JEFFERSON CITY - The Missouri Supreme Court handed the state a major victory Thursday by ruling that the state did not have to refund $244 million to taxpayers.
However, the University of Missouri system may still lose funds for capital improvements, including a variety of construction projects on the drawing boards at its four campuses.
The state may have to pay small refunds to Missourians who received tax credits, though how much remains unclear. A lower court will determine the size of any refunds.
"Since we do not know what that amount will be, and we have other pending budget issues...it is only fiscally responsible that I continue to keep our capital improvement funding frozen at the present time," Holden said in a statement, referring in part to planned construction at state universities and colleges.
Facing an estimated $300 million deficit in this year's budget, Holden has proposed dedicating proceeds from the state's portion of the tobacco settlement to balancing the budget.
His idea was rejected by the House, but Holden held out the possiblity he would release the building construction funds if the Senate went along with his idea for using the tobacco funds.
The $20 million reserved for improvements in the University of Missouri system "probably is still in limbo," said Sen. Marvin Singleton, R-Joplin.
"Services we have to pay for," said Singleton, chairman of the Senate Budget Control Committee. "Buildings I can wait a year for."
Associated Industries of Missouri and the Missouri Chamber of Commerce -- two of the business groups that challenged application of the Hancock amendment -- had little to say after the ruling.
"We felt fairly confident going in," said Chris Long, president of Associated Industries of Missouri. "We have a decision now to make on our own how to pursue the case further and whether to pursue the case further."
Ray McCarty, director of fiscal affairs for the Missouri Chamber of Commerce, said the high court decision "went against all taxpayers."
"But this will not stop us from raising questions about this in the future," McCarty said.
The ruling is the latest chapter in a series of challenges to a constitutional amendment that mandates if state revenue grows faster than the personal income of Missourians, money is due to taxpayers, according to a formula based on provisions of the Hancock Amendment.
In the decision overturned Thursday, Cole County Circuit Court Judge Thomas Brown had ruled that the state must return $244 million to taxpayers, finding that the formula must include the conservation sales tax voters approved in 1980.
The Supreme Court held that while the state did not have to pay the $244 million, it did uphold a lower court decision that counted against the Hancock limit money that the state used to pay some types of tax credits.
In the end, the state may still be responsible for up to $284 million in refunds, according to estimates.
"How much that will be will be up in the air until those arguments are made and until that decision is made by the trial court," said Glenn Norton, Holden's legal counsel. "Arguably, we think it might be nothing."
Norton said it could take the lower court months or even a year to make that decision.
The issue involves a complicated question about what tax credits are counted against the Hancock revenue limit.
Under the state high court decision, credits that reduce liability will not count against the limit, but revenue used to provide cash reimbursements of tax credits would count against the limit.