HCS HJR 20 -- LIMITS ON STATE APPROPRIATIONS

SPONSOR:  Icet (Bearden)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Budget by
a vote of 12 to 10 with 1 present.

Upon voter approval, 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 will be 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 used to permanently
reduce the income tax rate rounded to the nearest .25%.

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:  No impact on state funds in FY 2008, FY 2009, and
FY 2010.

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 a reduction in income
tax rates, 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.
Georgia has successfully implemented a similar bill.  Colorado's
TABOR is accomplishing exactly what it was designed to do.  It
remains the most effective tax and spending limit in the country
and has resulted in over $3 billion in tax rebates and tax cuts
in income tax, sales tax, and property tax for its taxpayers.

Testifying for the bill were Representative Bearden; 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.  Higher education
funding per student in Colorado dropped by 31%, elementary and
secondary education funding has been reduced, health care for its
citizens has diminished, and the number of uninsured children has
doubled in 10 years from 16% to 32%.  Missouri already has a
current limit, 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.  Education and other state-supported services
typically grow at a pace significantly greater than inflation.
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, higher
education, 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 to
individuals.  Fiscal policy should be in the state statutes and
not the constitution.

Testifying against the bill were League of Women Voters of
Missouri; Kansas City Civic Council; Cooperative School Districts
of Greater Kansas City; Missouri Hospital Association; Missouri
Library Association; Missouri Municipal League; Ron Sergent,
AARP; Cooperating School Districts of Greater St. Louis; Kristi
Sobbe, Covenant House Missouri; Missouri Federation of Teachers
and School-Related Personnel; Missouri AFL-CIO; Missouri National
Education Association; Missouri School Boards' Association;
Missouri Council of School Administrators, School Administrators
Coalition; Missouri School Administrators Coalition; Shelby
Butler, Southwest Center for Independent Living and Ozark
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; and Terry Mackey, Missouri Planning Council for
Developmental Disabilities.

Missouri House of Representatives
94th General Assembly, 1st Regular Session
Last Updated July 25, 2007 at 11:21 am