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Lager wants people to limit state's income

February 21, 2014 at 5:28 a.m. | Updated February 21, 2014 at 5:28 a.m.

Will the 10th time be the "charm" for state Sen. Brad Lager's plan to limit how much state government takes in each year?

Lager, R-Savannah, told the Missouri Senate's Ways and Means Committee on Thursday his proposed constitutional amendment never has gotten past the committee stage, in the nine previous times he's introduced it.

"I've been here for 12 years now, and I have watched as revenues go up and revenues come down," Lager said, "and the one thing that has always amazed me is - regardless of revenues - we keep spending.

"And we keep spending more every year."

Because of term limits, Lager is in his last year in the Senate.

"I feel like I've got to cap spending before I leave here," he said.

If lawmakers endorse the plan and Missouri voters in November approve it, Lager's amendment would "limit the growth of government to inflation plus the growth of population," he said.

Ray McCarty, president of Associated Industries of Missouri, told the committee AIM supports Lager's plan because, "You do allow voters to decide if they want to control spending."

Income above the proposed formula first would go to fill up the state's budget reserve and cash reserve funds.

McCarty noted that, after those two funds are filled, under Lager's proposal, "If there's excess revenue, the money goes back into income tax reductions."

Lager noted that, a decade ago, revenues were falling and then, in three years starting in 2005, "they came back strong - and over a two-year period, we grew government spending by over 15 percent."

Had his proposal been in the Constitution then, Lager said, "It would have limited the growth of government and would have taken those extra dollars and, actually, moved those towards the reduction of taxes."

Missouri voters in 1980 adopted the "Hancock Amendment" to the state Constitution, imposing a formula that limited the growth in state government revenues to a calculated increase over the 1978 budget levels.

If revenues are higher than the formula allows, the amendment requires refunds to all taxpayers.

"Right now in our state, we have the Hancock limit, which many people believe set a cap," Lager acknowledged. "But that cap is so far beyond where we are now, the reality is that, outside of raising taxes, Hancock no longer does anything.

"I believe that, if you want to moderate your growth of government, you're going to have to force the hand of the Legislature and put a hard cap in place."

But Jay Hardenbrook of the Missouri Budget Project said Lager's amendment isn't needed because the Hancock Amendment worked.

"Our big problem, really, is with the cap on spending," he told the committee. "We are now $3.7 billion below that Hancock lid - and that is also adjusted for inflation.

"So, the General Assembly - of both parties, Republican and Democrat, when they were in control - cut taxes and have kept that revenue low, and it continues to stay low."

Hardenbrook noted the state twice sent refunds back to taxpayers because of the amendment's formula.

"The other two times, you actually cut taxes," Hardenbrook explained, "to make sure that, in future years, you wouldn't hit the (Hancock) ceiling."

Otto Fajen of the Missouri National Education Association said his group also opposes the proposed amendment, because it would rob lawmakers of some of their current flexibility.

"Our concern is, we already have plenty of code in the Constitution that makes decisions for the Legislature on revenues and taxation," Fajen testified. "The idea of adding that on to the appropriations process seems unnecessary (because) you can't spend money you don't have.

"And either the Legislature won't appropriate it, or it will be withheld (and) that's why, year after year, the state - unlike the federal government - manages to figure out some way to make sure it's not spending money it doesn't have."

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