STATE TAX REVENUES MAY REACH RECORD LEVEL

JEFFERSON CITY -- Although final totals won't be known for three months, early reports indicate Missouri will receive record tax revenue in the fiscal year that ends June 30.

With some tax collections already up by as much as 90 percent, this year's total from state taxes could reach an historic high of more than $5 billion.

Individual Missourians felt the full effect of tax increases of Senate Bill 380, the Outstanding Schools Act adopted in 1993, when they mailed their 1994 state income tax returns this year.

Corporations, on the other hand, began feeling the effects of higher levies when the law went into effect Jan. 1, 1994. Since corporations must file periodic payments to both state and federal governments, their checks began growing after the first quarter of last year.

For businesses and corporations, which experienced a larger percentage tax increase as a result of SB 380 than individuals, the higher levy for education meant a new rate of 6.25 percent on adjusted income and a lower amount, 50 percent, for deductions for federal corporate tax payments.

The education levy previously was 6 percent on adjusted income.

Revenue Department officials refuse to discuss anything about tax collections resulting from SB 380. A lawsuit was filed earlier this month contesting the constitutionality of the Outstanding Schools Act. Department of Revenue lawyers have closed all records on tax collections until the suit is heard.

Six plaintiffs, including three Republican legislators, have filed the lawsuit, charging the law includes too many subjects, has language that is flawed and includes a provision wrongly empowering the Missouri Supreme Court with legislative duties by imposing taxes.

The suit seeks a halt to further collection of the tax increase called for in the 1993 law.

Despite the Revenue Department's information lid on tax collections, estimates of record-high revenue for the state are based on figures released earlier.

For the first nine months of fiscal 1995, individual income tax payments increased almost 12 percent over the previous year, while corporate income taxes increased just over 61 percent. Total collections for the general revenue fund from all taxes were up about 13 percent on March 31.

If the general revenue increases hold through June 30, the state's total collections for this fund would, for the first time, top the $5 billion mark.

Unknown is how much of the increase in both individual and corporate income taxes can be attributed to SB 380 and how much to a bustling economy.

The only yardstick is a 7 percent year-to-date increase in sales tax collections, which weren't affected by the school finance law.

The sales tax total reflects increased business activity in the state, while the higher percentages for income tax collections can be attributed both to improved personal and corporate incomes and the higher levies called for in SB 380.