Legislature down to the wire on new budget

Friday, May 2, 2003

There is just one week left before the Missouri Legislature's deadline to complete work on the state budget for the fiscal year that begins July 1. Legislative leaders had hoped to send a budget to the governor earlier than the May 9 deadline, but that now appears unlikely.

This year has been one of the toughest years in recent history for legislators seeking to match spending demands and revenue forecasts. At the beginning of the session, the gap was nearly $1 billion. By trimming overall spending, the state Senate has narrowed the difference to $200 million and on Wednesday approved a plan that would bring in an additional $164 million. Final action on revenue bills must be taken before the session ends May 16.

The Senate's spending bill provides a traditional line-item plan. The previously approved House version consists in large part of lump sums to state departments and agencies, which would leave it up to bureaucrats to decide how to best spend the money. The House version reflects representatives' frustrations in dealing with state officials who refused to cooperate with attempts to cut spending.

In addition to dealing with the legislative responsibility of specifying how state funds should be spent, the Senate also took a creative approach to revenue needs. Senators approved two spending plans, one for $18.8 billion that reflects revenue estimates based on current taxes and federal funding, and another for $19 billion that hinges on new revenue measures.

At one point, part of the Senate's plan to enhance revenue included what are commonly called sin taxes. In this case, the new taxes would have been applied to the sale of pornography and to illegal drugs. Elimination of the $500 loss limit at Missouri's casinos was considered at one point, but that idea was scrapped.

Still in the Senate's revenue-enhancement bill is authorization for state income-tax withholding on multistate lottery proceeds that go to out-of-state winners who purchased their winning ticket in Missouri.

The idea for taxing porn and drugs fell by the wayside because of a convincing argument that taxing something has the effect of legitimizing it. The sale of pornography is legal in Missouri, but illegal drugs are another matter. A law authorizing a tax on illegal drugs would not have produced very many willing participants and, in effect, would have allowed the seizure of offenders' assets for failure to pay the tax. Either way, the idea appeared to consider trafficking in porn and drugs to be just like any other business that produces taxable revenue.

At one point late in the debate before senators approved a revenue-enhancement bill Wednesday, the idea of putting a temporary increase in the state sales tax on the ballot was considered. The vote rejecting that idea was close.

As it stands, the Senate bill would generate about $164 million in new revenue, which is still short of the $2000 million hoped for. Budget negotiations between the House and Senate have been held up by the uncertainty over revenue figures. With the Senate vote Wednesday, it appears the process can move along again.

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