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Governor Seeks Tax Cut

January 16, 1996
By: Joseph Morton
State Capital Bureau

JEFFERSON CITY - Gov. Mel Carnahan's proposal to cut the state sales tax was attacked Tuesday by Republicans as politics.

Carnahan on Tuesday asked the legislature to cut the state sales tax to allow for a "booming" state economy. Carnahan said the move is necessary to keep revenues under the limits set by the Hancock Amendment.

Because Missouri's economy has performed above expectations, as have revenues from riverboat gambling, there is too much money rolling into state government, Carnahan said.

The state is required to refund any revenue above the limits set by Hancock to the people of Missouri, which many say is costly and inefficient. To avoid this cumbersome process, the governor proposes reducing the sales tax by 1/4 cent to keep revenues from getting too high.

Even with the sales tax cut, which represents $150 million, Carnahan announced that $115 million in surplus revenue still would be refunded to Missourians.

But Senate Minority Leader Franc Flotron, R-St. Louis County, charged that the real culprit behind the surplus revenue is Carnahan's Outstanding Schools Act, or Senate Bill 380, which increased taxes to raise more money for education.

"The administration is reacting to the Hancock Amendment and they're putting a nice spin on it," Flotron said. "I don't think his spin is going to stick because it's so blatantly false."

Senate Bill 380 increased tax revenues by $330 million last year, according to Budget Director Mark Ward.

Flotron said the booming economy and riverboat gambling played a part in the money excess, but these aren't the main problem.

"Admittedly there are other factors," he said. "But clearly without the money from Senate Bill 380, we wouldn't be having this discussion."

Others around the capital have different ideas about the governor's announcement.

Jo Frappier, president of the Missouri Chamber of Commerce, cited Senate Bill 380 as the main reason for the tax cut and the refunds. Frappier also said that Carnahan's actions amount to stealing from businesses and giving to everyone else in the state.

"Senate Bill 380 was overwhelmingly a tax on business," he said. "The governor took money away from businesses and now he's giving it to everybody in the state."

Education lobbyists defended Carnahan's bill, as did some legislators.

"If everything had stayed on line. Senate Bill 380 would not have triggered the Hancock Amendment," said E. C. Walker, assistant executive director of the National Education Association. "The people who will not admit that are the people who want to work against Mel Carnahan."

Walker said Carnahan's critics are contradicting themselves by blaming Senate Bill 380 for the excess money.

"At the time, the critics said 380 would cause the economy to falter," Walker said. "They were wrong then and they're wrong now."

Bob Quinn, NEA legislative director, said the problem relates to the basic nature of taxing and spending, which fluctuate and therefore need to be adjusted periodically.

"None of this has to do with 380," Quinn said.

Rep. Ken Jacob, D-Columbia, said the attacks on the education bill are misleading.

"They just keep talking tax increase, tax increase. They don't see all the school districts we're helping," Jacob said. "They're going to look at the most negative reason [for the excess money]."

Jacob, who chairs the House Ways and Means Committee which handles tax legislation, said Carnahan's proposal will come up in committee in two weeks and will likely be voted on shortly thereafter.

Besides criticism from outside his party, some Democrats are looking to revise Carnahan's proposal.

While Carnahan stressed Missouri's booming economy and the high revenues pouring in to state government, Senate President Pro Tem Sen. Jim Mathewson, D-Sedalia, urged caution.

"Washington is still holding us hostage," Mathewson said. "We ought to be cautious that we do not place ourselves in a position where a few years from now we come up short."