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Missouri auditor halts fiscal estimates for initiatives

Friday, April 20, 2012 | 1:10 p.m. CDT; updated 2:18 p.m. CDT, Friday, April 20, 2012

JEFFERSON CITY — Missouri Auditor Tom Schweich has instructed his staff to stop preparing estimates about the financial effect of proposed ballot initiatives, citing recent court rulings that have clouded the authority of his office to carry out the task.

In an internal memo obtained by The Associated Press under an open-records request, Schweich states that his moratorium on preparing fiscal analyses for ballot initiatives is to remain in effect until a state appeals court or the Legislature provides specific guidance for his office. He declined to comment Friday beyond what was written in the memo.

The immediate effect of Schweich's new policy is that his office will wait on appeals before writing new financial summaries — as ordered to do by trial judges — for a ballot initiative limiting payday loans and another initiative that would repeal the state income tax in favor of an expanded sales tax. Supporters of initiatives have until May 6 to turn in petition signatures, which must have the official financial summary affixed to them. It's unlikely the appeals will be resolved by then.

Schweich's frustration stems from three recent rulings in Cole County Circuit Court, which hears legal challenges to ballot initiatives because it is the home county of the state capital.

On Feb. 28, Judge Jon Beetem struck down a 1997 law directing the auditor to prepare fiscal analyses for proposed ballot initiatives. Beetem ruled that the law violate a state constitutional provision that forbids laws from imposing duties on the auditor that are not related to supervising and auditing the receipt and expenditure of public money. Although the ruling came in a challenge to a tobacco tax initiative for which supporters were no longer gathering signatures, the decision could call into question all initiatives if it is upheld on appeal.

But other Cole County judges don't seem to share Beetem's interpretation.

On April 5, Judge Dan Green rejected a challenge to the auditor's authority to prepare financial analyses for initiatives. But Green struck down the auditor's fiscal summary for a payday loan initiative because it failed to take into account a certain category of short-term lenders that might also lose business — if the measure is approved by voters — and thus trigger an even greater reduction in tax revenues than the auditor's office had projected.

Schweich's memo said the information about that particular category of lenders was not submitted to his office during the 20-day period he has to review initiatives. If the ruling is upheld, Schweich contends that opponents of future initiatives could routinely sabotage his financial estimates by waiting until court hearings to present financial data that should have been submitted earlier to his office.

On April 13, Judge Pat Joyce struck down the auditor's financial estimate for an income-and-sales-tax initiative because it was based on information submitted by a proponent of the measure who the judge said had a "clear bias" and was not a credible source. By contrast, the judge found that an expert witness put forth by opponents during a court hearing was credible. The judge also objected to Schweich's fiscal estimate because she said it assumed the Legislature would follow through on the initiative's directive to raise sales taxes, although she said the Legislature cannot be compelled to do so.

Schweich's memo said his office does not have the time or resources to try to determine the credibility of each of the hundreds of people who present data to his office. He said if his office must assume the Legislature will not carry out directives in initiatives, then it would be hard to determine the financial effect of such initiatives.

Based on the court cases, "we cannot at this time write notes that will sustain a legal challenge by the well-financed proponents and opponents of the initiatives," Schweich wrote in the memo. "I cannot justify wasting taxpayer resources in an effort to do so until we have significant clarification from the courts of the legislature."

In the meantime, his memo directs staff to issue financial summaries saying: "It is impossible to state the fiscal impact."


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