By Jeff Fox

Missouri Gov. Jay Nixon on Thursday said a compromise on a state income tax cut – a key priority for state Sen. Will Kraus, R-Lee’s Summit – is in the works.

The governor, addressing reporters and newspaper publishers at the Governor’s Mansion, cited what he called “real progress” made this week toward “a sustainable and sensible tax bill that I would sign.”

Nixon, who vetoed a larger tax cut that Kraus promoted last year, said he’s not against cutting taxes, “but if we’re going to cut taxes, I want it done the right way ...”

“I am extremely excited that the governor is willing to step forward and say what he is willing to sign,” Kraus said Thursday. His goal is to cut taxes and not focus on a bill that can’t get past the governor’s desk, he said. He also has said he believes taxes can be reduced “without cutting core budgets.”

Nixon stressed that as a a priority as well. As he outlined it, the state income tax rate would be cut by 0.5 percent – 0.25 percent once the state’s foundation formula for schools is fully funded and 0.25 percent when limits are placed on tax credits for low-income housing and historic preservation.

The foundation formula is the state’s basic method of allocating money to local school districts. It’s been underfunded for years, but Nixon said with an improving economy and state revenues rising, it’s his goal to have it fully funded in two years.

Nixon also said tax credits for preservation and housing – often a contentious issue in the General Assembly – benefit wealthy developers and special interests, amounting to “handouts to those who need them least.”

The governor also dismissed what he called gimmicks such as cutting taxes for “pass-through” companies, which he said tends to benefit lawyers and lobbyists. Republican proposals along those lines would cut taxes for those who report business income through individual tax returns.

“And there is no evidence – anywhere – that these do anything to create jobs,” he said.

There were lighthearted moments during the governor’s give-and-take with reporters and publishers – Thursday was his 58th birthday – and he tried to use humor to deflect a question about whether he’ll run for president in 2016. Nixon, a Democrat in his second term, by law cannot run for governor again. His term ends in January 2017.

He said he’s focused on the job of being governor for the next three years. A reporter pointed out that’s not a “no.”

Finally, the governor offered this: “That question ... not met with laughter is a very good birthday present.”

In an interview earlier Thursday with The Examiner, Nixon said that he and Kraus, despite being in different parties, have worked well together.

He took encouragement from Kraus’s comment, at an event in Independence a few weeks ago, that expanding Medicaid is inevitable. That’s been a key Nixon priority for more than a year, though legislators took no action on it in their session last year.

Expansion would add health care coverage for up to 300,000 people, most of whom are adults with one or two jobs that don’t offer coverage, Nixon and other advocates argue.

“I mean, there’s a lot of people doing hard jobs out there. They need health care,” he said.

Under Obamacare, the federal government is offering states heavy incentives to expand Medicaid: It would pick up the full cost of new enrollees at first and then scale back to a carrying 90 percent of that cost, permanently, in a few years. About half of the states have taken the deal and half haven’t.

The states that haven’t, Nixon argues, are paying the same federal taxes they would anyway, so it amounts a shifting of money from states such as Missouri – $5.47 million a day, he said – to states that are taking the incentives. The governor said it “annoys the bejeezus out of me” that the state has, in his view, lost more than $200 million that way just so far in 2014.