On November 4, 1980, Missouri voters approved the Hancock Amendment (Hancock) to Missouri's Constitution. (1) Hancock addressed voter concerns as to whether state and local governments could keep their taxing and spending in check. (2) The amendment contains two principle aspects. First, Hancock limits state and local governments in their ability to increase taxation, revenue, and spending without voter approval. (3) Second, Hancock prohibits the state from imposing "unfunded mandates" upon its political subdivisions--closing a loophole that would otherwise allow the state to circumvent its duty not to raise taxes or spending above a certain level without a vote of the people. (4) According to Hancock, new state mandates require that a "state appropriation is made and disbursed to pay the county or other political subdivision for any increased costs." (5) This "appropriation requirement" is the focus of this Law Summary.
As one of, if not the most, fiscally conservative states in the nation, the history and future of Missouri's Hancock Amendment--arguably the most restrictive tax and expenditure limitation in the nation--is critical to understand, not only for Missourians, but for many other Americans, as our state and national elected representatives consider how, if at all, to approach spiraling deficits in the wake of the 2008 financial crisis.
Part II of this Summary will briefly trace the history of self-imposed fiscal restraints among the various states. Missouri's unique tradition of fiscal conservatism and the birth of Hancock will be part of the historical discussion, which also includes a description of the Hancock's key provisions and how the courts have interpreted Hancock's provisions over time. Part III will focus on the 2004 case of Brooks v. State that appears to open the door for avoidance of the seemingly unambiguous Hancock appropriation requirement. This Part will also describe the pending case of Turner v. School District of Clayton, which may bring this question of interpretation before the Supreme Court of Missouri. Part IV provides two examples of recently proposed and enacted legislation that could violate the Hancock appropriation requirement in an effort to show the potential broad reach of the provision. It also suggests that the Supreme Court of Missouri has become increasingly deferential to the legislature in Hancock cases. Lastly, it applies the interpretive methods used by the court in Hancock cases to the appropriations requirement and concludes that regardless of method, the court is likely to uphold the provision's broad reach. This section ends with a policy-based argument supporting such a holding.
II. Legal Background
A. A Brief History of Self-Imposed Fiscal Discipline Among the States
unlike the federal government, states have developed tools promoting fiscal responsibility. (6) Most state constitutions, for example, place limits on spending (7) and borrowing. (8) Almost all states have balanced budget requirements, (9) and most have some restrictions on taxation. (10) These tools were often developed in response to serious economic crises. (11) While generally effective following such crises, state and local governments characteristically find ways to evade self-imposed limitations in the long run through either subsequent legislative action or judicial interpretations. (12) As one scholar points out, an important lesson to be learned from state fiscal devices is the "enormous gap" between the language of such provisions and actual practice of state and local governments today. (13) The history of two state fiscal controls public purpose requirements and state debt limitations--highlights this phenomenon. (14)
During the 1820s and 1830s, public support for private enterprises was widespread. (15) After the Erie Canal opened in 1825, New York's economy boomed. (16) other states supported their own large-scale infrastructure projects in order to remain competitive. …