ATTORNEY CALLS HANCOCK II `A PROPOSAL FATALLY FLAWED'

A Jefferson City attorney who once worked for promoters of the Hancock Amendment to the Missouri Constitution expressed concern about wording in Hancock II, which he calls "a proposal that is fatally flawed."

At a press conference in Cape Girardeau Thursday, the attorney, Alex Bartlett, said he has compared language of the original amendment and Hancock II, and the changes in language would have a devastating effect on the state, if approved.

The new version of the amendment, named for U.S. Rep. Mel Hancock, R-Springfield, is being circulated on petitions around the state. Proponents hope to see it voted on in the November general election, but to qualify for that ballot sufficient signatures must be obtained by July 8.

Bartlett is traveling the state under sponsorship of a group called "Protect Missouri's Future," organized to oppose Hancock II.

Barlett said the ultimate impact of Hancock II would be to require at least a $3 billion refund to taxpayers from the state's almost $11 billion budget.

"Potentially there could be $5 billion in refunds, but I think $3 billion is clearly mandated from the general revenue of the state," said Bartlett. "Instead of comparing apples to apples, Hancock II would compare oranges to apples."

He explained that under Hancock I, the same revenue sources are compared in determining the base limit for the fiscal year and the total state revenue for the succeeding years. But Hancock II uses revenue sources that are different by including funds not contained in Hancock I.

Barlett said those sources would include federal funds, proceeds from the lottery and riverboat gambling, and sales and use taxes levied for state parks and soil conservation.

"These inclusions would most likely cause the limit to be surpassed and trigger a massive refund that would have to come from the general revenues of the state, and would therefore require drastic cuts in public services, including some of the most basic and necessary services," Bartlett said.

He said refunds that could amount to almost half of the state budget would have to come from general revenue and could grind some areas of state government to a halt. For example, officials of the University of Missouri have said to make the kind of cuts Hancock II would lead to would require closing of one of its four campuses, he said.

"I don't think these kinds of cuts are what the people promoting this had in mind, but based on past state Supreme Court rulings, these kinds of refunds would be mandated," said Bartlett.

Another problem with the proposed amendment, the attorney said, is that it could force many fee increases charged by state departments and entities to be submitted to a statewide vote.

In an attempt to exempt fee increases for local governments from votes, Bartlett said the wording leaves the door open to subject many state departments to votes on fees, including increases in tuition for state universities.

"A user fee exception to the voter approval requirement for all taxes and fees applies only to a county or other political subdivisions, not to the state, a state department or an instrumentality of the state," Bartlett said.

Bartlett said he believes that statewide votes would be required for increases in fees or new fees for hunting and fishing licenses imposed by the Conservation Commission; for increasing student fees, football ticket fee increases, or an entrance fee for some new facility on a state university; an increase in annual dues for members of the Missouri Bar by the state Supreme Court; and fees for using swimming pools or campgrounds operated by the state.

Bartlett said the wording also would basically end the use of revenue bonds because voter approval would be required for them. He said this would put Missouri at a competitive disadvantage because revenue bonds are often used to help expand and attract industrial development. Under Hancock II, it is likely that if lease or rent from a company was going to be used to pay off the bonds, voters would have to first approve the amount of rent that would be charged.

Any taxes, licenses or fees that would be used to pay for revenue bonds would also require voter approval, he said.

Bartlett said the interpretation would essentially eliminate the use of economic development tools such as tax increment financing.

Another problem cited by Bartlett was that the amendment requires refunds to be made by reducing income taxes. However, Missouri only collects about $2.5 billion in income taxes annually. "An income taxpayer could potentially get back more than they paid," said Bartlett.

Bartlett has prepared a legal opinion that discusses the "supremacy" clause in the Hancock II provisions that states if there is any conflict in provisions of the Constitution, Hancock II will take precedence. Bartlett argues that this clause could violate Section 50 of Article III of the Constitution and be subject to court challenge.

In the conclusion of his 44-page opinion, Bartlett encourages proponents to consider the "unintended consequences" of the amendment.

"It is to be hoped that those involved in the promotion of Hancock II who have legitimate concerns about revenue and taxing limits will more fully consider the effect of Hancock II, and upon such consideration will not further pursue efforts to secure adoption of Hancock II in its present form," wrote Bartlett.

Proponents of Hancock II have offered the proposal as a way of reacting to legislative action and court decisions on the original amendment that they say circumvents its original intent.

But Bartlett said, "In an attempt to include things the Supreme Court has excluded, the definition of revenues has been made too broad."

He said Hancock II will be "a lawyer's delight on litigation. It should generate a considerable amount of litigation for many years to come."