REACTIONS TO TAX PLANS MIXED; THE FUNDING DILEMMA IN HIGHER EDUCATION

(First in a series)

The largest tax-hike proposal in Missouri history one that has ballooned from $456 million in the Senate to nearly $800 million in the House has received both plaudits and ridicule.

The House has proposed a $750 million tax package that provides about $300 million each for higher education and elementary and secondary education. The House bill, as now amended, also includes $150 million to provide health and social services for the poor, elderly and disabled.

House Speaker Bob Griffin, D-Cameron, proposed the measure as a substitute to a $456 million tax package the Senate passed last month.

Griffin delayed a vote until this week on his proposal because he didn't have enough lawmakers behind him Thursday to pass the measure.

If passed by the legislature, the bill would have to be submitted to a statewide vote, probably in November.

The Senate bill, which was weighted toward higher education, was proposed by President Pro Tem James Mathewson, D-Sedalia. Like the House measure, it would have to be submitted to a statewide vote.

Griffin's substitute bill, which would provide substantially more funding for preschool and elementary and secondary education than the Senate bill, includes some reforms left out of the Senate measure.

Education officials across the state have lauded the tax proposals. Business leaders and Gov. John Ashcroft have called the measures excessive.

Although legislators are yet to decide on a final tax proposal, it's likely any measure would earmark new tax revenue primarily for higher education, public schools and job development.

Mathewson said he wasn't particularly concerned about the amount of tax the House settled on because the final proposal will be worked out by a House-Senate conference committee. "I don't care what they put in it, just so they keep Senate Bill 353 alive, then give it back to me," Mathewson said.

Mathewson said the only parameters the conference committee can be assured of staying within are that the bill will address more funding for preschool, elementary and secondary and higher education.

"What we tried to do is package the bill for education from (kindergarten) through master's degree, with a strong emphasis on vocational education and job development and job training," Mathewson said. "I think we have to stay within those parameters. But we're not locked into ($456 million) going up or going down. I think there's a compromise in there."

Mathewson said the compromise likely would involve the governor's input. Ashcroft has remained a vocal opponent of both measures, contending they are too large and don't do enough to assure reforms, particularly at the elementary and secondary level.

The Griffin bill increases funding for higher education from $248 million to $300 million. But the preschool and elementary and secondary portion of the bill proposes an increased total allotment from the Senate's $184 million to $300 million.

In addition to funding for elementary and secondary and higher education, the Senate bill includes about $24 million for job training and development.

The House committee bill includes some generally low-cost reforms but doesn't include some major reforms called for by business groups and Ashcroft, including the governor's recommendation that the school-year calendar be extended from 174 to 200 days.

Mathewson said the conference committee will address the issue of which reforms should be included in the bill. "It's something the governor should play a role in," he said. "I met with him and it's my impression that he wants to be a player now."

Ashcroft has vowed to lead the way for new funding if the General Assembly agrees to longer school years and other education reforms.

The governor said that neither Mathewson's nor Griffin's bills go far enough in the area of reforms.

"If we're going to try to have some excellence, we're going to have to make some tough decisions," said Ashcroft. "I believe the amount of money in both versions is excessive. It places a monumental burden on taxpayers."

Ashcroft said the Griffin bill makes "gestures toward reform" in name only. "There are a lot of labels for reforms but no real reform," he said.

Said Ashcroft: "I don't think the state will, first of all, go for a $600 to $800 million tax increase regardless of what is in the bill. It is more of a tax bill than an education bill. That's the key.

"People are willing to support education, but they're not in favor of a major tax endeavor or tax program for the state."

Mathewson said his bill was written with a "strong emphasis on accountability" in the entire education system.

"The governor keeps talking about reforms," he said. "I don't know what that means, but I do understand accountability. People are going to demand that, and rightfully so, if they're going to pay more for education."

Mathewson said his bill, SB-353, allows for tax revenues to be spent only for specific purposes related to educational improvements.

"Every dollar would be going into special trusts and could only go for specific funding areas," he said. "It's written very tightly and we will need to continue that."

Mathewson said SB-353 doesn't propose any spending for new programs in the elementary and secondary schools. "Everything in that bill is just meeting the needs of already-in-place legislation," he said.

He said programs such as "Children at Risk," which was enacted last year and targets high-risk elementary students, and "Parents as Teachers" are good programs that have gone either unfunded or underfunded.

Ashcroft said that if legislators and educators in the state were really concerned about passing a tax increase for education, they would keep the price tag at a level that would be acceptable to voters.

"If we really want to help education, the way to do it is not to put something on the ballot that people will defeat," he said. "If you put something on the ballot that people will slam dunk, you won't see anything on the ballot again for a long time.

"You can contaminate the environment of constructive benefit for education if you go out in a sense of greed," said Ashcroft.

Mathewson said he agreed that voter rejection of an education tax could make passage of a funding measure more difficult in future years. He said legislators are working to pass a measure that's favorable to the public.

"We have reached the point where not only do we need the votes of the legislators, but we have to look at what the people will accept and what they won't," he said.

"At some point you max out on what the taxpayers will go for."

Mathewson said his $450 million proposal would cost the average taxpayer with an annual income of $30,000 about $32 more per year.

"I think that's salable," he said. "I've been told, `Well, the average citizen out there doesn't understand the difference between $500 million and $700 million.'

"But I think the average citizen does understand the difference between a $32 a year increase and a $100 a year increase. I think it's important that we keep that in mind."

The new tax burden created by the act would be shared by businesses and individuals. Griffin has proposed raising the money by eliminating up to $142 million in sales-tax exemptions, including those for sales by tax-exempt organizations, for cable television and interstate telephone charges.

The Griffin measure proposes higher taxes on personal and corporate incomes but removes the Senate bill's three-eighths-cent state sales-tax increase and a cigarette tax proposal. It also raises money by changing tax deductions.

Altogether, Griffin has proposed spending $120 million for public school programs compared to $79 million in Mathewson's bill. The speaker has proposed spending $300 million for colleges and universities, compared to $248 million by Mathewson.

Another $110 million would be earmarked for increasing the state's foundation formula, through which it computes basic school aid, compared to $35 million in the Senate bill.

Both versions call for $70 million to guarantee that no school district gets less per-pupil money under a new formula that is being considered separately by lawmakers.

Griffin said the complicated formula used to calculate distribution of state funds to school districts will be dealt with in a House bill that has progressed to the Senate. Legislators have said the formula needs to be changed in the face of a lawsuit by some school districts alleging it is unconstitutionally inequitable.

Ashcroft said that despite his opposition to Mathewson's and Griffin's bills, he thought the "game is still open" for a compromise.

"To support certain improvements and reforms, we should be willing to make the right payments," he said. "But I'm against this idea of a blank check for business as usual.

"We obviously have to defeat the mega-tax issues and proposals of Griffin and (Mathewson), but I think the game is still open," said Ashcroft. "As you come down toward the end of the legislative session, virtually anything can happen."

(Monday: A look at the funding split between elementary-secondary and higher education, and business opposition to tax proposals.)