JEFFERSON CITY — A conservative bid to scrap Missouri’s personal property tax on vehicles and other items ran into bipartisan opposition and failed Monday.
The measure, which would cost local governments an estimated $1.4 billion in revenue, would bring the state in line with 29 others that do not have the tax.
But, it failed to advance after hours of debate and closed-door negotiations.
Sen. Bill Eigel, R-Weldon Spring, who is sponsoring the plan, said the reduction in revenue would be softened by phasing out the tax over time.
“We’re minimizing the fiscal impact in each given year,” said Eigel, a member of the upper chamber’s Conservative Caucus.
Sen. Rick Brattin, R-Harrisonville, said the tax is hated among his constituents.
“I think people will be rejoicing in what you’re trying to do. People are going to be dancing in the streets.” Brattin told Eigel. “It’s an extremely devastating bill to get.”
“There’s no tax that ticks people off more than the personal property tax,” added Sen. Eric Burlison, R-Battlefield.
A fiscal analysis of the legislation says the change could reduce local government revenue statewide by up to $1.45 billion in 2027 and take more than $6.4 million away from the state’s Blind Pension program.
A compromise that emerged after talks with Senate President Dave Schatz, R-Sullivan, pegged a reduction to county-level tax collections, potentially extending the phase-out period to 10 years.
The compromise failed to win enough support to advance after eight Republicans voted "no."
"These senators will have to explain to their constituents why they abandoned the Republican principle of lower taxes to preserve a regressive, unfair tax that targets middle and working class homes," Eigel said.
Democrats called the initial version of the legislation “irresponsible.”
“I disagree with the approach. I understand the sentiment,” said Senate Minority Leader John Rizzo, D-Independence.
The revamped version, which has a longer rollout, did not quell their concern.
"Twenty years from now we're going to be in a world of trouble," said Sen. Greg Razer, D-Kansas City. "There's going to be a lot of struggling agencies out there."
Sen. Dan Hegeman, the Republican chairman of the Senate Appropriations Committee, also raised questions about the effect of the elimination on local police funding and other locally provided government services.
Currently, personal property tax is assessed at 33.3% of its real value. Local governments then tax that assessed value.
Personal property is any property that is “tangible,” excluding real property such as land and buildings, according to the Missouri State Tax Commission definition page. Examples of personal property include vehicles, office equipment and machinery.
Eigel’s initial proposal would have reduced the assessment percentage to 25% in 2022, 19% in 2023, 13% in 2024, 7% in 2025, and one thousandth of a percent in following years. The version that failed would have tied the reduction to local county property values, potentially taking longer to phase out.
St. Louis officials estimated that if property values remained the same and there were no mechanism to replace lost revenue, personal property tax revenue to the city would drop from nearly $16.4 million in 2020 to $492 by 2026.
Taxes to all jurisdictions in the city would drop from close to $84.5 million to just over $2,500.
Recipients of personal property tax revenue include St. Louis Public Schools, St. Louis Public Library, the Zoo Museum District and the Metropolitan St. Louis Sewer District.
Eigel acknowledged the elimination could hurt local government coffers initially, but said it also could trigger a jump in local sales tax revenue if people have extra money to spend.
He also said property taxes on homes and land also are rising at a rapid clip, which could produce revenue to replace the loss of the personal property tax.
There were concerns raised on the Senate floor that Eigel’s predictions could be too hopeful.
“We’ve seen a bust in the housing market,” said Hegeman, R-Cosby.
Hegeman also suggested that the legislation would defund the police.
“What particularly concerns me is law enforcement. This effort to take resources away from local law enforcement gives me pause,” Hegeman said.
The Blind Pension program assists blind people who don’t qualify for Supplemental Security Income or for help under the Supplemental Aid to the Blind law. It currently provides Medicaid coverage and payments of $750 a month.
“We don’t want to hurt the blind pension fund,” said Sen. Karla May, D-St. Louis.
The legislation is Senate Bill 24.