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UPDATE: Missouri auditor to appeal ruling on tax initiative

Monday, April 16, 2012 | 6:52 p.m. CDT; updated 9:25 p.m. CDT, Monday, April 16, 2012

JEFFERSON CITY — A group backing an initiative to replace Missouri's income tax with an expanded sales tax conceded Monday that "the odds are against it" appearing on the November ballot, even though the state auditor plans to appeal a court ruling against the initiative.

Missouri Auditor Tom Schweich said Monday he will appeal a recent ruling that the financial estimate his office prepared for the initiative was insufficient, based on a "biased and not credible analysis" and "likely to deceive signers and voters in favor of the measure."

That appeal could take weeks — or even months — to resolve, likely coming after the May 6 deadline supporters face to submit petition signatures to the secretary of state's office. Under Missouri law, signatures gathered on petitions that do not bear the official ballot title cannot be counted.

If Friday's ruling by Cole County Circuit Judge Patricia Joyce is upheld, any signatures gathered under the stricken-down ballot summary and financial estimate probably could not be used to qualify the proposed constitutional amendment for the November ballot.

"The odds are against it, for sure," Travis Brown, chairman of the sponsoring group Let Voters Decide, said Monday. "But that's not to be mistaken for the intent of having this before voters."

The initiative seeks to repeal the state's income tax and replace it with a higher sales tax charged on a wider variety of goods and services. The financial summary prepared by the auditor's office estimated the initiative — if passed — would have an impact ranging from a $300 million gain for state revenues to a $1.5 billion loss.

In her court ruling, Joyce noted that the proposal cannot technically require legislators to do anything. Thus, while the initiative would repeal Missouri's current tax structure it can only instruct — not mandate — the legislature to replace it with an expanded sales tax, Joyce said. The judge rewrote the ballot summary prepared by the secretary of state's office to replace the word "require" with "instruct."

She also ordered the auditor's office to prepare a new financial estimate. The judge said the original estimate was based on a biased analysis submitted by supporters of the initiative and failed to inform people that passage of the initiative would result in a loss of $7.5 billion in state revenues as a worst-case scenario, if no replacement tax is imposed.

"We believe our fiscal note was sound, it presented a reasonable range of potential impacts and we intended to appeal the decision," Schweich said.

Brown said initiative supporters "would certainly join in the sentiments of that appeal."

As is common in Cole County Circuit Court, the judge received written suggestions as to the facts and conclusions for a potential decision from attorneys in support of and opposed to the ballot initiative. Her decision largely followed the wording of the recommended ruling submitted by attorneys for the opposition group Missourians for Fair Taxation, which is funded primarily by the Missouri Association of Realtors.

That angered some supporters of the proposal.

"The real issue here, on tax day, is lawyers in a very slanted argument could be preventing taxpayer access to their constitution on a very important pocketbook issue" by effectively blocking the measure from the November ballot, Brown said.

Attorney Chuck Hatfield, who represents Missourians for Fair Taxation, said the ruling was a complete victory for challengers of the measure.

"It wasn't necessarily the goal of the litigation to prohibit it from being on the ballot," Hatfield said. "The goal was to get a better fiscal impact and summary statement. But personally, I'm glad it's not going to be on the ballot."


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