Mo. Governor Asks $365 Million In New Taxes for Finance Reforms

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Gov. Mel Carnahan of Missouri has called on lawmakers to raise $365 million in new taxes to fund court-ordered reforms in the state school-finance system.

In an unusual address to a joint session of the legislature this month, Governor Carnahan said the legislature has a "moral obligation'' to approve the tax increases in order to meet the judicial mandate.

A state judge in January declared the existing school-funding formula unconstitutional and gave lawmakers until 90 days after the end of the regular legislative session to draft an equitable spending plan.

In his speech, Mr. Carnahan urged adoption of a formula drafted by a joint legislative committee, which he had appointed to study the finance issue prior to the judge's ruling.

The legislative panel has estimated that fully funding the new formula would cost the state as much as $502 million in additional spending each year.

"The fact is that funding a new foundation formula that meets the court's requirements will itself require significant new revenues,'' the Governor said.

Mr. Carnahan, who campaigned last fall on a pledge to improve education, agreed last month not to offer a package of school reforms so that the legislature could focus this year on meeting the court mandate.

In his speech this month, however, the Governor emphasized that the new funds would be concentrated on school-improvement efforts.

"I will not support another dollar more for education--court order or no court order--unless we build in safeguards that insure that every education dollar is spent wisely, efficiently, in the classroom on those things that really help children learn,'' he said.

Although lawmakers reportedly greeted the speech warmly, some expressed concern that the Governor was asking them to pass the tax hikes on their own, without going to the voters for approval.

Raising taxes without public endorsement could be risky for lawmakers' political futures, observers noted. On the other hand, Missouri voters in 1991 overwhelmingly rejected a ballot initiative to raise taxes for education.

Personal, Corporate Tax Hikes

The Governor's proposal contains several different methods for funding the revised formula.

One provision would eliminate the state tax deduction for federal income taxes for households with annual incomes greater than $100,000.

That change, according to Mr. Carnahan, would affect only the 3 percent of the state's taxpayers whose income is more than double that of the average Missouri family.

Mr. Carnahan also would increase corporate-income taxes on roughly 8 percent of the state's businesses.

He also proposed to permanently reallocate $50 million of state revenues, beginning this fiscal year, into funding for education, largely to support what he called the Outstanding Schools Trust Fund "for crucial education reforms.''

The new taxes and the reallocation of existing revenues, he noted, will add $415 million to the $1.15 billion that Missouri currently spends on precollegiate education.

Mr. Carnahan also called on lawmakers to boost the minimum local tax levy to $2.75 per $100 of assessed valuation, from the current minimum of $1.25.

The Governor noted that under the new formula more money will be spent on such reforms as reducing class sizes and improving teacher training.

"There is no court order that requires us to continue spending money inefficiently and ineffectively,'' he said.

Vol. 12, Issue 30

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