.

6:00 PM-7:00 PM        Scheduled to attend Academic Excellence Awards Banquet, but Chris couldn’t attend due to Budget Committee Meeting.

6:00 PM-8:00 PM        Scheduled to join Boone County Retired Teachers Association Auction and Fundraiser.  Chris couldn’t attend as the session continued.

Want to learn more about nuclear vs. coal power from a renowned nuclear physicist? Learn more from Dr. Turk Storvick, MU Emeritus Professor of Chemical Engineering, here.

Want to keep up with the Obama Stimulus Plan and what it means for Missouri? Click here to learn more.

We won't claim that this poll is scientific, but we have added a twist to better help Chris understand your point of view. Please take time to read the article "The Logic of Sales Tax vs. Income Tax" and follow the logic that has led Chris to his current position BEFORE you answer the poll. Then tell him whether his position makes sense to you by clicking on the email link below.