Cooperation easier said than done in Jeff City

Monday, January 12, 2004

JEFFERSON CITY, Mo. -- There was big talk of cooperation on the legislature's opening day, as Republican leaders offered to work with, instead of against, Democratic Gov. Bob Holden.

But putting those words into practice could prove difficult.

That's because Holden and Republican legislative leaders seem to have budged little from last year's entrenched battle positions on many issues.

Consider, for example, the issue of school funding.

Holden believes public schools need more state money. Last year, he offered numerous ways of accomplishing this -- eliminating tax breaks that he calls "corporate tax loopholes"; raising casino taxes and repealing the state's unique gamblers' loss limit; increasing taxes on tobacco products; and imposing an income tax surcharge on wealthy Missourians.

Difference over taxes

Republican legislative leaders believe no new taxes are necessary, for public schools or otherwise. Last year, Republican lawmakers ignored or rejected almost all of Holden's major revenue proposals, during the regular session and two extra sessions. Instead, they passed a budget with no new money for education.

This year, Holden again will request new revenue for education when he outlines a budget during his State of the State speech Jan. 21. In fact, the governor plans to renew his call for many of the same tax increases he targeted last year.

Similarly, Republican legislative leaders again are warning they will not approve any tax increases. House Speaker Catherine Hanaway specifically pledged that education could remain a priority without new taxes.

Cooperation?

Where's the middle ground between more taxes, and no new taxes for education?

Asked that question after proclaiming she was reaching her hand out to the governor, Hanaway had no specific answer.

"I don't know," she acknowledged, "but we better find one."

Hanaway added that compromise might not be possible on every issue, but there are plenty where it is.

Early signs

Indeed, there are some early indications of compromising tendencies. But they have yet to result in full cooperation.

For example, Republican budget leaders and Holden's administration finally agreed late last week on a tax revenue projection upon which the next budget will be based. But they still can't agree on how much money the state will have this year, meaning they will be entering the budget process with different assumptions on how much money is available.

The result is a potential sequel to last year's dramatized debate over whether the budget actually is balanced.

In a second example of apparent compromise, Republican leaders have introduced a bill they claim would stop multistate corporations from avoiding state income taxes by transferring money as royalty or trademark payments to affiliated companies in tax-free states, such as Delaware.

They claim this fulfills Holden's request to close the tax loophole.

But Holden responded that the Republican solution could worsen the situation, adding: "If the problems with this bill can be worked out, it will be a great first step to increasing revenue for our state."

Among Holden's complaints, the bill shifts the burden of proof that a company does not qualify for the tax break to the Department of Revenue -- the very provision considered one of the bill's key components by sponsoring Republican Rep. Shannon Cooper, chairman of the House Tax Policy Committee.

Holden and lawmakers are likely to reach an agreement on some important issues this session, perhaps a construction-spurring bond plan and changes to the state's foster care system.

But rather than a true compromise on school funding and taxes, what appears more likely is that Holden and Republican leaders each may characterize their proposals as compromises, encouraging the other side to accept.

Don't be surprised if at the May 14 end of the legislative session, politicians are touting their efforts to compromise, not necessarily their success at doing so.

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