HCS HJR 48 -- LIMITS ON STATE APPROPRIATIONS

SPONSOR:  Icet (Bearden)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Budget by
a vote of 14 to 9.

This proposed constitutional amendment prohibits, upon voter
approval, 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% of the authorized net general revenue
appropriations allowed, 67% of the excess is to be transferred to
the Cash Operating Reserve Fund and 33% to the Budget Reserve
Fund, which are created by the substitute.  Any revenue in excess
of the specified limits of the funds 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 his or her
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 appropriation bills 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 on July 1 of
each year is to be transferred to the Cash Operating Reserve
Fund.  If the balance in the Cash Operating Reserve Fund exceeds
5% of the net general revenue collected in the previous fiscal
year, the excess amount 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.  If the
balance in the Budget Reserve Fund at the end of a fiscal year
exceeds 7% of the net general revenue collections for the
previous fiscal year, the excess funds will be transferred to the
General Revenue Fund.  If the balance is less than 7%, the
difference will be transferred from the General Revenue Fund
within five years.

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

FISCAL NOTE:  Estimated Cost on General Revenue Fund of $131,400
in FY 2007, $0 in FY 2008, and $0 in FY 2009.  No impact on Other
State Funds in FY 2007, FY 2008, and FY 2009.

PROPONENTS:  Supporters say that the bill will limit the growth
of government spending, provide long-term fiscal planning,
provide rainy day funds, help to balance the economic highs and
lows, protect programs and funding, provide refunds to taxpayers,
and create a better business environment.  The bill doesn't apply
to local governments and will not limit the power of the
legislature to appropriate funds between programs.

Testifying for the bill were Representatives Bearden and Lager;
Taxpayers Research Institute of Missouri; Associated Industries
of Missouri; and Dr. Barry Paulson, Americans for Prosperity
Foundation.

OPPONENTS:  Those who oppose the bill say that it places a new
constitutional lid on state spending growth that contains an
excessive growth restriction formula and is similar to the TABOR
adopted by Colorado that hurt the state.  Missouri already has a
current lid, called the Hancock Amendment, which protects
taxpayers.  The bill ties state spending to population growth
plus inflation, is constitutional, and has a ratchet effect since
Missouri's future spending would be tied to today's historic
budget levels.  Establishing the Rainy Day Fund is beneficial to
the state.  The bill could result in an increase in property
taxes and erode Missouri's ability to fund the new education
formula, public transportation, highways, infrastructure, parks,
health care, mental health services, and other needed programs.
The bill might work for a while, when times are good, but
inevitably will become a restriction that prevents needed
accommodations to changing economic circumstances and cause the
burden for vital services to shift to the local level and
individuals.

Testifying against the bill were Missouri Budget Project; AARP;
Cooperating School Districts of Greater St. Louis; Covenant House
Missouri; Missouri Federation of Teachers and School-Related
Personnel; Missouri AFL-CIO; Brad Young; Megan Payne, Lutheran
Family and Children's Services of Missouri; Missouri National
Education Association; Missouri School Boards' Association;
Missouri Association of School Business Officials; Missouri
School Administrators Coalition; Southwest Center for Independent
Living; Missourians for Tax Justice; Missouri Association for
Social Welfare; Citizens for Missouri's Children; American
Federation of State, County, and Municipal Employees Council 72;
Greater Kansas City Chamber of Commerce; Paraquad, Incorporated;
Maternal, Child and Family Health Coalition; and Missouri
Planning Council for Developmental Disabilities.

Karla Strobel, Legislative Analyst

Missouri House of Representatives
93rd General Assembly, 2nd Regular Session
Last Updated November 29, 2006 at 9:46 am