TAX-LIMIT PROPOSALS ARE SOFT ON SPECIFICS TO PROTECT TAXPAYERS

Both the Missouri Senate and House currently are considering versions of legislation to amend the state's Hancock Amendment, which was adopted by voters in 1980 and which limits state and local tax increases.

Since its adoption, the Hancock Amendment has been riddled by exceptions. The biggest blow to taxpayers came in 1993 when the General Assembly approved Senate Bill 380, the Outstanding Schools Act, which was pushed by Gov. Mel Carnahan. Included in SB 380 was a $315 million tax increase. Missouri voters never had an opportunity to vote on the tax increase, in spite of the Hancock Amendment. A lawsuit has been filed just in the past few days challenging the constitutionality of SB 380. A hearing has yet to be set for the lawsuit.

Last year voters turned down, by a 2-to-1 margin, a major rewrite of the Hancock Amendment, which was placed on the November ballot through an initiative petition. Voters were turned off by the confusing language of the new amendment, which state officials said threatened to throw government revenue into chaos.

The proposals now in the Legislature, Senate Joint Resolution 10 and House Joint Resolutions 8, 20 and 27, aim once again to restrict the annual growth of state taxation. Generally, the proposals set a limit of $50 million in new taxes each year, although different versions present differing concepts of what is new revenue and whether or not the limit applies to each new tax or to the aggregate of all new taxes in any given year.

These are important distinctions. Without appropriate language in the legislation currently under consideration, the likelihood still exists that voters will be asked to approve a constitutional amendment that is both vague and potentially construed as a license to raise taxation at an even more alarming rate than currently exists.

There are safeguards that need to be included in any tax-limit legislation. The major points have been distilled by the Taxpayer Research Institute of Missouri, a division of Associated Industries of Missouri and a respected watchdog group that has monitored the state's tax issues for years. TRIM's list includes:

-- Definitions. Any tax-limit proposal must include language that is simple without creating the need for court interpretations or misunderstandings as to the intent.

-- No indexing. The state legislature right now can raise taxes approximately $10 million to $12 million a year automatically because of increasing state revenue resulting from a healthy and growing economy. This is called indexing. In the alternative, TRIM suggests setting a dollar limit on tax increases without any automatic increases due to revenue growth.

-- Aggregate tax increases. This would combine all tax increases in any given year as a measurement against the total of the limit. It would also count tax increases that extend over more than one year to be included in each year's total.

-- Auditing. Currently the Office of Administration, which is at the beck and call of the governor's office, tracks tax increases. This means that even with a tax limit, the governor could pick and choose which taxes within the limit should be approved by the Legislature and which taxes above the limit should go to a vote of the people.

TRIM thinks the House version of the tax-limit legislation comes closest to meeting these needs. Moreover, TRIM thinks the $50 million annual limit advocated by the governor and the Missouri Farm Bureau is too high. Instead, a limit of about half that would be more realistic.

Of course, the best limit would be to require all state tax increases to be put before voters. But the mood of the Legislature and those pushing the limit favors setting some sort of reasonable dollar figure for tax increases beyond which voters would have to vote.

A clear-cut tax limit obviously is needed. Taxpayers who just finished filing their state income tax returns have a taste of what SB 380 has done to their tax bills. Surely no one in Missouri wants that sort of unprecedented tax increase to be foisted upon the state ever again.