Ste. Genevieve, MO – Taxpayers and county officials from Ste. Genevieve and Iron Counties have filed a lawsuit against Governor Mike Kehoe and other state officials.
The lawsuit asks the Cole County Circuit Court to declare that certain amendments to Missouri’s sales and use tax laws affecting voter-approved local sales taxes violate the Hancock Amendment, Article X, §§ 16-24, of the Missouri Constitution.
The lawsuit claims that the State violated the Hancock Amendment by imposing unfunded mandates and enacting several tax and fee increases without submitting them for voter approval.
Since 1980, the voters of Ste. Genevieve County have approved five separate one-half cent local sales taxes to support law enforcement, roads and bridges, the Ste. Genevieve County Community Center, and general revenue for essential services.
In Iron County, the voters have previously approved two local sales taxes.
In 2021, the Missouri General Assembly exempted electricity, mining, and other manufacturing inputs from voter-approved local sales taxes so that the state could collect more taxes on Internet sales. This new exemption has led to a dramatic decline in local sales tax revenue, which decreased more than 20 percent between 2022 and 2024 for both Ste. Genevieve and Iron Countied.
Facing this dramatic decline in local sales tax revenue caused by the state, these counties have continued to experience increased costs for unfunded state mandates like costs to transport and house state prisoners, law enforcement, criminal justice and courts. With significantly less sales tax revenue to maintain existing levels of services, perform State mandates and meet contractual and bond obligations, the counties have been forced to rely more heavily on local property taxes and have shifted the tax burden to local taxpayers.
“The State has decimated our local sales tax revenues that were approved by the voters to be used for specific purposes so the state can get more taxes on Internet sales,” said Randy Ruzicka, Ste. Genevieve County Presiding Commissioner.
“At the same time the state is taking our revenue, they are certainly not rolling back their unfunded mandates, which puts a rural county like ours—and many others around the State—in a no win position where we have increased costs and reduced revenue and our local taxpayers are forced to pick up the tab,” said Jim Scaggs, the Iron County Presiding Commissioner.
“The Hancock Amendment prohibits unfunded mandates that shift the tax burden from State to local taxpayers, and it prevents the State from raising taxes and fees more than a specified amount without voter approval,” said Stephen Jeffery, attorney for the two counties. “Here, the State violated the Hancock Amendment in both of these ways with its scheme to increase the scope of State taxes while limiting the scope of previously approved local sales taxes.”
In their lawsuit, the taxpayers and county officials are asking the court to issue an injunction under the Hancock Amendment ordering the state to provide funding for the County’s increased costs and lost revenue and ordering that any excess revenues received by the State that should have been submitted to a public vote be refunded to taxpayers or state taxes be reduced to offset the excess.