Court orders rewrite of Missouri tax amendment ballot text

Summary

• Missouri appeals court ordered revisions to Amendment 5 ballot language.
• Court found voters were not adequately informed about sales tax expansion.
• Judges upheld the proposed constitutional amendment against broader constitutional challenges .
• Missouri Supreme Court declined to review the revised ballot language.

The Missouri Court of Appeals Western District ordered changes to the ballot summary and fair ballot language for a proposed constitutional amendment, Amendment 5, that would phase out the state individual income tax, finding the original language did not adequately inform voters about the role of sales and use tax expansion in achieving that goal. The measure will appear on the Aug. 4 ballot.

The suit, filed by plaintiff Jill Owens, claimed that the resolutions placing the state income tax question on the ballot — House Joint Resolution 173 and House Joint Resolution 174 — violate the Missouri Constitution. Owens also challenged the language of the summary statement of the ballot title and the fair ballot language.

Intervenors Missouri Promise PAC and Dennis Ganahl also appealed, arguing that the trial court erred by denying their petition challenging the summary statement and ballot language.

Owens, the PAC — which supports the resolution — and Ganahl all asserted that the language of the summary statement was not fair and sufficient, and that the fair ballot language was not fair and sufficient. Owens further asserted that the resolution violated Article XII, Section 2(b) of the Missouri Constitution.

Cole County Circuit Court denied relief on all claims, leading to the appeal.

Owens raised 16 points on appeal, covering constitutional concerns, ballot summary language and who was allowed to participate in the case.

Owens argued the resolution violated the Missouri Constitution’s multiple-articles requirement by affecting provisions outside Article X. However, the appellate court disagreed, finding that the resolution’s provisions were contained within Article X and that the other constitutional provisions Owens identified all related to taxation.

“We do recognize that many of the provisions are drafted broadly with ‘notwithstanding’ clauses to render the provisions operative to the exclusion of anything else in the Missouri Constitution that conflicts with these provisions. Depending on how the Resolution, if adopted, is construed, this amendment will be likely to affect a number of articles of the Missouri Constitution … We also recognize that the Resolution expressly identifies a number of provisions in other articles of the Constitution as being affected by the Resolution,” the court wrote in a unanimous June 5 opinion, authored by Judge Thomas N. Chapman. “However, these affected provisions from other articles all relate to taxation.”

The court did side with Owens when it came to the summary statement, finding several problems. The 50-word summary statement drafted by the legislature said the resolution would phase out individual income tax based on revenue growth, reduce personal property and local taxes when local revenue increases, modify sales and use taxes to eliminate income tax and reduce local taxes, and protect local funding for public schools and other purposes.

“When a proposed amendment enacts a significant number of changes to Missouri law, and includes broad ‘notwithstanding’ clauses that make it difficult (if not impossible) to presently identify all the changes that may accompany its adoption, one natural consequence of such a proposed amendment is that the summary statement will not be able to provide notice to voters of every feature of the amendment,” the opinion stated.

The court found that the summary never told voters that sales and use taxes would likely be expanded to additional goods and services. The summary implied that income tax elimination would happen automatically while the legislature would actually have to act first.

“We agree that the Resolution does not sufficiently inform voters of the Resolution’s expansion of the General Assembly’s sales and use tax authority and the elimination and suspension of existing constitutional limits on taxation,” wrote the court. “It is not fair and sufficient to repeatedly suggest to voters that various tax obligations will be reduced and eliminated without informing them, at any point or in any manner, of the expansive authority that will be granted regarding sales and use taxes … Voters should not be informed prominently of the purpose of eliminating the state individual income tax without being apprised of the grant of authority that is the contemplated and planned means that make such a purpose possible.”

As for the summary not being clear that it would still take an act of the legislature for the tax to be eliminated, the court said that could be cleared with a “minor adjustment” that “produces a summary statement that is accurate rather than one that would suggest to voters that the amendment operates differently than it does.”

The court rewrote the summary to read: “Shall the Missouri Constitution be amended to: Require legislative phase-out of the individual state income tax based on revenue growth, and authorize the expansion of sales and use taxes; Curtail constitutional limits on taxing goods and services; and Require local tax rate cuts without reducing school funding if local sales tax revenue increases?”

The court also sided with the challenges to the fair ballot language. The court found that the original “yes” statement had the same problems as the summary in that it did not fully disclose the sales and use tax expansion and was inaccurate about local tax-rate reductions. The original “no” statement inaccurately implied that voting no would prevent future changes to the individual income tax and leave existing sales and use tax rates unchanged. The court also rewrote both these statements: “A ‘yes’ vote will amend the Missouri Constitution to require legislative phase-out and elimination of the individual state income tax based on revenue growth, and authorize the expansion of sales and use taxes; curtail constitutional limits on taxing goods and services; and require local tax rate cuts without reducing school funding if local sales tax revenue increases.

“A ‘no’ vote will not amend the Missouri Constitution to require legislative phase-out and elimination of the individual state income tax based on revenue growth; and will not authorize the expansion of sales and use taxes.

“At this time, the impact on taxes is unknown.”

The court found that neither the PAC’s nor Ganahl’s intervention was material to the outcome of the case and declined to grant relief on that point.

The judgment was affirmed in part and reversed in part, with the court certifying the revised summary statement and revised fair ballot language statement to the secretary of state.

On Monday, the Missouri Supreme Court declined to review the changes to the summary made by the appellate court; Tuesday was the deadline under state law to revise ballot language for the August election. That decision by the Supreme Court leaves in place the revised ballot language drafted by the Western District in its June 5 opinion.

The case is Owens v. Hoskins, Case No. WD88981 & WD88982.