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Missouri Legislative Academy
Institute of Public Policy
University of Missouri
Overall Limitation on Raising Tax Revenues
Section 18(e)
prohibits the General Assembly
from increasing taxes or fees in any fiscal year
that would produce "new annual revenues" in
excess of either a specified dollar amount
(adjusted annually by percentage change in
personal income; for FY12 the amount was
estimated at $80.2 million) or 1% of TSR for the
second fiscal year before the General
Assembly's action, whichever is less. The term
“new annual revenues” refers to the net increase
in annual revenues.
The determination of a net
increase in annual revenues is determined by
identifying the total increase of all taxes and
fees less any applicable refunds and any
contemporaneously occurring reductions in
taxes or fees. In addition, “new annual revenue”
does not include and interest earned on the
proceeds of any taxes or fees. Finally, this
limitation does not apply to dedicated funds.
Refund Provision
For any year in which the revenue limit is
exceeded by 1% or more, a pro rata refund of
the excess revenues is made to Missouri state
income taxpayers.
In order for the funds to be
subject to the refund mandate, they must be 1)
received into the state treasury and 2) subject to
appropriation. Missouri Ass’n of Counties v.
Wilson, 3 S.W. 3d 772, 774 (Mo. 1999) citing
to Kelly v. Hanson, 959 S.W. 2d 707 (Mo.
1997). The constitutionality of this provision
was upheld by the Missouri Supreme Court in
Missourians for Tax Justice Education Project
v. Holden, 959 S.W.2d 100 (Mo. banc 1997), in
which it was argued that the refund was
unconstitutional, as a violation of the Equal
Protection clause, because it went only to
income taxpayers, not all taxpayers. The Court
found that the Hancock amendment furthered a
Mo.Const. art. X,§ 18(e)(1)(2012).
Mo.Const. art. X,§18(e)(2)(2012).
The amount of annual new revenue allowable without voter approval is published annually in the executive budget and can be viewed on-line at
www.oa.mo.gov.
Mo.Const. art. X,§18(b)(2012).
Definitions
FY (Fiscal Year) - the period running from
July 1 of one year through June 30 of the
following year which is used to measure the
state budget cycle of revenues and spending.
General Revenue Fund - fund in the state
treasury into which all state moneys are
deposited, unless required by statute or
constitutional provision to be deposited into
another fund. (See §33.543, RSMo)
Hancock II - initiative petition placed on the
ballot in 1994 which would have strengthened
several provisions of the original Hancock
Amendment. The measure was defeated by a
wide margin.
Personal Income of Missouri - total amount of
income received by persons in Missouri from
all sources, as defined by the U.S. Department
of Commerce. (See article X, § 17(2) in
Appendix A)
Total State Revenue (TSR) - all general and
special revenues, licenses and fees, excluding
federal funds. The term is used to describe the
total amount of money which the state receives
into the state treasury and which is then subject
to appropriation; if the amount exceeds a
certain limit, the excess must be refunded to
state income tax payers. (See article X, §17(1);
§ 18(b) in Appendix A)
§18(e) State Tax Increases Requiring Voter
Approval - a referendum amendment adopted
in 1996 imposed an additional limit on the
ability of the General Assembly to increase
taxes without voter approval. New annual
revenues imposed by the General Assembly,
which in the aggregate exceed a specified
dollar amount (originally $50 million), or 1%
of total state revenues, must first be approved
by the voters. The dollar figure is adjusted for
changes in personal income of Missouri and for
2012; the amount is estimated at $80.2 million.