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By Phill Brooks
Missouri's legislature and state local governments are facing a conundrum involving how to fund government services in light of Missouri Republican proposals to cut taxes and Donald Trump's tariffs.
The conundrum is how to replace lost tax collections to continue funding state and local government services.
Part of the conundrum arises from the vision of Republicans who now control state government to reduce state taxes.
The biggest cut in state tax revenue comes from Gov. Mike Kehoe's proposal to phase out the state income tax.
Legislative staff estimate a similar proposal introduced in the Senate would cut state tax collections by more than $8 billion per year.
Another measure pushed by Republicans would repeal the tax on capitol gains which involves profits from the sale of property or financial investments.
Legislative staff estimate for that proposal would result in $300 million in lost tax revenue each year.
Realize that the current state's budget is slightly more than $14 billion in state-collected funds.
So, an revenue cut of $8 billion cut in existing tax collections could challenge legislators to fund the state's budget for education, health care and other social services.
That would leave only a sales tax increase to replace the lost state taxes.
But a sales tax increase likely would trigger tremendous opposition from businesses, merchants and consumers about raising what consumers must pay for purchases.
In the decades I've covered the budget process in Missouri, I've found a sales tax increase to be a road-block issue.
Adding to Missouri's budget conundrum is Pres. Donald Trump's proposed imposition of tariffs on imports from foreign countries.
A tariff essentially is a tax on foreign imports that gets passed on to U.S. purchasers.
The tariff on Canada has an impact on Missouri because Canada is a major source for oil used to produce fuel for motor vehicles.
On a state level, higher gasoline costs could increase costs for the Transportation Department which requires a significant amount motor fuel to maintain and improve our state highways.
It also could boost costs for the Missouri State Highway Patrol whose troopers spend so much time driving the highways to protect our safety.
Beyond that, of course, will be the local-government costs for school buses that drive children to and from school, ambulance services, fire districts and local police purchasing motor fuel for their tasks.
Those local government budget problems might trigger budget pressure on Missouri's legislature to cover these higher costs.
I better understood this issue when I filled the tanks of my our cars even before Trump's tariff.
The gas price at our local service station already had already been raised before the tariff took effect.
While Trump as paused his proposed tariff on Canada and the legislature has yet to approve the deep tax cuts, the issue continues to loom for funding state and local government services.
As an aside, I owe a debt gratitude to Missouri Independent's Rudi Keller who inspired me to resume my Missouri Capitol Perspective columns.
As one of my statehouse students years ago, Rudi was a budget expert which he demonstrated advising me about this column.