News Release

Statement from State Auditor Schweich Regarding Initiative Petition Fiscal Notes

Thursday, February 10, 2011

CONTACT: Gary McElyea, Media Director
(573) 751-4213

JEFFERSON CITY (February 10, 2011) – State Auditor Tom Schweich today released the following statement regarding the fiscal notes prepared by the State Auditor's Office this week:

"In response to multiple sunshine requests received by this office, I am releasing the fiscal note and fiscal note summary delivered to Attorney General Koster on February 7, 2011, with respect to the nine petitions filed seeking constitutional amendments to eliminate the state income tax. The fiscal note and fiscal note summary are still subject to review by the Attorney General's Office. However, in light of the open records requests, and the importance of this matter to the people of Missouri I am releasing this statement.

"State law limits the fiscal note summary to fifty words. The proposed fiscal note summary for each of the nine petitions reads as follows:

'The total cost, savings, and/or change in tax revenue to state and local governmental entities cannot be determined. The proposal (1) requires a range of legislative action with unknown outcomes, and (2) will result in changes to consumer spending patterns that cannot be presently quantified.'

"It is the duty of the State Auditor to provide fair, unbiased fiscal notes and summaries for initiative petitions, estimating the fiscal impact of the initiative, and I take this responsibility seriously. But, it is also my duty to inform the voters when initiatives are so broad that the fiscal impact cannot reasonably be predicted. That is the case with each of these petitions.

"To assist in drafting the fiscal note and summary, my office received input from 22 public entities, and Mr. Marc H. Ellinger and Mr. James R. Moody provided information as a proponent and opponent of the proposals, respectively. The cost and savings estimates for each of these petitions ranged from an unknown or no fiscal impact to a projected state budget shortfall in excess of $1.02 billion.

"While the nine different petitions varied slightly, they all contained ambiguities; the fiscal impact of each of the petitions is dependent upon undefined variables related to legislative actions required and changes in consumer spending, none of which can be predicted at this time. Some of the legislative actions envisioned are:

Legislative Actions Envisioned

  • The legislature must establish the specific sales tax rate, up to seven percent.
  • The legislature must define "low income" for the purpose of issuing rebates, credits or prebates.
  • The legislature must determine how to address tax credits in the event tax credits can no longer be redeemed.
  • The legislature must determine what healthcare costs, if any, will be exempt from taxation.
  • The legislature must establish a method for calculating and providing sales tax rebates, credits or prebates.
  • The legislature must determine what additional tax exemptions, if any, will exist.
  • The legislature must determine if senior citizens and the disabled are to continue receiving certain tax credits.
  • The legislature must determine whether to collect delinquent taxes and pay tax refunds.

"In addition to the legislative uncertainties, both proponents and opponents make wide-ranging assumptions regarding consumer spending which are not verifiable. Some of the unanswered questions regarding consumer spending include:

Consumer Spending

  • Whether the elimination of a state income tax will cause people to move into Missouri with a corresponding increase in the tax base.
  • Whether the implementation of a "consumption tax" will lead citizens to move out of Missouri.
  • Whether citizens living near a bordering state will avoid the sales tax by shopping across state lines if the bordering state has a lower sales tax.
  • Whether Missourians will avoid the sales tax by buying more used items instead of new items.
  • Whether Missourians will avoid the sales tax by shopping online instead of in state.
  • Whether service providers will establish locations outside of Missouri to avoid a sales tax on services.

"While I discount the dire predictions of state bankruptcy, I also cannot in good faith predict that the petitions will have little or no fiscal impact on the state. While I prefer to quantify risks where possible, for the foregoing reasons, it would be inappropriate for my office to attempt to prospectively quantify the effects of these broad initiatives."