Holden's tax ideas make no headway in capital

JEFFERSON CITY, Mo. -- While Republican leaders are considering closing some loopholes in the state tax code, legislation to raise taxes is languishing in the Missouri Legislature.

Democratic Gov. Bob Holden called for a three-pronged approach to addressing an estimated $1 billion shortfall when he unveiled his proposed budget for the upcoming fiscal year in January.

In round figures, Holden cut $300 million from the core budget and asked lawmakers to generate $200 million by tightening tax laws and another $500 million through direct tax increases for a $19.2 billion spending plan.

Majority Republicans are moving forward cautiously on the loophole issue, filing bills in both chambers in the last two weeks. However, the various Democratic-sponsored tax increases -- some submitted two months ago -- have yet to even receive hearings.

Since the Missouri Constitution requires that any significant tax increase be approved by voters, time is running out to get proposals on the ballot before the July 1 start of the fiscal year.

'The last resort'

Senate President Pro Tem Peter Kinder, R-Cape Girardeau, said his party hasn't ruled out new taxes but is working to balance the budget without them.

"That would be the last resort, but it's not completely off the table," Kinder said.

Appropriations committees in the House of Representatives have cut approximately $300 million on top of what the governor suggested. An impending bond sale that was recently approved will generate $185 million for next year, leaving a remaining deficit of more than $200 million, assuming none of the cuts is restored later in the process.

Lawmakers have less than two weeks to get a tax package on the June 3 ballot, which is all but impossible. The deadline for submitting a ballot measure to Secretary of State Matt Blunt for approval is March 25, but because the legislature will be on spring break that week, as a practical matter the deadline is March 20.

Holden has called for a July 1 election, which would give lawmakers until April 22, but there is a legal question as to whether he can have one.

Different interpretations

The constitution empowers the legislature to authorize special elections on ballot measures, but state law defines when such elections can be held, with June and August the only summer options.

The governor's office interprets the constitution as allowing a special election at any time, regardless of what the statute says. The secretary of state's says that interpretation could be correct but doesn't follow past practice and would likely spawn a lawsuit.

With no tax proposals moving such questions for the moment are moot.

The biggest single component of Holden's tax package calls for raising $279 million through an additional 55-cent tax on a pack of cigarettes and other tobacco-related increases. The proposal is similar to one voters narrowly defeated in November.

State Rep. Vicky Riback Wilson, D-Columbia, is sponsoring the bill but said House Speaker Catherine Hanaway hasn't even assigned it to committee.

"I'm not aware of anything that has a Democratic name on it that's moving," Riback Wilson said.

Hanaway, R-Warson Woods, said neither Holden nor members of his legislative team have spoken to her about the tax proposals.

In the Senate, Minority Floor Leader Ken Jacob, D-Columbia, has filed several bills containing some of Holden's other tax proposals. Those include a 5 percent state income tax surcharge on individuals who earn more than $200,000 a year and various boosts in taxes and fees paid by the riverboat gambling industry. His bills are stalled as well.

'Don't know where to cut'

Jacob chided Republicans, particularly those in the House, for their recent complaints that the Holden administration hasn't cooperated in their budget-cutting efforts.

"They're the ones that have been saying it's a spending problem," Jacob said. "They won the elections with it being a spending problem, and now they don't know where to cut."

A bill sponsored by Kinder that the Senate is to debate this week could become a vehicle for moving tax proposals. That bill would create a three-day sales tax break in August.

Jacob said he will attempt to attach some of his tax increase measures to the bill, though Kinder isn't likely to be receptive.

State Sen. John Russell, R-Lebanon, admitted balancing the budget through cuts alone would be difficult without affecting vital state services. However, he strongly doubts Missouri voters are inclined to accept new taxes.

Russell filed a bill to close tax loopholes as a fallback position if cuts aren't enough to do the job.

"I think the membership might be amenable to doing something if there really are so-called loopholes in our tax law," Russell said. "I'm not expecting a big crusade to move tax bills just to be moving tax bills."

The amount of revenue Russell's bill or related House measures would raise hadn't yet been estimated, but none of the bills is as expansive as Holden proposed.

mpowers@semissourian.com

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