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Democratic leaders propose a $155 million tax cut

January 19, 1999
State Capital Bureau

JEFFERSON CITY - The average tax-paying Missourian would be $60 wealthier in 2000 under a tax cut plan proposed Tuesday by Senate Democrats.

The bill would decrease total state revenue by $155 million, Democrats said. It is the third year in a row legislative leaders have proposed tax cuts in an effort to bring state revenues within the Hancock limit on the state's budget.

Republican leaders attacked the plan for being too skimpy and said the cuts ought to be double that amount.

"I think $155 million is a good start," said House GOP Leader Delbert Scott, R-Lowry City. "Based on the past year's history, it should be at least $300 million."

But Democrats urged caution with the tax issue. Cutting taxes any further would be a gamble, said Wayne Goode, D-St. Louis County and the new chairman of the Senate Appropriations Committee.

"I think it's the responsible thing to do to minimize the Hancock refund but also have enough money to run the state," Goode said.

The Hancock lid requires the state to refund back to the taxpayers funds above a constitutional limit on the government's budget. The lid rises each year in the same proportion as the income of Missourians. But in recent years, total state tax collections have been rising at a rate much higher than the state's total personal income.

While Democrats have been trying to bring tax collections as close to that limit as possible, Republicans argue for going much further -- to actually cutting the size of state government.

"I think it is time to go beyond the Hancock amendment refund and ask ourselves how big we want this government to be," said Senate Republican Leader Steve Ehlmann, R-St. Charles County.

"Who can argue that tax cuts are a bad idea? Sure, this is a good idea, but there are other good ideas that could be considered," Ehlmann said.

The Democratic plan would increase the exemption on individual tax returns by $900 and on joint tax returns by $1,800. This increases the personal exemption from $1,200, which was set in 1946, to $2,100.

"I thought that this was the best approach," Goode said of the uniform applicability of the plan. "Other tax cuts benefit some but not all."

"We feel giving the personal exemption increase goes hand-in-hand with helping working families," said Sen. Ken Jacob, D-Columbia.

A growing side theme to the tax debate has been a charge repeatedly leveled by Republicans that the Democratic administration deliberately has misled both the legislature and Missouri taxpayers.

The motivation, say Republicans, has been to lower tax-collection projections so that each year the Democratic legislature has the opportunity to pass another tax-cut bill.

The charge, first leveled by the House Republican leader at the start of the session, has now been picked up by the Senate Republican leader.

"The administration has consistently underestimated the amount of money that needs to go back. These are people who are cutting taxes just because the constitution requires them to," Ehlmann said. "People are making more money."

"They've been off by a billion dollars over the last four years -- that's a billion that should've been cut," Scott said. "We should stop being so chintzy with the cuts."

If the state cuts too much in taxes, the economy goes bad and we need services, Ehlmann said, then lawmakers could always raise taxes back to the cap. He added that some cuts for the business community, which he said contributed to much of the state's revenue, would also be appropriate.

Democratic leaders, on the other hand, argue that knowing where the economy is headed is about like looking into a crystal ball.

"I think that you always have to approach tax cuts with looking at the future," said Senate President Pro Tem Ed Quick. "Our economy was good this year. It could be down the tubes next year."