Category Archives: Gov’t Oversight and Accountability
The following is a link to a letter I sent to the Missouri Department of Health and Senior Services this morning regarding the state plan for Ebola, and the text of that letter copied-and-pasted in this post.
Re: State Plan for Ebola
Health officials confirmed the first case of Ebola diagnosed in the United States yesterday. Reports from Dallas, Texas indicate that the patient had traveled to Liberia and had presented at a hospital with symptoms, but was allowed to return home. After his illness grew worse, he returned to the hospital. NBC News reports that the patient did not receive appropriate treatment until his nephew contacted the Centers for Disease Control. There are further reports this morning of a potential Ebola diagnosis in Hawaii.
Public experts believe that, if Ebola comes to the United States in serious numbers, it can be effectively contained because of our health care infrastructure. Nevertheless, containment requires both a plan and execution. To that end, I write this morning seeking information on the Department’s plans related to Ebola. Specifically:
- Does the Department have a written protocol for actions to take in the event a person in Missouri is diagnosed with Ebola other than the “Methods of control” section of the Control of Communicable Diseases Manual referenced in Section 4.0 of the Division of Community and Public Health manual?
- What steps has the Department taken or will it take to help ensure that a Missouri hospital does not make the same mistake that the hospital in Texas made – and inadvertently send a patient with Ebola home?
- What steps will the Department take to notify the general public?
- What steps will the Department take to identify, contact, and monitor persons with whom a person infected with Ebola had recent contact?
- How will the Department coordinate efforts with the Centers for Disease Control?
- How will the Department coordinate efforts with local health officials and statewide healthcare organizations?
- The Department’s existing Communicable Disease Investigation Manual indicates that “U.S. hospitals are well equipped to isolate cases and control spread of the virus.” Are there designated hospitals in Missouri which are better equipped to handle a potential Ebola patient? Has the Department identified those hospitals?
As concerns grow over the spread of this disease, I believe it is vitally important for the Department to actively assure Missourians that state government is prepared to move quickly in the event of an Ebola diagnosis in our state.
Thank you for your attention to this matter.
Yours in service,
Rep. Jay Barnes
Gov. Nixon announced Tuesday that SB 509 contains a “fatal flaw” which should prevent the legislature from overriding his pending veto of the bill. This flaw relates to language in proposed §143.011.2(4), which provides, “The bracket for income subject to the top rate of tax shall be eliminated once the top rate of tax has been reduced to five and one-half percent.”
Gov. Nixon reads this provision in isolation to argue that it eliminates all income taxes in Missouri for income above $8,000 per year once the gradual steps down to 5.5 percent are completed. In making this argument, Gov. Nixon is well-aware that this is not the intent of the General Assembly, and with 16 years of experience as the state’s top lawyer, he’s also well-aware that Missouri courts do not examine statutory provisions in isolation. Instead:
The cardinal rule of statutory construction is that the intention of the legislature in enacting the statute must be determined and the statute as a whole should be looked to in construing any part of it. Words are to be given their plain and ordinary meaning whenever possible. Where the words of a statute are capable of more than one meaning, the courts give the words a reasonable reading rather than an absurd or strained reading.” JS v. Beaird, 28 S.W.3d 875, 876 (Mo. banc. 2000).
“Each word, clause, sentence, and section of the statute will be given meaning, and (Missouri courts) will not interpret (a) statute in a way that renders some phrases mere surplusage.” Farish v. Mo. Dep’t of Corrections, 416 S.W.3d 793, 796 (Mo. 2013). “Consistent with these principles, a sentence should not be given meaning that thwarts a section; a clause should not undermine a sentence.” Middleton v. Mo. Dep’t of Corrections, 278 S.W.3d 193, 196 (Mo. banc. 2009).
In support of his interpretation, Gov. Nixon enlists a letter from Prof. Cynthia Block from Washington University School of Law in St. Louis. It is telling that neither Gov. Nixon nor Prof. Block mention the duty of Missouri courts to examine statute in context to avoid absurd readings and interpretations that render some provisions meaningless.
How Nixon’s Interpretation Would Lead to Absurd Results and Render the Pass-through Tax Cut Meaningless
Where the words of a statute are capable of more than one meaning, the courts gives the words a reasonable reading rather than an absurd or strained reading.” JS v. Beaird, 28 S.W.3d 875, 876 (Mo. banc. 2000).
Putting proposed §143.011.2(4) in context illustrates how Gov. Nixon’s interpretation would lead to absurd results. First, the reductions are limited to “one-tenth of a percent” and “no more than one reduction shall occur in a calendar year.” See proposed §143.011.2(1). Second, the reductions “shall only occur if the amount of net general revenue … (increases) by at least one hundred fifty million dollars.” See proposed §143.011.2(2). Third, the other significant tax relief provision in the bill allows individual taxpayers who receive income from a pass-through business entity to deduct up to 25 percent of income received from the pass-through from their federal adjusted gross income. See proposed §143.022. It does so through the same measured stair-step approach as the reduction in individual income tax rates.
Nixon’s interpretation would require a Missouri court to examine the careful stair-step approach of §143.011.2 and conclude that, instead of intending to ensure that general revenue would not be starved from tax reductions, the legislature really intended to take a series of small nibbles at the top marginal tax rate followed by a gigantic bite. In the first four years, the court would find that the legislature intended to reduce the rate by 1/60th in careful steps, then suddenly, in year five, reduce the top rate by 56/60th’s. Taken in context, this is an absurd result.
· Each word, clause, sentence, and section of the statute will be given meaning, and (Missouri courts) will not interpret (a) statute in a way that renders some phrases mere surplusage. Farish v. Mo. Dep’t of Corrections, (Mo. 2013).
Nixon’s interpretation would also require a court to conclude that the legislature enacted the second tax relief provision even though it would have no significance if income above $8,000 could not be taxed. If SB 509 is interpreted in the strained manner Nixon fears, there is no actual tax relief to any individual who receives pass-through income in excess of $10,666. Thus, Gov. Nixon’s strained interpretation would render proposed §143.022 meaningless for the vast majority of Missouri small business owners.
Prof. Block’s Letter Reveals the Only Reasonable Interpretation Consistent with Legislative Intent which Would Render the Entire Statute Logical and Give Effect to Every Part of SB 509
· Where the words of a statute are capable of more than one meaning, the courts give the words a reasonable reading rather than an absurd or strained reading.” JS v. Beaird, 28 S.W.3d 875 (Mo. banc. 2000).
Prof. Block writes, “For tax purposes, the term ‘bracket’ has a technical meaning quite distinct from ‘rate.’ The former, represented by the left-hand column in most tax tables, refers to a specified range of taxable incomes to which a particular tax rate applies.” Under this interpretation, a tax bracket is only a category of income subject to some level of taxation. Thus, if the tax rate for a certain range of income levels is zero, according to Prof. Block, there is no “tax bracket.”
This definition, however, is inconsistent with another Missouri statute, case law, and the dictionary definition of “bracket.”
Despite there being no direct definition of “tax bracket” in Missouri statutes, there is an implied definition. For the collection of sales taxes, §144.285 requires the director of revenue to “establish brackets, showing the amounts of tax to be collected on sales of specified amounts.”
A previous version of the sales tax statute set the first bracket as follows:
144.285. Brackets for collection of tax. – 1. In order to permit sellers required to collect and report the sales tax to collect the amount required to be reported and remitted, …, the following brackets shall be applicable to all two percent taxable transactions: (1) On sales of less than twenty-five cents no tax shall be added.” Automatic Retailers of America, Inc. v. Morris, 386 S.W.2d 901 (Mo. 1965).
In Automatic Retailers, Missouri’s then Director of Revenue argued that this “zero bracket” for sales less than 25 cents was not actually a bracket with a zero tax rate. The Missouri Supreme Court rejected the argument, upholding the bracket of zero percent.
Contrary to Gov. Nixon, the only reasonable interpretation of the definition of “tax bracket” in SB 509 is that the phrase denotes an income point at which a different tax rate will be applied. Under this interpretation, creating a tax rate of zero for income above $8,000 does not eliminate the top tax bracket. Instead, it applies a different rate to the existing bracket. Under this reasonable interpretation, a court would reject Gov. Nixon’s interpretation of SB 509 as setting the top bracket to zero because that would not actually eliminate the bracket and effectuate the intent of the statute. Instead, it would merely change the rate for the top bracket.
This more reasonable interpretation is also consistent with the dictionary definition of “bracket” as “a section of a continuously numbered or graded series.” See Merriam-Webster’s Online Dictionary. The word “section” is defined as “one of the parts that form something.” See Merriam-Webster’s. It connotes the action of “cutting or separating by cutting” so as to show distinction with other parts. To “eliminate” the top tax bracket under this interpretation would be to tear down the wall of separation between the current top rate which would no longer exist and the new top rate.
Is the rule of statutory construction that tax laws should be construed strictly against the taxing entity iron-clad, or is it subject to other rules of statutory construction?
As the Missouri Supreme Court has explained, “Rules of statutory construction cannot be rigidly applied. Most often, for every rule suggesting one resolution, another rule exists that suggests the contrary. ” South Metropolitan Fire Protection District v. Lee’s Summit, 278 S.W.3d 659, 666 (Mo. 2009).
Although tax laws are to be strictly construed against a taxing entity, this rule is not iron-clad. Like other rules of statutory construction, the tax statute rule must give way to “the cardinal rule” of statutory construction” – that the intent of the legislature be determined by examining “the statute as a whole” and, where words of a statute “are capable of more than one meaning, the courts give the words a reasonable reading rather than an absurd or strained reading.” J.S. v. Beaird, 28 S.W.3d 875, 876 (Mo. banc. 2000).
“Taxing statutes should be construed strictly against the taxing authority unless a contrary legislative intent appears.” Union Electric v. Coale, 146 S.W.2d 631, 635 (Mo. 1941)(Interpreting statute against taxing entity.) Put another way, “[t]ax laws are to be construed strictly against the taxing authority; however that rule does not require that statutory language be ignored and not given meaning that reasonably accords with the apparent intention the legislature expressed in the statute.” L & R Distributing v. Department of Revenue, 648 S.W.2d 91, 95 (Mo. 1983) (Interpreting statute in favor of taxing entity.)
No rule of statutory construction is iron-clad save for “the cardinal rule” – that courts must give effect to the intent of the legislature. Regarding SB 509, it is clear that the intent of the legislature is not to make the tax rate zero for all income above $8,000, but instead to gradually reduce the top rate contingent upon economic growth and then adjust the brackets accordingly to remove the section divider currently placed at $9,000 of income.
 2. (1) Beginning with the 2017 calendar year, the top rate of tax 27 under subsection 1 of this section may be reduced over a period of 28 years. Each reduction in the top rate of tax shall be by one-tenth of a 29 percent and no more than one reduction shall occur in a calendar 30 year. The top rate of tax shall not be reduced below five and one-half percent. Reductions in the rate of tax shall take effect on January first of a calendar year and such reduced rates shall continue in effect until the next reduction occurs.
Missouri and Kansas have a long history of competition – and worse. In the 1860s, we fought in the Civil War. We used to compete in sports every year, until KU chickened out when Mizzou moved to the SEC. And, for the past decade, we’ve battled to lure jobs across the border by dangling so-called jobs tax credits.
In the past four years, Missouri and Kansas have collectively doled out $217 million in corporate subsidies to seduce Kansas City area businesses to shuffle jobs across state lines, but fail to add any new jobs to the region. In these years, Kansas has spent $141 million to entice the re-location of 3,433 jobs from Missouri, and Missouri has spent $76 million to lure 2,929 jobs from Kansas – for a net difference of 504 jobs at $430,000 per job. However large, these numbers still fail to take any “retention” tax credits into account to theoretically keep a company from moving jobs elsewhere.
Unfortunately, rather than create a long-term low tax climate for all entrepreneurs and families, these corporate subsidies only provide special benefits to the privileged few big enough to be aware of the benefits and savvy enough to work the system. Both states shuffle the cards around, hold celebratory gubernatorial press conferences, and pretend as if real economic growth is occurring.
In the era of a 24-hour news cycle, these perpetual press releases touting corporate subsidies create the appearance of success. These results prove that our economic development border war is not leading either state to prosperity. Instead of improving our economy, the border war paves a path of mutually assured destruction.
Both states give hard-earned taxpayer dollars to businesses to move just a few miles. Their employees probably never move. They don’t start shopping in new places. They don’t generate new economic activity for the region. The only change is the address from which they operate.
This is insane economic policy. And it illustrates the fundamental problem with our so-called jobs tax credits: they don’t actually create new jobs, especially when the subsidies are spent in competition with Kansas.
House Bill 1646, sponsored by Speaker Tim Jones (R-Eureka), directs the Governor and the Department of Economic Development to negotiate a corporate subsidy ceasefire with Kansas for the nine combined border counties in the Kansas City metro area. It tells Kansas that we’re willing to work for the greater benefit of the entire Kansas City region, but we’re not going to unilaterally disarm. If Kansas passes a similar law, we’ll call a truce.
This limited bill enjoys broad support in the legislature. As one who is skeptical of the entire corporate subsidy shell game, I’m hopeful that it’s the first of many steps to re-examine our economic development policy. Going forward, we should pursue an interstate compact with several other states to shift the focus away from specialized giveaways and back to lower taxes for everyone.
As Pope Francis has explained, “Work is fundamental to the dignity of a person. Work…‘anoints’ us with dignity, fills us with dignity, makes us similar to God” and “gives one the ability to maintain oneself, one’s family, to contribute to the growth of one’s own nation.”
In 1996, President Clinton and a Republican Congress enacted welfare reform legislation requiring welfare recipients to work. The concept is simple. Americans – and Missourians – are not stingy when it comes to helping people who are willing to help themselves. We’re willing to help those who have fallen on hard times temporarily so that they may get back on their feet. But we aren’t willing to continue to distribute hard-earned taxpayer dollars to people who show no personal responsibility and would rather live off a government check. Welfare programs should be a safety net for the industrious, not a hammock for the indolent.
For the able-bodied, a life without work is a life lacking purpose. Welfare reform rejected the idea that certain people were destined for a lifetime of poverty and unable to help themselves. It insisted that they use their talents to live a productive life. And it worked. Employment and earnings for single mothers increased significantly. Welfare caseloads decreased. The Brookings Institute, a liberal think tank, concluded welfare reform “has been a triumph for the federal government and the states – and even more for single mothers.”
House Bill 1901, which I have co-sponsored, attempts to bring the principles of welfare reform to our state Medicaid program by requiring able-bodied Medicaid recipients to participate in the workforce to remain eligible for Medicaid. Under the current system, it is morally reprehensible but economically rational for a person at the lowest end of the income scale to refuse work in order to remain eligible for Medicaid. Consider a single mother who makes $3,000 a year. If she accepts a job that pays her an additional $5,000 per year, she loses health care coverage worth approximately $5,200. It is economically rational for her to refuse the new job because. After all, she’s essentially working for free. But by turning down this first job, she’s much less likely to get the next job which may lift her out of poverty. The current system is a welfare trap.
HB 1901 moves Missouri out of the welfare trap. It compels capable recipients to work, and it rewards such work by increasing eligibility for the working poor. By passing this bill, Missouri could lead the nation in bringing welfare reform to Medicaid.
On Monday, the House Committee on Government Oversight and Accountability heard three other bills designed to ensure welfare benefits are reserved for those who need it most and to improve health outcomes of recipients.
House Bill 1861, sponsored by Rep. Wanda Brown, is a direct response to an expose from Auditor Tom Schweich, who uncovered 366 cases of welfare recipients spending Missouri welfare benefits for several months in other states, including one such recipient, for five months, in the Virgin Islands. HB 1861 would bar benefits for any recipient who doesn’t use them in Missouri for 90 days – eliminating wasteful and fraudulent entitlement spending by recipients who are no longer Missourians.
House Bill 1864, also sponsored by Rep. Brown, requires the Department of Social Services to use data analytics software to cross-check the eligibility of welfare recipients to ensure that they are indeed eligible. The department estimates that it will save at least $4 million a year in Medicaid. As chairman of the committee, I plan to combine these bills and require an eligibility cross-check for recipients who have left the state, likely increasing savings.
House Bill 1879, which I sponsored, encourages healthier lifestyles for food stamp recipients by starting a pilot project to provide bonuses for purchases of fresh fruits and vegetables at Missouri farmers’ markets. The goal of this legislation is to help fight the public health crisis of obesity. We know that eating fresh fruits and vegetables leads to better health, but they aren’t always available or affordable for food stamp recipients. This bill gives an added incentive and ability for recipients to eat healthier foods. Plus, the bill benefits local farmers and small business owners by growing the market of people likely to buy their homegrown goods.
The committee will combine these bills and a few others to create a welfare reform omnibus bill, carried by Rep. Brown, to save taxpayer money and reduce waste, fraud, and abuse.
Fox 2 from St. Louis reports on Auditor Schweich’s findings of welfare fraud through the use of welfare cards in different states – and, in at least one case, the Virgin Islands. Worth noting – Rep. Wanda Brown filed HB 1861 last week to put an end to this practice and I was glad to be the first co-sponsor.
On Monday, the House Committee on Government Oversight and Accountability passed HB 1052, a bill to encourage the construction of school-based health care clinics in high-poverty school districts. Many other states, most notably Texas, have robust school-based clinic programs. The following is a memo from my Legislative Assistant Emily Walker summarizing research on these clinics. Conclusions: they work to save money, reduce unnecessary ER visits, and improve the health and education outcomes of students in schools where these clinics exist.
To: Representative Barnes
From: Emily Walker
Re: School Based Health Clinics
Date: February 6, 2014
Question: What are the value of School Based Health Clinics based on academic studies and real world data?
School Based Health Centers (SBHCs) have developed in the past three decades as a solution to health care access problems in younger populations. These in-school clinics help to “overcome utilization barriers in a way not previously documented in other clinical settings, even when serving populations that suffer from significant health disparities.” Based on census data collected by the School-Based Health Alliance for 2010-2011, there were 1381 school based clinics that provided primary care and responded to the surveys. SBHCs are found in a variety of communities: 54.2% in urban areas, 27.8% rural areas, 18.0% suburban areas. Of the responding clinics, 94.4% are located within school buildings. The numbers of these clinics are growing and Missouri already has four located within our state.
There is no set funding or structured mechanisms for SBHCs. Financing may come from a variety of sources and control comes from multiple levels (private sector, local government, state government, etc.) Other states have successfully implemented these clinics on a state level. Texas recently passed an expansion measure in 2009 to further support SBHCs. HB 281 was a bipartisan bill passed unopposed in the House Public Education and Senate Education committees and signed into law by Governor Perry. This expansion of the program included stabilized and increased grant funding for the programs. According to the Census data collected by the School-Based Health Alliance, Texas had 87 school-based health clinics at the time of the survey.
There are many benefits to the school-based health clinic system. These clinics have consistently shown decreases in emergency department visits, increases in primary care access, increases in immunizations, and better quality of health care for children who traditionally lack health care resources. SBHCs knock down many of the barriers that children from high-risk families often battle, including: lack of private health insurance, transportation to appointments, parental absence from work, lack of awareness, and other stressors that keep children away from health professionals. Not only do these programs give children access to health care, the ultimate goal of the clinics serves the ultimate goal of education programs. As Adams and Johnson explain, “the program is aimed at improving school attendance and classroom performance and the longer-term prospects for these children as they mature”
Numerous studies have found the cost saving measures that school-based clinics provide for public insurance programs. In Adams and Johnson’s article, An Elementary School-Based Health Clinic: Can it Reduce Medicaid Costs?, the authors answered the title question in the affirmative. This study compared children served by a school-based clinic to demographically similar children who did not have access to the same kind of clinic. There were no significant differences between the groups before the clinic opened, but two years after its opening, the children with access to the clinic had significantly lower instances of inpatient visits, non emergency department transportation, drug, and emergency department Medicaid expenses. These lower instances of high cost health care items meant that the school-based clinic helped to curb costly health care mechanisms for the children who had access to the SBHC.
Another study also examined the affect of school-based clinics on the frequency of emergency department visits. In Young, D’angelo, and Davis’ 2001 article Impact of a School-Based Health Center on Emergency Department Use by Elementary School Students, the authors wrote that emergency room visits are often non-urgent and have the negative effects of increasing medical costs and fragmenting health care. In their study, the authors examined elementary aged children (5-12) from an inner city neighborhood. The clinic served a school that had a student population of 95% of the population on free/reduced lunch and 60% African American/40% White. This study used a retrospective audit of emergency department records that compared the year before implementation of a school-based clinic to the year after its inception. There was a significant drop in emergency room visits after the school-based clinic was introduced to the school. The results of this study show that SBHCs help to decrease non-urgent emergency department visits, and therefore the higher costs of these visits.
Key, Washington, and Hulsey provided their findings of lesser emergency department visits by adolescents enrolled in SBHCs into their 2002 article, Reduced Emergency Department Utilization Associated with School-Based Clinic Enrollment. This was another retrospective cohort study that examined emergency department utilization rates before and after adolescents enrolled in a SBHC. The subject school was an urban, public high school that’s student population was made up of 80% free/reduced lunch recipients and 99% African American. The study showed a decrease in the emergency department visit rate for both groups from the base year, but this decrease was only statistically significant for the students who chose to enroll in the SBHC (enrollees had a 41% decrease of emergency room visits after enrolling in the clinic). The authors noted that because the study compared a population with prior emergency room use and then recorded the changes following the enrollment in a SBHC, the SBHC should be attributed as the cause of the decrease.
Beyond the scope of saving money on decreased emergency room visits, SBHCs serve other important interests as well. One major benefit to note is the ability of SBHCs to help with vaccination rates in adolescents. In the article Addressing Adolescent Immunization Disparities: A Retrospective Analysis of School-Based Health Center Immunization Delivery, the authors performed a study to determine if SBHCs can improve rates of immunizations among at risk children and adolescent populations. The study was a retrospective cohort analysis of children and adolescents who were split into groups that received health care from either a Denver SBHC or Community Health Center (CHC). For most types of vaccinations, children and adolescents were more likely to be up-to-date on their immunizations if they received health care from SBHCs. Along with this, for vaccines that require multiple doses over a set period of time, SBHCs were more likely to guarantee children received all doses. The authors noted a variety of reasons for why SHBCs are better for vaccinations, including: easier access to care, reminders to come back for care are easier, the tracking system is easier within the school system, many SBHCs see patients without any payment requirements, parents do not have to leave work, and students do not have to leave campus for the care.
Finally, a more recent study addresses all of the issues discussed above and the overall strong benefits of SBHCs. In the article School-Based Health Centers: Improving Access and Quality to Care for Low Income Adolescents, the authors wanted to examine all of the advantages of SBHCs. This was a retrospective cohort study that tracked the use of health care and markers of quality of care for adolescents enrolled in SBHCs compared to adolescents who used other community care entities. The SBHCs helped to increase uninsured adolescents access to care for primary health care. This increase in access to care through SBHCs led adolescents to report a higher likelihood to have three or more primary care visits, less emergency department visits, more health maintenance visits, and a higher likelihood to receive a flu vaccine, a tetanus booster, and a Hepatitis B vaccine. The authors of this study strongly established that SBHCs provide underserved adolescents and children with better access to care and an overall higher quality of health care than traditional community health systems do.
There are multiple studies available to show the benefits of SBHCs to serve populations of children and adolescents that traditionally have not received quality health care. These clinics have statistically shown they can reduce Medicaid expenditures through better preventive care measures, they increase immunization rates, and overall, they provide higher quality of care for a population that is often underserved.
 Steven Federico, et. al., Addressing Adolescent Immunization Disparities: A Retrospective Analysis of School-Based Health Center Immunization Delivery, 100:9 American Journal of Public Health,1630-1634 (2010).
 sbh4all.org, 2010-2011: Census Report of School-Based Health Centers, School Based Health Alliance, 2012, http://www.sbh4all.org/atf/cf/%7BB241D183-DA6F-443F-9588-3230D027D8DB%7D/2010-11%20Census%20Report%20Final.pdf (last visited February 6, 2014).
 tasbhc.org, Legislative Efforts, Texas Association of School-Based Health Centers, 2009, http://www.tasbhc.org/legislative-efforts/ (last visited February 6, 2014).
 2010-2011: Census Report of School-Based Health Centers.
 Thomas Young, et. al., Impact of a School-Based Health Center on Emergency Department Use by Elementary School Students, 71:5 Journal of School Health, 196 (2001).
 E. Kathleen Adams and Veda Johnson, An Elementary School-Based Health Clinic: Can it Reduce Medicaid Costs?, 105 Pediatrics, 780-788 (2000).
 Young, D’angelo, and Davis.
 Janice Key M.D., E. Camille Washington, M.D., Thomas C. Hulsey M.S.P.H., Sc. D., Reduced Emergency Department Utilization Associated with School-Based Clinic Enrollment, 30:4 Journal of Adolescent Health, 273-278 (2002).
 Mandy A. Allison, MD, MSPH, et al. School-Based Health Centers—Improving Access and Quality of Care for Law-Income Adolescents, 120:4 Pediatrics, 887-894 (2007).
The House Committee on Government Oversight and Accountability will hold a hearing on the state’s execution protocol on Tuesday, January 22 at 2:00 p.m.
Regardless of what anyone thinks of the death penalty, everyone should agree that it must be carried out according to the requirements of the Constitution and laws of our state.
The hearing will focus on two areas of the Department of Corrections’ execution process.
First, the committee will seek the standards, if any, that the Department has for determining whether the condemned has had all of their constitutional appeals determined by the appropriate courts.
This inquiry is the result of a recent dissenting opinion filed by Judge Kermit Bye in the wake of Missouri’s last execution. In the late December 2013 opinion, Judge Bye wrote:
At approximately 10:52 p.m. on December 11, 2013, Missouri executed Allen Nicklasson before this court had completed its review of Nicklasson’s request for a stay of his execution, a request he brought in a pending action challenging the constitutionality of Missouri’s execution protocol. That bears repeating. Missouri put Nicklasson to death before the federal courts had a final say on whether doing so violated the federal constitution.
Second, the committee will seek information on the Department’s process for determining the new drug it would use for executions, including allegations that the drug was obtained by an unlicensed pharmacy.
The Department of Economic Development responded late this afternoon with a box of documents relating to the state of Missouri’s response to Boeing’s request for RFP for production of the 777x.
I’ve attached the most relevant documents to this post.
It’s interesting that DED Director Mike Downing leads off DED’s RFP response with a paragraph highlighting Missouri’s tax climate. I agree. Taxes matter most. So let’s enact broad-based tax relief to encourage job growth throughout the economy – not just to the special and privileged few.
It’s also worth noting that these are opening offers. A final deal could have looked a little bit different. The cost to taxpayers could have been higher. For example, Gov. Nixon had greater authority to negotiate on BUILD benefits. At the same time, the cost could have ended up being lower as well – for instance, if Boeing did not create as many jobs as contemplated in the offers below.
Credit where it’s due: I’ve frequently been a critic of DED and our so-called jobs tax credits. However, DED has always been very cooperative and timely with document requests. They were again this time. In addition, regardless of whether you think the Boeing subsidy legislation was good public policy, the documents provided show that DED exhibited great competence in putting this package together in a very short time period for Boeing.
The Kansas City Business Journal reports that the Associated Industries of Missouri is questioning whether the proposal for a tax credit ceasefire in the Kansas City metro area is constitutional.
AIM’s Ray McCarty claims Sen. Ryan Silvey’s proposal to create a neutral zone in Missouri and Kansas would “be discriminatory” and could violate Missouri’s constitutional restriction prohibiting differential treatment of taxpayers, the dormant Commerce Clause of the federal constitution, and the Equal Protection Clause of the Fourteenth Amendment.
I think McCarty is wrong – and will explain why. But the really interesting thing is – if he’s right, then most, if not all, of Missouri’s so-called jobs tax credit programs are unconstitutional.
Dormant Commerce Clause
McCarty cites a memo by Jeffrey Dardick, a partner at Pricewaterhouse Coopers, to explain the dormant Commerce Clause argument. In short, the dormant Commerce Clause enforces a 50 state free-trade zone throughout the United States. No state may enact a law which discriminates against the free flow of commerce through its borders from another state.
Dardick cites Cuno v. DaimlerChrysler, 386 F.3d 738 (6th Circ. 2004) to argue that Sen. Silvey’s proposal is unconstitutional under the dormant Commerce Clause. The Cuno Court examined an Ohio statute which was remarkably similar to Missouri’s BUILD statute. 
The Cuno Court explains the legal test:
In general, a challenged credit or exemption will fail Commerce Clause scrutiny if it discriminates on its face or if, on the basis of a sensitive, case-by-case analysis of purposes and effects, the provision will in its practical operation work discrimination against interstate commerce by providing a direct commercial advantage to local business. Discrimination simply means differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter. A state tax provision that discriminates against interstate commerce is invalid unless it advances a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives.
I believe Sen. Silvey’s cease-fire legislation passes this test for three reasons.
- First, the alleged discrimination against Kansas businesses is not triggered solely by an act of the state of Missouri. Instead, the trigger is both states enacting reciprocal legislation. Thus, the alleged discrimination against Kansas businesses would only occur with the consent of the state of Kansas. As the
legislature learned and discussed last year with the use tax fiasco, states are free under the dormant Commerce Clause to discriminate against their own citizens.
- Second, the reciprocal arrangement ensures that Missouri businesses have the same restrictions in Kansas that the Kansas businesses have in Missouri. This puts the businesses on the same footing and there is no discrimination.
- Third, Sen. Silvey’s legislation advances a legitimate local purpose (stopping the use of tax credits which do not actually grow the region’s economy) that cannot adequately be served by reasonable nondiscriminatory alternatives.
The Cuno Court examined Ohio’s version of BUILD – and held that it violated the dormant Commerce Clause. To my knowledge, no taxpayer has ever challenged Missouri’s version. The Sixth Circuit case, while persuasive, is not binding precedent. I am not aware of any Eighth Circuit opinion on the issue. And, the Eighth Circuit could very well come to a different conclusion because these cases are in the gray area of dormant Commerce Clause case law.
AIM also lists the equal protection clause of the Fourteenth Amendment as potential grounds for a constitutional challenge. This claim is not serious. The equal protection clause prohibits states from denying any person equal protection of the laws by treating them differently than similarly situated persons.
Courts examine equal protection challenges under three standards. Suspect classifications, such as race, national origin, religion, or classifications which burden fundamental constitutional rights, are examined under strict scrutiny. A middle level of scrutiny is applied to classifications based on gender. Everything else receives rational basis review – the minimum level of scrutiny. Under rational basis review, a law is upheld if it is rationally related to a legitimate governmental reason offered to justify the differential treatment. Courts rarely strike laws as unconstitutional under rational basis review. As explained by the Missouri supreme court, “[a] classification will be sustained if any state of facts reasonably can be conceived to justify it.” Schnorbus v. Director of Revenue, 790 S.W.2d 241 (Mo. 1990).
Sen. Silvey’s cease-fire legislation does not affect a suspect class, fundamental right, or gender, and would be reviewed under the rational basis test – which it would easily survive. The cease-fire is rationally-related to the legitimate government end of want to protect resources that would otherwise be used for roads, schools, corrections, and the other typical government functions. In addition, businesses considering whether to move a few miles and create no net new jobs in the Missouri-Kansas border region are not similarly-situated to businesses from elsewhere.
Article X, Section 3 of the
AIM also cites Article X, Section 3 of the Missouri Constitution, which requires that taxes “shall be uniform upon the same class or subclass of subjects within the territorial limits of the authority levying the tax.” In Schnorbus v. Director of Revenue, 790 S.W.2d 241 (Mo. 1990), the Missouri Supreme Court explained that, under Article X, Section 3, “The power of the state to classify for the purpose of taxation is broad. For income tax purposes, the taxpayer may be classified upon the reasonable basis of legal organization or the amount or source of income.” The question in this case is whether legislation can classify taxpayers on reasonable bases of location when the programs in question create no net new jobs when used in certain geographical areas.
I am confident the Missouri Supreme Court would uphold this reasonable classification. But, as with the dormant Commerce Clause argument, if AIM is right, then it also puts in doubt industry-targeted tax credits such as the Boeing legislation passed in special session and the Ford bill passed in 2010. Considering the group making this constitutional argument, the irony is rich.
While I have serious doubt about whether any of these so-called jobs tax credits actually work, you can’t just throw stuff at the wall and hope something sticks. Accordingly, the legislature should ignore AIM’s claims on Sen. Silvey’s proposed cease-fire legislation.
 The statute, “grant[ed] a taxpayer a non-refundable credit … if the taxpayer ‘purchases new manufacturing machinery and equipment during the qualifying period, provided that the new manufacturing machinery and equipment are installed in [Ohio].”