Missouri Tax Initiatives: Victories Won and Opportunities Lost Families USA Conference January 27, 2006 Ruth R. Ehresman, Missouri Budget Project

Missouri Landscape Conservative ideology about the role of Government Low tax/low service state Hancock Amendment- a revenue lid Structural deficit 2003 through 2005 brought tremendous deficits

Missouris TABOR Limited growth in spending to inflation plus population growth Couched deficit as a spending problem Would have required a reduction of $280 mil the first year; $1.2 bil 5 years later Legislation was introduced (again)

Missourians in Charge hit the streets with an initiative petition Tied TABOR to eminent domain Minimal media coverage/a stealth campaign

The Battle Plan Persuade the legislature to allow the proposed legislation to die Keep the issue off the ballot Develop a broad coalition/educate Maximize earned media Discourage individuals from signing the petition Mount legal challenges to the initiative petition

TABOR 06: Tentative Victory Legislature refused to act Initiative petition to amend the Constitution was not allowed on the ballot

The Sad Saga of the Tobacco Tax Missouris tobacco tax is 17 cents per pack – 49 th in nation Tobacco tax was last increased in 1993 MOs tobacco tax is 76 cents below the national average MO has one of the highest smoking rates in the nation

Medicaid – a victim of balancing the budget Cuts began in In 2005 more than 100,000 lost eligibility More than 300,000 lost services Broad feeling that these cuts went too far

How should proceeds of the increased tax be used? Agreement: for smoking prevention and cessation programs Agreement: hospitals Disagreement: Restore eligibility and services cut in 2005

Two petitions are circulated Hospital Association Lung Association Cancer Society Lung Association Low income advocates ACORN Other similar MO groups

A compromise was achieved 17.5% ($61 mil) for tobacco cessation/prevention programs 32.25% ($102) for medically necessary programs provided through SCHIP and Medicaid for those with incomes under 200% of FPL, with emphasis on those with smoking-related disease

32.25% ($102 mil) for physician reimbursement 13% ($38 mil) for safety net clinics 15.25% (($44 mil) for trauma centers and emergency rooms

Factors that influenced the outcome Other ballot issues that drew out conservative voters (Stem cell issue) Distrust that money would be used as stated in the initiative petition The size of the tax increase (480% increase) Misperception that the initiative created an unfunded mandate

Some good reasons why the initiative was imperfect It was a constitutional amendment It was a regressive sales tax If higher taxes discouraged smoking, the tax proceeds would not be a stable source of funding It appeared to promise too much by way of Medicaid restorations

Final Tally Yes 48.6% No 51.4% The initiative was defeated by approximately 60,000 votes

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