KANSAS CITY, Missouri (Reuters) - Missouri Governor Jay Nixon was critical on Friday of a corporate tax cut bill aimed at helping the state compete for business with neighboring Kansas, but he did not say if he would veto the measure.
The Missouri House sent Nixon, a Democrat, a bill on Thursday that would reduce the corporate tax rate to 3.125 percent from 6.25 percent over 10 years. The bill would also see taxes on income a business owner declares on a personal return decline by 50 percent over five years.
In remarks at the state capitol in Jefferson City, Nixon said the cuts would have an estimated $800 million impact on state revenue annually once fully implemented. Those cuts are equivalent to the cost of higher education, the prison system or Department of Mental Health, he said.
"I take my responsibility to keep the budget in balance very seriously," Nixon said. "Missouri is a low-tax, Triple-A (rated) state with a stable budget environment, and we're going to keep it that way."
Nixon said he would give the bill "full review" before deciding whether to veto.
The Republican-controlled House passed the bill 103-51, six votes short of the votes needed for a veto override, although five Republicans were absent. The Senate passed the bill on Wednesday 24-9, which would meet the two-thirds majority needed for an override.
The tax cuts would only take effect in years when tax collections had been rising by certain amounts in prior years, a plan meant to keep state revenue from falling overall.
"There are multiple triggers in this bill so it doesn't damage the state," said Representative T.J. Berry, a Republican who sponsored the bill. "It is a very measured approach."
Last year, at the urging of Governor Sam Brownback, Kansas lawmakers cut corporate and individual income taxes to make the state more attractive to business. Those tax cuts were offset partly by retaining certain sales taxes.
Missouri lawmakers and some business groups, especially in the Kansas City area near the state line with Kansas, pushed for the cuts in Missouri as well.
"It's not just Kansas. We are in competition with 50 states and bordered by eight of them," said Berry.
Some opponents doubt the tax cuts would prompt businesses or individuals to move to Missouri and have said they could be counter-productive.
"The cuts to services like education, transportation, and public safety required by such a revenue decline will undermine Missouri's economy and make it harder for Missouri to compete with Kansas and other states," said Amy Blouin, executive director of the non-profit Missouri Budget Project, which monitors state spending.
The Missouri Budget Project estimated the bill would cost the state more than $850 million in annual revenue when fully implemented, although Berry said state estimates were less than $700 million and ranged downward depending on what cuts would actually take place.
(Reporting by Kevin Murphy; Editing by Mary Wisniewski and Cynthia Johnston)