ISSUE PROMPTS OF `TAX OVERLOAD'; OPPONENTS SEE BURDEN ON THE POOR

(Fourth in a series)

Proposition B's three-eighths-cent sales tax provision would unfairly burden the poor and add to the "tax overload" on middle-income earners, opponents maintain.

They also question a part of the measure dealing with job training and business tax credits, and the fact that none20of the money would go for the state's mental-health and social services.

Opponents point to the fact that Proposition B would provide added funding for public schools, but much of it only after the foundation formula, the basic method for distributing state aid to schools, has been revised. At this point, they say, there is no way to tell what will be contained in a new foundation formula.

Some opponents also say that Proposition B would not provide enough money for public education.

Pat Martin, a spokesperson for Missourians Against Proposition B, a St. Louis-based group of about 100 members, said: "It is a burden to middle-income people, but really an unconscionable burden on low-income people the elderly, those on fixed income, retirees, the unemployed and senior citizens."

Martin's husband, the Rev. Benjamin Martin of St. Louis, was one of three people who brought legal challenges against the state earlier this year over the original wording of the ballot measure.

The legal challenge resulted in Circuit Judge A.J. Seier of Cape Girardeau changing the brief ballot wording to indicate that Proposition B involves "additional tax revenues."

Proposition B, a tax-and-reform measure for education, is on the Nov. 5 election ballot.

Pat Martin said opponents of the measure are not as well organized or as well funded as Proposition B supporters, who have a whole host of business, education and political leaders on their side.

Martin said the largest portion of new revenue from Proposition B (44 percent) would come from an added three-eighths-cent sales tax.

"It is the most over-utilized tax in the state for both local and state government," she maintained. "Forty-five percent of local and state tax collection is from sales tax."

Martin said it's misleading to refer to Proposition B as a "$385 million tax increase." That figure refers to the estimated revenue from Proposition B taxes for the first full fiscal year. But the tax money would be earmarked for education and job training for 10 years, after which the money would go into the state's general revenue fund unless otherwise allocated by the legislature.

"It's actually a $5.1 billion tax package (over the 10-year period)," said Martin, "and $2.2 billion of that is from the grossly unfair sales tax increase."

The $5.1 billion is based on an estimate that the tax revenue would increase by 4.5 percent annually.

Martin said: "Sales tax is a tax on consumers. It means that we not only pay tax on money when we earn it, through the income tax, but also when we spend it."

She contended supporters of Proposition B are "uninformed about the realities of the federal food-stamp program when they claim the sales tax increase doesn't really burden the poor."

Food-stamp purchases are exempt from the sales tax. "But only about 40 percent of the eligible low-income population in Missouri is served by this program," said Martin.

"In addition, families receiving food stamps must spend an additional 33 percent of their net income on food to have adequate nutrition," she said.

"To say sales tax won't be a burden on the poor is cruelly insensitive and ignores the facts," she said.

Martin said the average income in several Missouri counties is below the poverty level. "More than 40 percent of Missouri's oldest senior citizens (85 or older) live below the poverty line," she said. "To increase this tax on those least able to pay is unjustifiable."

Martin said the sales tax is now more than 7 cents in some areas of the state. "People must say no to more sales taxes if they want to ever have fair taxes in this state," she said.

Mark Youngdahl, a former state representative from St. Joseph and one of the leaders of Missourians Against Proposition B, said, "We think the taxing scheme is wrong."

Proposition B would raise revenue through not only a sales tax but also corporate, cigarette and tobacco taxes, and limits on state deductions for federal income taxes. The measure would also increase the dependent exemption from $400 to $800.

Proponents say the savings from the increased exemption would almost offset the impact of a sales tax increase.

It's estimated that a two-earner family with two dependents and income of $32,500 a year the median Missouri family income would pay $5 more a year in taxes, a 42-cent-a-month increase.

But Youngdahl said the cost estimate deals only with families that have two dependents. "A couple who is retired and has children who are grown, they don't get that income tax deduction, and that figure doesn't apply," said Youngdahl.

He said he objects to the tax measure because it doesn't include any increased funding for mental-health and social services. "It's just unthinkable that mental-health and various human services are not included," he said.

Most state lawmakers appear solidly behind Proposition B. But state Sen. Larry Rohrbach, R-California, isn't one of them.

"My biggest problem is that it is a big tax increase," he said. "We continue to create new programs year by year. I think we need to do a better job of spending control in state government rather than constantly raising taxes."

The state budget, he said, has grown from $4 billion to $9 billion in nine years, a 125 percent increase, which is well above the 50 percent rise in inflation.

During that time, he said, there have been various tax increases that include Proposition C, a sales tax increase for education, and a sales tax for soil conservation and state parks.

Rohrbach said he believes the foundation formula for public schools should have been revised before submission of any tax proposal. "I think we should have put a formula in there because it is a real pig in the poke without it."

He said Proposition B would allocate money to specific educational programs, leaving school districts with no flexibility to deal with needs at the local level.

Rural schools, for example, whose class sizes are already small, would still implement a program for low-size classes because Proposition B provides funding for such an endeavor, not because they need it, Rohrbach said.

"I have visited with an awful lot of educators over the years," he said. "What you hear over and over and over again is that there is a tremendous amount of classroom interruption because of all sorts of special programs."

Rohrbach suggested the state should give school districts "some good, decent, basic support" and then allow school boards and school officials to spend the money to meet needs of the individual schools. "Good schools are not made in Jefferson City," he said.

As to higher education, he said, full-time equivalent enrollment at public colleges and universities went up 6 percent from 1981 to 1989, while state appropriations, adjusted for inflation, went up 29 percent.

"There is quite a bit of evidence that we have had universities competing for students and programs against each other as well as against private colleges," he said.

Proposition B also calls for defining the missions of each state university and college. But Rohrbach said the legislature will be involved in this process, which means it will be "a political process" rather than an objective one.

The state lawmaker said he believes if Proposition B doesn't pass, the legislature will enact a more modest tax hike and a change in the foundation formula that won't require voter approval.

The Missouri League of Women Voters opposes the measure, contending the sales tax is regressive and the measure would not adequately fund education.

"Public education at all levels needs and deserves more money," said league official Elaine Blodgett. "Missouri public schools spend about $3.7 billion a year. This (extra money) will not save them from bankruptcy, especially when much of it is allocated to specific reforms of unproven value."

Missourians Against Proposition B has criticized what it views as "hidden tax credits" for businesses.

"The thing that makes me particularly angry and should make the voters angry is the corporate tax credits that are in the bill," said Youngdahl.

Under the job-development and training portion of the measure, businesses could obtain tax credits and use such credits in paying off low-interest loans. Youngdahl termed the tax credits "a payoff to corporations" that would lead to millions in lost revenue for the state. "It's kind of an insidious thing because you don't see it; it's money that isn't coming in," he said.

Martin said opponents also question whether the "reforms" contained in Proposition B would really create excellence in education.

"We are not anti-tax. We are not anti-education," she said. "We just want things done differently. Our theme is that we have to demand a better proposal than this."

(Thursday: Lawmakers comment on Proposition B. Business groups express support for the measure, and proponents talk of its impact on taxpayers.)