HCS HJR 12 -- LIMITS ON STATE APPROPRIATIONS

SPONSOR:  Lager (Bearden)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Budget by
a vote of 17 to 9.

This proposed constitutional amendment prohibits appropriations
in any fiscal year from exceeding the total state general revenue
appropriations from the previous year by more than the
appropriations growth limit.  The appropriations growth limit is
the greater of zero or the sum of the annual rate of inflation
and the annual Missouri population growth.

For any fiscal year in which the net general revenue collections
are in excess of 1% above the authorized net general revenue
appropriations allowed, the excess is to be transferred in equal
amounts to the Cash Operating Reserve Fund and the Budget Reserve
Fund.  Any revenue in excess of the specified limits will be
refunded, pro rata, based on tax liabilities reported in the tax
year in which the fiscal year ended.  Any taxpayer can designate
on the state income tax return that any refund be credited to the
taxpayer's future tax years.

Total state general revenue appropriations may exceed the
appropriations limit only if the Governor declares an emergency
and the General Assembly approves appropriations to meet the
emergency.  The funds appropriated to meet the emergency will not
increase the appropriation limit for the succeeding fiscal year.

New or increased tax revenues or fees receiving voter approval
will be exempt from the calculation of the appropriations growth
limit for the year in which they are passed.

One-half of the balance in the Budget Reserve Fund is to be
transferred to the Cash Operating Reserve Fund.  The Cash
Operating Reserve Fund's maximum balance is 5% of the net general
revenue collected in the previous fiscal year.  Funds in excess
of the maximum balance will be transferred to the General Revenue
Fund.

In any fiscal year in which the Governor reduces expenditures
below amounts appropriated, the Governor may request an emergency
appropriation from the Budget Reserve Fund.  If the request is
approved by the General Assembly, funds may be restored to any
expenditure authorized by existing appropriations.  The Budget
Reserve Fund's maximum balance at the end of a fiscal year is 7%
of the net general revenue collections for the previous fiscal
year.  Funds in excess of the maximum balance are to be
transferred to the General Revenue Fund.  If the balance is less
than 7%, the difference will be transferred from the General
Revenue Fund.

Funds appropriated and expended from the Budget Reserve Fund must
be paid back within five years of the original transfer date.

FISCAL NOTE:  Estimated Effect on General Revenue Fund of an
Income of $0 in FY 2006, a Cost of $116,010 in FY 2007, and an
Income of $0 in FY 2008.  No impact on Other State Funds in FY
2006, FY 2007, and FY 2008.

PROPONENTS:  Supporters say that the bill is a spending
limitation bill based on a weighted Consumer Price Index and will
make needed changes to the constitution.  The constitution's
current revenue limit has not been sufficient to keep state
government expenditures from growing.  Periods of recession will
be helped by the rainy day provisions of the bill.  Expenditures
in Missouri have out-paced the growth in family incomes.  When
Missouri needs to reduce spending, the state tends to reduce
salaries, staff, expenses, and programs.  Other states have a
similar spending limit and have reduced taxes and are improving
and growing.  Anytime an economy grows, employment will improve
as new jobs are created.

Testifying for the bill were Representative Bearden; American
Legislative Exchange Council; Missouri Chamber of Commerce and
Industry; and Associated Industries of Missouri.

OPPONENTS:  Those who oppose the bill say that it is totally
unnecessary.  When Missouri is short on funds, programs are
underfunded; but when revenue allows, programs can grow along
with the economy.  Missouri state workers are the lowest paid
state workers in the nation, and Missouri state taxes are one of
the lowest in the nation.  The bill will make the current budget
crunch permanent and shrink state government.  It will cut state
jobs, lose federal funds, and ignore the needs of Missouri's low
income, senior, disabled, and mentally ill citizens.

Testifying against the bill were Missouri Budget Project; AARP;
Covenant House Missouri; Missouri National Education Association;
Missourians for Tax Justice; and Paraquad, Incorporated.

Karla Strobel, Legislative Analyst

Missouri House of Representatives
93rd General Assembly, 1st Regular Session
Last Updated August 25, 2005 at 1:21 pm