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Governor's office still backs taxes despite economic improvement

May 05, 2004
By: Sara Bondioli
State Capital Bureau

JEFFERSON CITY - The state economy is improving and legislators have passed an increased education budget, but the governor's spokeswoman said he still backs his plan for a half billion dollar tax increase.

The governor's office voiced his firm stand on taxes the same day the Department of Economic Development reported that state economic trends have been positive since July 2003. State revenue growth began in September and continued into the first months of 2004.

On Tuesday, the legislature passed an education budget giving schools more money than Gov. Bob Holden requested -- and did so without a tax increase.

Mary Still, the governor's spokeswoman, said the governor's proposed tax increases should be used on top of the current budget for items such as the school foundation formula, which is $600 million short of being fully funded in the current budget. The foundation formula distributes aid to elementary and secondary schools across the state.

Senate Appropriations Committee Chair John Russell, R-Lebanon, chuckled at the governor's continued support of tax increases.

"You've really gotta be kidding that he is still out promoting the tax increase with 10 days left or less than that in the legislative session," he said. "That just doesn't even make any sense."

House Budget Committee Chair Carl Bearden, R-St. Charles, said Missourians won't support Holden's tax increases, especially while the economy is improving.

"He's completely changing his story now on his tax increases because he had and used bad data, supported bad data and now wants to change his story about why we should have tax increases," Bearden said.

Bearden said the governor's office used a "static process" without looking at components such as income and sales tax. The House's revenue prediction was closer to what the state is actually taking in, but even Bearden admits the state's revenue was higher than he expected.

State Budget Director Linda Luebbering said the revenue predictions from the House were more accurate because noneconomic factors, such as consumer confidence and declining tax credit redemptions, worked in its favor.

"For us to have counted on that last July would have been irresponsible," Luebbering said.

But Bearden said the governor ignored the obvious signs of an economic rebound.

"We knew the recovery was taking place. They knew that as well but did not acknowledge it," he said.

Still said the governor preferred to play it safe by going with a more conservative estimate and withholding funds from the current budget year until he was certain revenue would remain strong.

Revenue Department Director Carol Russell Fischer said the state's retail sales were up for the last quarter of 2003, and holiday sales were stronger than predicted.

"That's probably a pretty good indicator from that point on," Fischer said.

April revenue figures will be released later this week, but Fischer said she has seen a growth in gross revenue for the state through April.

For the end of this calendar year, Fischer said she expects individual income tax refunds to be about $30 million higher than last year.