MDN.ORG:
Missouri Digital News
MDN.ORG
Mo. Digital News
Missouri Digital News
MDN.ORG:
Mo. Digital News
MDN.ORG:
Missouri Digital News
MDN.ORG:
Missouri Digital News
MDN.ORG
Mo. Digital News
Missouri Digital News
MDN.ORG:
Mo. Digital News
MDN.ORG:
Missouri Digital News
JEFFERSON CITY - While legislators debate which taxes to cut, the fate of millions of dollars are hung up in state courts.
Since the Hancock Amendment has placed a limit on the collection of state revenue, court battles have emerged to challenge the amount of money the state has been over-collecting and the mechanism by which taxpayers will be refunded.
The Missouri Association for Social Welfare, the Reform Organization of Welfare and two private citizens are fighting the way money will be returned under the Hancock Amendment.
The lawsuit, filed last year, has prevented the refund of $147 million from the 1995 fiscal year -- money collected from July 1, 1994 to June 30, 1995.
Under the Hancock Amendment, administration officials project the average person would receive approximately $41.
But only the refunds would be go only to those persons and corporations who paid income taxes. The suit charges that approach discriminates against the lower income.
"The purpose of the lawsuit is to point out that the refund mechanism is unfair and that everybody pays taxes," said Peter DeSimone of the Missouri Association for Social Welfare. "Only those who pay income taxes are rewarded a refund. Poor people pay taxes too."
Jill Shinn, a resident of Kahoka, is one of the two private citizens who are a plaintiffs in the suit. Shinn collects Social Security and does not pay income taxes. She feels neglected by the Hancock Amendment.
"All of the people in Missouri who have contributed to the general revenue are not necessarily people who have paid income taxes," she said.
"I don't feel that it's fair. For all the taxes other people have paid into the general revenue of the state, why aren't we able to get refunds? Forty-one dollars will do a lot for people who don't have much more than $5 - 6,000 of income per year."
Late last year, the Cole County Circuit Court ruled in the state's favor to pay the refunds. But, the case is currently being appealed. No date has been set for a hearing.
"We're fighting this lawsuit," said Chris Sifford, chief spokesman for Gov. Mel Carnahan. "We think people are owed refunds. The constitution calls for it and we think they deserve it."
The belief that the Hancock Amendment is unfair has received some backing in the State Senate this year. Sen. John Schneider, D-St. Louis County, and Sen. Wayne Goode, D-St. Louis County, have proposed an amendment to the state constitution which would change the refund mechanism.
"This resolution would allow alternatives for a more equitable method of returning money," Schneider said. "The present mechanism is atrocious. It gives a whole lot of money to the wealthy but very little to anyone else. I would hope that the court finds this unconstitutional, but I don't feel that confident."
Schneider's proposal, if approved by the legislature and Missouri voters, would affect only tax refunds in the future - not the current refunds being argued in court.
The state administration is facing another lawsuit filed by State Auditor Margaret Kelly which challenges the governor's figures used to determine the size of the refund.
The state auditor's office argues the state's excess revenues are three times the administration's figures -- $754 million rather than $229 million for the 1996 fiscal year.
Much of the conflict is centered around the collection of money that Kelly has deemed a form of taxation.
In one case, hospitals and nursing homes are required to pay an assessment to the state for the privilege of doing business in Missouri. This money is then used by the state to get matching federal money for Medicaid and, then, effectively returned to the hospitals.
The state auditor's office calls this method a form of taxation.
"It's just an accounting gimmick," said Frank Ybarra, a spokesman for Kelly. "If it looks like a tax and sounds like a tax, it's a tax. That's why we're going to court."
The governor's office claims that since the money never goes into the state treasury, it is not a tax.
"It never hits the treasury," Sifford said. "We use the same calculations that were used under previous Republican governors. The auditor only challenged this methodology after Carnahan was elected."
State Budget Director Mark Ward said that the state auditor's tactics are totally partisan.
"Our calculations are based on what the Hancock Amendment says and the court decisions that have interpreted these methods," he said. "It seems pretty evident from her press releases that she (Kelly) was trying to garner publicity for her campaign."
The Auditor's office maintains that her lawsuit will not hold up refunds any longer than the case over the refunds. And, they add, a victory in the courts would mean a larger refund for Missouri taxpayers.