MISSOURI BOND RATINGS COULD BE AFFECTED BY AMENDMENT 7

Unlike most opinion pieces you'll real about Hancock II, this one will not tell you how to vote. Instead it's intended to shed a little light on the sea of confusing facts and figures that have prompted many voters to tune out the Amendment 7 debate.

As an elected official I have made a conscious decision to keep my opinion out of the public debate on Amendment 7, but as Missouri's chief financial officer I have an obligation to lay out the facts as I know them and urge you to make an informed vote.

Simply put, Amendment 7 is a revenue lid set below the current budget for the state of Missouri. Proponents say it's intended to strengthen the original Hancock Amendment by tightening controls on how much tax money can be collected. It does this by adding the partially undefined term "all other revenue" to the category of Total State Revenue. By doing so Amendment 7 includes voter approved taxes such as propositions A and C, parks and soils sales tax, lottery sales, riverboat gaming, bingo revenues and the local motor fuels tax.

As state treasurer I would like you to know about impact of Amendment 7, one that is not concerned with specific amounts of potential budget cuts or tax refunds. Missouri is one of only five states in the nation that have a AAA rating from all three rating agencies on state issued tax exempt bonds. That means there's virtually no risk of losing your money if you buy a bond issued by the state of Missouri. This rating allows the state to issue bonds at the lowest possible interest rate in order to help municipalities, counties and other political subdivisions raise revenue for local construction and maintenance projects. Our rating could be in danger if Missouri and its municipalities are not able to pay their bills in a timely manner. Moody's Municipal Credit Report of Oct. 26 states, "At this time Moody's is not taking any rating actions regarding the state or its political subdivisions. If the proposition (Amendment 7) is adopted, we will review the credit positions upon presentation and adoption of plans to address the revenue loss for the state and its units of local government." MOody's rating and the decisions made by other bond rating agencies will be based upon the fiscal health of the state after the election.

How does this affect taxpayers? Anything that affects the state's bond rating could also impact the rates of locally issued bonds in two ways: 1) The state of Missouri will have to charge communities and political subdivisions higher interest rates for Missouri-issued bonds. Plus, state aid to local communities could be reduced because of forced budget cuts. (This year Missouri awarded $250 million in cash assistance to communities throughout the state.) 2) Section 23 in Amendment 7 would make it more difficult to sell locally issued bonds because any taxpayer would be allowed to file a lawsuit challenging the enactment of a local tax to pay for such bonds.

My other primary concern about the potential impact of Amendment 7 is the uncertainty of its interpretation. In two days Missouri voters will be deciding on a constitutional amendment which, if passed, will ultimately be interpreted by the courts. Experience has shown us how a courtroom can turn well-intentioned ideas into fiscal nightmares. For example, desegregation was intended to keep a racial balance in our schools. It has ended up costing Missouri taxpayers more than $3 billion.

Don't rely merely on budget cut projection or the promise of a tax refund. Read carefully the budget analyses and study the impact on the state and your local governments' credit rating and evaluate what the courts will do with the language in the amendment and how it might impact your roads, your taxes, your schools and your jobs.

There will be consequences for all of no matter what decision is made on Tuesday. Most importantly, remember that when you enter that ballot box on Tuesday you will be deciding the future Missouri offers its citizens today and its children tomorrow.

Bob Holden is state treasurer of Missouri.