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TABOR – HJR 23 Constitutional Spending Limit

It is accepted that Missouri State Government must provide several programs important to society; including elementary education, higher education, health insurance for the poor, mental health care and corrections programs.  To support and fund these obligations, the state of Missouri needs a robust and growing stream of tax revenue.  After deep cuts in 2001 through 2005 and now again in 2009, most of these important state programs are being funded at levels among the bottom ten in the nation.  Adequate future revenues will be critical to maintain and improve the important programs.

The Missouri General Assembly is now considering a constitutional amendment, HJR 23 that would impose a strict Constitutional limit on the amount that state government can increase general revenue spending in any given year.  The spending cap is derived from a calculation based on the rate of inflation and Missouri population growth.  Tax revenues collected above the spending limits would be first placed in the state’s cash reserve and the stabilization funds.  When the funds in the stabilization fund grow, then they will be used to permanently reduce the state income tax rate.  In effect, this would limit state government funding from General Revenue to “cost of living increases” which would never allow real improvements to these programs or keep up with growth in the client base.

 

BACKGROUND

HJR 23 imposes strict constitutional limits on the annual increase in the amount spent from General Revenue funds of the state. This spending limit would effectively limit increases to all programs funded from General Revenue to increases equal to the increase in the average cost of living.

This limit would be in addition to the already strict constitutional limit on the growth in total revenues (known as the Hancock amendment adopted in 1980), a balanced budget provision and a constitutional requirement for voter approval of any tax increase over $95 million a year.  If this proposal had been in place two years ago, it would have required a $250 million reduction in the amounts budgeted for the 2007 fiscal year.  That reduction would have been necessary in the year preceding the current downturn and would have significantly worsened the situation the state faces now.

Colorado passed a constitutional spending limit in 1992 that is similar to HJR 23.  In Colorado, the limit is called TABOR (Taxpayer Bill Of Rights). Since TABOR went into effect, Colorado has experienced the following results:

  •               Dropped from 30th to 50th in the nation in average teacher salary;
  •               The number of uninsured children doubled; and
  •               Higher education funding was cut by 31% per student.

In 2005, after 10 years of disastrous results, the voters in Colorado passed a referendum implementing a five year suspension of the spending limits to protect the funding for important state programs.

Click on the link below to learn more about HJR 23 and to track its progress in the Missouri legislature

House Joint Resolution 23 (Allen Icet)

IN OUR OPINION, Missouri is already a low tax state, ranked 46th in per capita state and local taxes. Missouri already has a constitutional limit on the growth in state revenue, a balanced budget requirement and requires voter approval of any significant tax increase.  It seems that an additional spending limit is unnecessary and it may have potentially harmful effects.  The programs which represent most of the General Revenue appropriations are Elementary Education, Health Care, Prisons, and Higher Education.  Because health care costs have been increasing more than twice as fast as general costs, the number of people served in the health care programs would have to be cut just to maintain the spending levels in the other programs.  This limit would force supporters of these programs to try and cut appropriations to the other programs in order to increase funding for the program they most support.  Therefore we believe this proposal would create a substantial impediment to state support for vital services.  Furthermore, the legislature currently has the power to determine the level of state spending and can choose in any year to restrict spending without a Constitutionally mandated limit.