HCS HJR 70 -- LIMITS ON STATE APPROPRIATIONS

SPONSOR:  Icet

COMMITTEE ACTION:  Voted "do pass" by the Committee on Budget by
a vote of 13 to 10.

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:  Estimated Cost on General Revenue Fund of $0 in
FY 2009, $89,440,442 in FY 2010, and $69,976,996 in FY 2011.
Estimated Income on Other State Funds of $0 in FY 2009,
$89,440,442 in FY 2010, and $69,976,996 in FY 2011.

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.
Colorado's TABOR is accomplishing exactly what it was designed to
do, and it remains the most effective tax and spending limit in
the country.  Colorado continues to have one of the most robust
economies in the 50 states.  Unlike Colorado, adjustments have
been made in the bill to prevent the ratchet-back effect.

Testifying for the bill were Representative Icet; Taxpayers
Research Institute of Missouri; Associated Industries of
Missouri; and Carl Bearden 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 by reducing funding for
education and health care for its citizens.  Missouri already has
a current limit, 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 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.

Testifying against the bill were Missouri Budget Project;
Partnership for Children; Roger Kurtz, Cooperative School
Districts of Greater Kansas City; AARP; Roger Kurtz, Missouri
National Education Association; Missouri School Boards
Association; Missouri Council of School Administrators; Roger
Kurtz, School Administrators Coalition; Missourians for Tax
Justice; Missouri Association for Social Welfare; Greater Kansas
City Chamber of Commerce; Missouri Hospital Association; Missouri
Municipal League; Roger Kurtz, Missouri State Teachers
Association; and Paraquad, Incorporated.

Missouri House of Representatives
94th General Assembly, 2nd Regular Session
Last Updated October 15, 2008 at 3:12 pm