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State court to hear Hancock refund cases

December 02, 1997
By: Joe Stange
State Capital Bureau

JEFFERSON CITY - Thursday, seven state Supreme Court judges will shape the fate of three years' worth of tax refunds, enough money to hire 7,000 Supreme Court judges.

According to the Administration Office, Missouri owes its taxpayers $695 million after exceeding the Hancock revenue limit the last three years in a row. The court will hear two cases Thursday with a direct impact on how those refunds will be handled by the state.

Meanwhile, the $695 million is collecting dust -- and interest.

The hearings should resolve two questions:

* How will the refunds be distributed to taxpayers?

* Is the state's estimate of the refunds correct?

A bevy of taxpayer interest groups, including Missourians for Tax Justice and the Association for Social Welfare, raised the first issue. They're appealing a loss in the circuit court.

The groups, represented by St. Louis attorney Lewis Greene, argue the money should not just be refunded to those who paid income taxes, but to all the state's taxpayers.

Peter DeSimone, head of the Missouri Association for Social Welfare, said giving the refunds back only to income taxpayers would be a massive transferal of money "from the poorest to the richest."

"It's Robin Hood in reverse," he said.

Don Kling, spokesman for the treasurer's office, said the task of returning the money, presumably via mailed checks, will be daunting even if the money just goes back to income taxpayers -- including those who have left the state in the past couple of years.

"If they decide it's going to all taxpayers I don't know what we're going to do," Kling said.

The second hearing is a lawsuit filed by the state auditor's office. Margaret Kelly claims the state owes taxpayers a much larger refund. The discrepancy was an issue the GOP official stressed in her unsuccessful campaign against Gov. Mel Carnahan's reelection in 1996.

The auditor insists Carnahan's administration has "cooked the books," according to spokesman Frank Ybarra.

Ybarra said the auditor's case argues the Administration Office has incorrectly calculated revenue for several years, making the Hancock refunds much smaller than they should be.

"We believe the refunds should be three to four times larger," Ybarra said.

The attorney general's office will defend the administration's figures, spokesman Scott Holste said.

"The Office of Administration has historically...determined the state's revenue from year to year," said Holste. "We feel she's arguing she has the power to bind the legislature and the governor to [her calculations]."

Regardless of which office is correct or how the money will be returned, it is not going anywhere until after these matters are settled. Until then, the (at least) $695 million is gaining sizable interest.

And just who is getting that interest?

According to Kling, it is added each fiscal year to that year's calculated revenue.

The result: until Missouri gets the refunds out of its hands, that interest just counts against the Hancock lid in the next year.