The Missouri legislature is set to adjourn May 13 after passing a $49 billion budget that will set aside dollars for Missourians to get up to $500 as a tax credit. (File photo)

Missouri lawmakers finalized a plan to set aside $500 million of the state’s general revenue to return to taxpayers through a tax credit, Gov. Parson vetoed the line item on Thursday as he took action on the state’s budget.

Individual income filers would have receive up to $500 under the now-vetoed plan, while joint filers would have received up to $1,000. Missourians eligible for the tax credit must have earned less than $150,000 as individuals and $300,000 for married couples. The state would have credited taxpayers $1 back for every $1 paid in income taxes, up to $500. 

The bill is part of a package of legislation that will dictate Missouri’s spending for the 2023 fiscal year. He has until July 1 to sign legislation for the upcoming year. 

Senate Majority Caucus Chair Dan Hegeman, R-Cosby, also chairs the Senate Budget Committee and carried the upper chamber’s version of the bill. He and House Budget Chairman Rep. Cody Smith, R-Carthage, pointed to inflation and rising cost of living as reasons for the rebate. 

“I think that’s important that we recognize that these are working Missourians who have paid state income tax, of which we have an abundance, and to me the right thing to do in that scenario is to return it to them, especially in times of inflation and increased prices just for about everything these folks are buying,” Smith said during the bill’s hearing. 

The rebate proposal emerged in April as the House Budget Committee finished its work on the largest budget in Missouri history. Federal funds from the coronavirus relief package left the state with an overflowing pocketbook. House Republican leaders originally proposed a budget that would have left $2 billion unused, but the final Senate budget took advantage of those dollars and tacked on more than $1 million in spending.

To help keep the cost of the tax credit proposal under $500 million, the Senate plan set income caps and a plan to prorate the rebates to Missourians.

Smith’s plan did not include an income cap provision and would have cost the state more. His overall plan would have allowed up to $1 billion in spending for the rebates alone, as opposed to the Senate’s $500 million, before the state could prorate the payments. 

Democrats in the House voted against Smith’s tax credit plan, arguing that the payments would leave out Missourians who are on a fixed income, like Social Security. And they contended that the state would be better off spending the excess funds on big needs, such as money for schools and mental health treatment. 

Critics were outnumbered, however, and Smith’s bill passed the House in late April with a 103-44 vote. 

Elsewhere in the budget, the Senate opted to raise starting teacher salaries to $38,000, something Parson listed as one of his budget goals for the upcoming year. The Senate also added $214 million to the House spending plan to fully fund the state’s school transportation formula. 

Missouri’s starting teacher salary was recently found to be the 50th lowest in the nation, with the current minimum at $25,000, though all districts in the metro already meet the $38,000 salary mark. 

Lawmakers also funneled $1 billion to payments to medical providers and $2.5 billion for expanded enrollment in Medicaid. 

Also thanks mostly to federal pandemic relief funds, the legislature funded a  litany of infrastructure projects, including $411 million for water infrastructure and lead pipe removal and $250 million for broadband. 

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MEG CUNNINGHAM is The Beacon’s Missouri Statehouse reporter. Previously, Meg worked as a national politics reporter for ABC News in Washington, D.C., where she covered campaigns and elections. Meg is...