Missouri Hancock Amendment: Revenue Caps, Refunds, and Voter Approval

The Missouri Hancock Amendment, added to the state constitution by voters in November 1980, caps how much revenue Missouri can collect each year and requires voter approval before any state or local government raises a tax or fee. It lives in Article X, Sections 18 through 24 of the Missouri Constitution. It ties the state’s allowable revenue to the growth of Missourians’ personal income, forces refunds when collections run over, blocks the state from imposing unfunded mandates on local governments, and lets any taxpayer sue to enforce it.

How the State Revenue Cap Works

Article X, Section 18 sets a ceiling on total state revenue for each fiscal year. The formula locks in a ratio from the amendment’s first year: state revenue in fiscal year 1980–1981 divided by Missouri personal income in calendar year 1979. That ratio is applied to current personal income (using either the prior calendar year or a three-year average, whichever is higher) to produce the cap for the coming budget year.¹

The practical effect is simple. If Missourians’ incomes rise about 3 percent, the state’s allowable revenue rises about 3 percent. If incomes flatten, so does the ceiling.

Total state revenue for this purpose covers taxes, licenses, and fees flowing into the state treasury. It excludes federal funds and revenue from voter-approved bonds.¹ Federal grants and debt service on bonds the public already approved do not count against the cap.

When Refunds Are Triggered

When total state revenue exceeds the cap by one percent or more, the entire overage must be refunded to taxpayers. The refund is split proportionally by each filer’s state income tax liability for the year following the fiscal year in question.¹ The more state income tax you paid, the larger your share. The one-percent buffer absorbs small estimating variances; once crossed, the full excess comes back.

Refunds were triggered every year from 1995 through 1999, with amounts ranging from roughly $99 million in fiscal year 1999 to $324 million in fiscal year 1997.² The state has stayed well under the cap since. For fiscal year 2024, total state revenue of about $15.5 billion came in roughly $4.9 billion below the refund threshold of $20.4 billion.³

If you ever receive a Hancock refund, federal tax treatment depends on how you filed the year you paid the underlying state tax. Taxpayers who claimed the standard federal deduction generally owe no federal tax on a state refund. Itemizers owe federal tax on the refund only if they deducted the underlying state taxes and were not already limited by the $10,000 cap on state and local tax deductions.⁴

Voter Approval for New State Taxes and Fees

The overall cap has a companion rule. Section 18(e) sets a separate annual ceiling on how much new revenue the legislature can generate through tax or fee increases without sending the question to voters. That ceiling is the lesser of $50 million (adjusted annually for changes in Missouri personal income) or one percent of total state revenue from two fiscal years prior.⁵ For fiscal year 2024, that worked out to $144.4 million.³

If the legislature passes multiple tax or fee increases in a single year that together exceed the ceiling, the increases go to voters in descending order of size until the remaining ones fall below the cap. Extending a tax or fee already set to expire does not count as an increase. The provision keeps the legislature from piling up small hikes that individually look modest but collectively push past the cap.

Voter Approval for Local Taxes and Fees

Article X, Section 22 extends the same rule to counties, cities, school districts, and every other local political subdivision. No local government may levy a new tax, license, or fee, or raise an existing one above its 1980 level, without majority voter approval.⁶ This is why school levy increases and new city sales taxes appear on local ballots.

Two related rules limit backdoor increases. If a local government broadens the base of an existing tax to cover something new, the rate must drop so the broadened tax raises the same estimated revenue as before. And if assessed property values rise faster than inflation (excluding new construction and improvements), the tax rate must be rolled back so revenue from existing property stays roughly the same after adjusting for the general price level.⁶ A local government can collect more from rising property values only if voters approve a higher rate.

One carve-out: taxes levied to pay principal and interest on bonds or similar debt obligations authorized before the amendment took effect are not subject to these restrictions.⁶

When a Fee Is Really a Tax

A lot of Hancock litigation turns on whether a local charge is a user fee (no vote needed) or a tax (vote required). Missouri courts look at whether the charge is paid in exchange for an individual’s specific use of a government service or is instead a general levy funding broad operations. In Zweig v. Metropolitan St. Louis Sewer District (2013), the Missouri Supreme Court held that a stormwater charge was a tax needing voter approval because it funded the continuous availability of the drainage system for the district as a whole rather than a service each ratepayer used individually.⁷

If a local government labels something a “fee” but the charge funds general services available to everyone rather than a service you specifically requested, a court may treat it as a tax that needed voter approval. One caveat on remedies: even when a charge violates Section 22(a), the Zweig court held that taxpayers are not automatically entitled to a refund of amounts already collected, because nothing in the amendment expressly authorizes courts to order one. The typical remedy is an injunction halting the illegal collection going forward.⁷

Unfunded Mandates on Local Governments

Article X, Section 21 addresses the unfunded-mandate problem. The state cannot require a county or other political subdivision to perform a new activity, provide a new service, or expand an existing one unless the state appropriates and disburses money to cover the increased costs. It also cannot reduce the share it already pays for programs it requires local governments to run.⁸ If the state historically pays half the cost of a required program, it must keep paying half.

Proving a violation is harder than it sounds. In Miller v. Director of Revenue (1986), the Missouri Supreme Court held that a challenger must show both that the state imposed a new or increased activity and that the local government experienced a quantifiable cost increase as a result. The court rejected a challenge to a new police reporting requirement, finding the burden too minor to be a measurable cost.⁹ Speculation about costs is not enough; a plaintiff needs evidence of actual increased spending.

Your Right to Sue as a Taxpayer

Article X, Section 23 gives the amendment real teeth. Any Missouri taxpayer has standing to sue in circuit court to enforce Sections 16 through 22. If the state itself is the alleged violator, the taxpayer can file directly in the Missouri Supreme Court.¹⁰

If a taxpayer wins, the constitution entitles them to recover costs and reasonable attorney fees from the government entity found in violation.¹⁰ Missouri statute Section 137.073 separately authorizes attorney fees when a taxpayer successfully challenges a property tax levy violation in a class action.¹¹ Fee-shifting matters because it makes it financially viable for an individual taxpayer to challenge an illegal charge rather than absorb it.

Note the boundary. Standing under Section 23 belongs to taxpayers, not local governments. In Missouri Association of Counties v. Wilson (1999), the Missouri Supreme Court held that counties and their associations lacked standing to enforce Sections 16 and 21 because they did not qualify as taxpayers. A county squeezed by an unfunded mandate cannot sue the state on its own behalf; an individual taxpayer has to bring the challenge.

The Emergency Exception

The revenue cap is not absolute. Article X, Section 19 allows the state to exceed it for a single fiscal year if three conditions are met. The governor must formally request an emergency declaration specifying the nature, dollar amount, and funding method. The legislature must approve the declaration, matching those specifics, by a two-thirds vote in each chamber. And the declaration must occur before any emergency spending begins.¹² The extra authority expires at the end of that fiscal year, and no part of a pending refund can be redirected toward the emergency. Section 18(e) contains a parallel exception for the new-tax-and-fee ceiling using the same procedure.

1
Missouri Revisor of Statutes. Missouri Constitution X Section 18 – Limitation on Taxes Which May Be Imposed by General Assembly
2
Missouri State Auditor’s Office. Hancock Amendment Report
3
Missouri State Auditor’s Office. Auditor Fitzpatrick Finds State Revenues in Compliance With Hancock Amendment
4
Internal Revenue Service. IRS Issues Guidance on State Tax Payments
5
Missouri Revisor of Statutes. Missouri Constitution X Section 18(e)
6
Justia. Missouri Constitution Article X Section 22 – Political Subdivisions to Receive Voter Approval for Increases in Taxes and Fees
7
Justia. Zweig v Metropolitan St Louis Sewer District
8
Justia. Missouri Constitution Article X Section 21 – State Support to Local Governments Not to Be Reduced
9
Justia. Miller v Director of Revenue
10
Justia. Missouri Constitution Article X Section 23 – Taxpayers May Bring Actions for Interpretations of Limitations
11
Missouri Revisor of Statutes. Missouri Revised Statutes Section 137.073
12
Missouri Revisor of Statutes. Missouri Constitution X Section 19 – Limits May Be Exceeded, When, How