MPA Legislative Report: 2021 Missouri Legislative Session Issues

The COVID-19 pandemic is still challenging for everyone including legislators and members of the general public. In anticipation of the legislative session, below is a list of probable issues that will face members of the Missouri Senate and the Missouri House of Representatives.

State Budget

Approving the annual state budget is the most important duty of the Missouri General Assembly, and building the FY 2021-2022 budget, which goes into effect July 1, will be closely watched. Gov. Mike Parson signed the state’s current $35 billion budget in June. The Governor immediately restricted approximately $480 million and has released about half of that amount so far this year. This year is a complicated budget cycle for several reasons. First, COVID-19 and CARES Act funding have been at the forefront. While the state has received about $2 billion in CARES Act relief, little of it can be used to fund budget holes. Second, the consensus revenue estimate (CRE) that is used as the estimate for general revenue collections has been set at $9.78 billion or a 4.1 percent decrease from FY 21. This is due to pushing the IRS tax deadline to July 15, 2020 (the number for FY 21 was $10.2 billion and is artificially high). And third, new mandatory spending for Medicaid expansion is needed and the money will have to come from somewhere. We will monitor and keep you informed as the budget is developed.

Medicaid Expansion Funding/Cost Containment

Accessibility and affordability to healthcare are a top challenge in Missouri. Missouri joined 37 states, including Washington, DC, who have adopted Medicaid expansion. In August, Missourians passed the Medicaid expansion ballot initiative by a 53.25 percent to 46.75 percent margin. Gov. Parson said he would expand Medicaid, if that is what Missouri voters say they want. The ballot measure requires Missouri state government to provide Medicaid for persons less than 65 years old, whose incomes are equal to or below 138 percent of the official poverty line as set forth in the Affordable Care Act. As many as 200,000 Missourians will get new coverage. The General Assembly will determine how and to what level it will be funded. The estimates are anywhere between $200-300 million dollars. The General Assembly is also considering some reform measures, including use of the Federal Reimbursement Allowance, move certain programs to managed care, cut back on out-of-state patient benefits, and/or reviewing reimbursement rates.

Gaming, Video Lottery Terminals, Sports Betting

After many bills were filed last session, the General Assembly has already filed legislation dealing with lottery terminals, illegal gaming, betting on sporting events and other related issues during pre-filing. Two bills have been filed regarding illegal video gaming machines and how to resolve the ongoing issue that has resulted in at least one guilty verdict in Missouri. The current bills provide an enforcement process that would give authority to the Gaming Commission and to the Alcohol Tobacco Control to remove these machines and take action against establishments’ liquor and lottery licenses. Three bills have been filed regarding sports wagering, and while all three have different taxation rates, all three allow wagering on a casino riverboat or over the

internet. The last couple of bills would allow for a pilot project to legalize video lottery terminals by number and the number of establishments they could be located in. With the revenue issues plaguing the state, this may be the year that a gaming compromise is made.

Education Issues

Education reform and K-12 public school funding generally garner the most attention every year; add in COVID-19, virtual learning, and CARES Act funding and the 2021 legislative session may be the largest K-12 legislative year in recent history. We expect many of the same issues from the 2020 session to resurface in 2021, including:

• Funding the Foundation Formula: In 2019, public school funding for K-12 education received a $60 million increase. We fully expect the formula to receive full funding this session for the Fiscal Year 2021 state operating budget. There has been some discussion around property taxes and local funding of K-12 education and the need to start to consider revisions to the Foundation Formula.

• Public Charter School Expansion: Missouri currently allows public charter schools in the metropolitan school districts of St. Louis City and Kansas City. Legislation has been filed for several years that would expand the districts eligible and create additional safeguards to close poorly performing schools.

• Empowerment Scholarship Accounts: Legislation was debated in 2019 and 2020 in the General Assembly that would allow students to attend a school of their choice through a $50 million tax-credit-funded scholarship program.

COVID-19/Virtual Learning, Learning Loss

Bills have been introduced regarding what every school district is facing this year. This includes options for transfer, if your district is doing virtual learning, attendance calculations for virtual learning, assessments, substitute teaching, and reading programs.

• The ability for school districts to share superintendents and allow children to go to multiple districts for summer school.

• Child restraint legislation is filed again this session to address concerns regarding the use of restraints and seclusion rooms.

Redistricting of Congressional and Legislative Districts

Redistricting is the process by which new congressional and state legislative district boundaries are drawn. All U.S. Representatives and state legislators are elected from political divisions called districts. District lines are redrawn every 10 years following completion of the U.S. census. Missouri Constitutional Amendment 3, relating to redistricting and placed on the November 3, 2020, ballot by legislators, became a highly controversial issue a few months ago leading up to the election. The amendment made changes in regulating the General Assembly and modified redistricting methods in Article III of the state’s constitution. The approval by voters of Amendment 3 eliminated the position of “non-partisan state demographer” whose task would have been to draw state legislative districts. Removal of the post of “non-partisan state demographer” gives all redistricting responsibility to existing commissions, renamed as the House Independent Bipartisan Citizens Commission and the Senate Independent Bipartisan

Citizens Commission. Redistricting process will soon begin and is necessary to end prior to the 2022 elections for U.S. Congress and elections for seats in the Missouri General Assembly.

COVID-19 Liability Protections for Businesses

A special session of the Missouri General Assembly called by Governor Parson was expanded in November 2020, and debate began in committee on proposed legislation to provide liability protection during a declared state of emergency for health care providers, manufacturers, businesses, schools, churches, and nonprofit organizations, among others. Business protection legislation, expected to be a top priority in 2021, has been pre-filed. So far, Missouri has done nothing to help protect businesses. But that is not the case in dozens of other states. According to the Missouri Chamber of Commerce and Industry, many business leaders are concerned they could be targeted in lawsuits that allege someone contracted the virus on their premises. Today, such lawsuits can move forward in Missouri regardless of whether businesses are taking proper precautions against virus transmission. While Missouri has waited, many states have acted. All but one of Missouri’s neighboring states enacted some form of COVID-19 liability protections in 2020.

Initiative Petition Reform

A repeat is expected of the 2020 legislative session when several bills were introduced to reform Missouri’s initiative petition laws. Already more than a dozen bills in the Senate and the House of Representatives have been pre-filed for consideration in 2021 in what is sure to be a controversial issue. Under current law, initiative petitions proposing constitutional amendments on the ballot shall be signed by 8 percent of the legal voters in each of two-thirds of the state’s eight Congressional districts. One pre-filed constitutional amendment, if approved by the voters, requires such petitions to be signed by 15 percent of the legal voters in each of the Congressional districts. Some pre-filed bills would require constitutional amendments to be approved by two-thirds of voters, not by just most voters, as required now. On one hand, the initiative petition process is a way for citizens to hold their elected officials accountable. On the flip side, currently it only takes a simple majority vote of the people to change the Missouri Constitution. That means, if voter turnout happens to be only 30 percent, then it would take only 15 percent of voters to change the state’s constitution.

Gas Tax Increase/Highway Funding

Increased funding for Missouri highways and transportation infrastructure is needed, according to many state officials and the Missouri Department of Transportation. Consequently, a proposed fuel tax increase may be on the statewide ballot in 2022. Sen. Dave Schatz (R-Sullivan), the Senate’s President Pro Tem, has pre-filed Senate Bill 262 and Senate Joint Resolution 21. Currently there is a statutory tax of 17 cents per gallon on motor fuel purchased in Missouri. SJR 21, the proposed constitutional amendment, if approved by voters, would establish a minimum motor fuel tax of 19 cents per gallon in 2022, and would increase this minimum tax by two cents per year over a period of four additional years. When the amendment is fully implemented after five years, the minimum motor fuel tax would be 27 cents per gallon. SB 262 proposes the same

fuel tax increases and includes a referendum clause, calling for a statewide vote by Missouri citizens.

Sales Tax on Internet Sales “Wayfair”

Since the Wayfair decision, Missouri is one of only two states that has not enacted either a sales tax or a use tax for online purchases. The 2018 U.S. Supreme Court case, the Wayfair decision, affirmed South Dakota’s application of its sales tax to internet retailers who sell into South Dakota but have no property or employees in the state. Taxing online purchases is expected to be a hot topic in 2021. Some of the possible legislative options include passing a “Wayfair-esque” use tax, managed by the Missouri Department of Revenue, where the use tax is approved by local voters; amending the use tax filing threshold from the current $2,000 annual purchases to $1; improving the use tax ballot language to help both state and local tax collections; and offsetting increases in use tax collections by reducing the state income tax rate with two-year adjustments for accuracy. The issue is sure to attract attention in the state capitol in 2021.

Criminal Justice/Police Reforms

Bills have been pre-filed that would affect law enforcement in Missouri, including legislation: prohibiting the use of chokeholds by police officers; modifying provisions relating to search warrants; creating the offense of sexual conduct in the court of public duty; and requiring law enforcement agencies to adopt written investigation policies for officer-involved deaths, among others. Bills filed in the Senate and the House of Representatives would make it a crime to post on social media a police officer’s name, address, Social Security number or other personally identifiable information. Five bills affecting criminal justice reforms did not pass, during a summertime 2020 special session of the General Assembly. Those proposed bills contain topics that may return to the state capitol in 2021, including legislation: allowing an otherwise inadmissible witness statement, if a “preponderance” of evidence shows the defendant engaged in wrongdoing to cause the unavailability of the witness; criminalizing adults who knowingly encourage, aid, or cause a child under 17 years old to commit a crime with a weapon; letting judges decide whether juveniles 16 to 18 years old should be prosecuted as adults and possibly go to prison for certain crimes committed with weapons; toughening the penalty for selling or giving a firearm to someone under 18 years old to avoid or interfere with an arrest, detention, or investigation of a crime.

County Financial Statement/Public Notices

Annually in March, Missouri counties of the second, third and fourth classifications are required to publish a detailed statement in a local newspaper of revenues received and disbursements made during the previous calendar year. State law requires first-class counties without charter forms of government to publish a summary financial statement, rather than the more lengthy, detailed statement. Legislation has been filed by Rep. Peggy McGaugh (R-Carrollton) that would allow summary financial statements to be published in newspapers by individual counties of all classification sizes.

Eminent Domain and Condemnation

Last session, legislation was debated at length and passed several times by the Missouri House that prohibited the use of eminent domain for a green energy transmission line across several northern Missouri counties. The project, named “Grain Belt Express,” has been proposed by Invergy and has faced strong opposition from several property rights groups. The wind-powered electric transmission line begins in Kansas and crosses the state of Missouri into Illinois then Indiana. We expect this legislation to return in 2021 as the opposition has not slowed. To gain momentum, the transmission line operators have offered to hang fiber along their route to provide a “middle mile” for the expansion of broadband to the rural areas along the route.

Rural Jobs Act

In past years, legislation has been introduced and heard in the Missouri House that would enable small businesses in rural areas to expand and create private-sector jobs by providing access to affordable, growth capital. This program, entitled the “Missouri Rural Jobs Act,” would create access to capital for small businesses and provide a platform for rural communities to achieve long-term and sustainable growth. This program would utilize a federal tax credit with a state tax credit match and fill the financing void that so many businesses continue to face during these difficult times.

Biodiesel

Biodiesel is a renewable, biodegradable fuel manufactured domestically from vegetable oils, animal fats, or recycled restaurant grease. Biodiesel meets both the biomass-based diesel and overall advanced biofuel requirement of Renewable Fuel Standards. In 2020, legislation was passed in the Missouri House that would require that all diesel fuel sold or offered for sale in Missouri for use in internal combustion engines shall contain at least 5 percent biodiesel fuel oil by volume beginning April 2, 2022; 10 percent biodiesel fuel by volume beginning April 1, 2023; and 20 percent biodiesel fuel by volume beginning April 1, 2024. Legislation has been pre-filed for the 2021 session and is likely to mandate a 5 percent blend mandate and provide retailers with incentives to blend about 11 percent. (This report is compiled for Missouri Press Association members by Lathrop GPM Consulting.)

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