State Legislature starts work as GOP says no new taxing

Thursday, January 9, 2003

JEFFERSON CITY, Mo. -- The first Republican speaker of the House of Representatives since 1954 warned Missouri's Democratic governor on Tuesday against proposing to balance the next state budget with tax increases, the use of state savings or the expansion of legalized gambling.

As the General Assembly opened the 2003 legislative session, House Speaker Catherine Hanaway -- the first woman to hold the post in Missouri -- said the top priority in the chamber will be to create and retain jobs in Missouri by making it a more business-friendly state.

"The policies of our state government have driven jobs out of this state and kept others from coming here. Our state government has stifled growth through an economy-eating, ever-ballooning budget, through an open door for job-killing lawsuits and through regulatory burdens that crush initiative," said Hanaway, R-Warson Woods.

Senate President Pro Tem Peter Kinder, R-Cape Girardeau, likewise called for pro-business initiatives to revitalize the state economy, which has endured the loss of 77,000 jobs in the last 19 months. Both legislative leaders said reforming an increasingly costly workers' compensation system and limiting "frivolous" lawsuits against businesses would help secure Missouri's long-term economic growth.

"I ask that we pull together to tackle these issues so that when we leave here on May 16, of us it can be said that we took action to better Missouri's economic climate -- to take down the sign that has been posted saying 'Missouri is unfriendly to business' and replace it with one that says 'We welcome jobs and opportunity and we are very much open for business,'" said Kinder, who begins his second two-year term as Senate leader.

Republican plans

While job creation is vital to Missouri's long-term economic health, it will take time and won't immediately help state government out of its worst budget crisis since the Great Depression. Republicans, who control both legislative chambers for the first time since 1948, offered no details Wednesday on how they intend to address the budget problem. They did say that protecting funding for education and programs that benefit children, the elderly and the disabled would be priorities.

The current state budget of nearly $19 billion is expected to be $300 million out of balance by the end of the fiscal year on June 30 without corrective action. Because of flat revenue and increases in mandatory spending programs, lawmakers will have to come up with $1 billion in new money, cut the budget by a like amount or implement some combination cuts and tax increases in the new budget.

Gov. Bob Holden will announce his budget plan for the fiscal year beginning July 1 on Wednesday. Though Holden hasn't publicly called for new taxes, his budget director said Tuesday that balancing the budget without additional revenue would result in draconian cuts in state services that the governor finds unacceptable.

Hanaway said taxes are not a realistic option, given the tough economy and the fact that Missouri voters rejected two major tax packages last year.

"To Governor Holden, I say we need your help, and we want to be your partners. ... But you must do your part," Hanaway said. "Do not send us a budget that balances only through tax increases, expansions of gambling and the use of the rainy-day fund. Do not send us a budget that does not reflect the will of the people of Missouri."

Kinder said that all options are on the table but that even if lawmakers endorsed tax increases he doubts the chances of success with Missouri voters, who under the constitution must approve any significant tax increase.

Tax loopholes

State Rep. Denny Merideth, D-Caruthersville, said simply trimming the fat won't come close to solving the problem. He said lawmakers need to take a serious look at Holden's proposal to close loopholes that allow out-of-state companies to avoid paying corporate income taxes. In addition to costing the state money, such loopholes also put Missouri-based businesses at a competitive disadvantage, Merideth said.

"If by closing those loopholes we can enhance our revenues, that is something we need to have on the table," Merideth said. "None of us wants a large-scale tax increase."

However, Merideth said eliminating loopholes and unneeded programs may not be enough.

"If you make government as efficient as you can and you've still got a shortfall, at that point you get to where you either have to enhance revenues or cut services," Merideth said.

Senate Minority Floor Leader Ken Jacob, D-Columbia, agreed that a tax increase would be tough to sell to voters, but he shuddered at the alternative.

"If we have to cut $1 billion from the budget, health care, education, corrections, everything is going to be effected," said Jacob, adding that he is anxious to see the Republican plans for addressing the issue.

House Majority Floor Leader Jason Crowell, R-Cape Girardeau, said he looks forward to seeing the governor's proposal, which will serve as the starting point for lawmakers to begin work on the budget. Crowell said Holden hasn't yet consulted with Republican legislative leaders as to his intentions. Crowell, the No. 3-ranking House leader, said the GOP Caucus will propose a combination of short- and long-term solutions.

"We are in triage in this state and the first thing we have to do is stop the bleeding," Crowell said. "After we stop the hemorrhaging, then we can look at what we can do in the long term to attract businesses."

In addition to Kinder and Crowell, Southeast Missouri also boasts a third top legislative leader -- House Speaker Pro Tem Rod Jetton, R-Marble Hill. Jetton will serve as Hanaway's second in command.

With the GOP takeover of the General Assembly and 90 new faces in the 163-member House because of term limits, Jetton said an era of new ideas and energy has begun in the Legislature.

"Today we observe not a political victory but a change in Missouri's direction," Jetton said.

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