The Squeeze from Both Sides: Amendment 5, SB 3, and a Local Safety Net That’s Already Shrinking

• Amendment 5 wouldn’t land in a vacuum. It would arrive on top of Senate Bill 3 (2025), a property-tax law already limiting how much local communities can raise. Together, they point the same way: less room for schools to absorb a bad year.
• What SB 3 does: Signed in 2025, it was on the April 2026 ballot in 97 of 114 counties. It lets voters cap eligible homeowners’ property-tax bills — frozen in “zero-percent” counties, capped at 5%/inflation in “five-percent” counties. School leaders warned it could roll funding back to 2024 levels.
• The double squeeze: The Hancock Amendment already rolls back local tax rates when values rise fast. SB 3 caps the bill on top of that. In frozen counties, a district can’t collect more even when it legally could — stripping out the normal cost-of-living rise in revenue.
• Add Amendment 5: A district has two funding legs — state aid and local property tax. Amendment 5 would weaken the state leg (phasing out the income tax, leaning on a rocky new sales-tax system). SB 3 can cap or freeze part of the local leg where voters approve it. If state aid drops mid-year, the usual fallback — local revenue — may be constrained.
• The catch in the promise: Amendment 5’s summary (rewritten by a court in June 2026) says it would require local tax cuts “without reducing school funding” if local sales tax rises. But that covers only local taxes — and it’s narrower than it sounds when read beside SB 3, which is separately constraining the local base while the income tax disappears.
• Fair caveats: SB 3 only applies where voters adopt it, and only to owner-occupied homes — not the whole tax base. Amendment 5’s effects depend on future legislation. The point isn’t certain crisis; it’s that constraining both funding legs at once removes the flexibility schools rely on.

Bottom line: The real question isn’t just “do I want lower income taxes?” It’s “if state and local revenue both get tighter at the same time, who makes up the difference for my kids’ school?”

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The Full Story: How a state tax shift and a local tax cap could combine

Most of the debate over Amendment 5 treats it as a single question: should Missouri phase out the income tax and lean more on sales taxes? But Amendment 5 wouldn’t land in a vacuum. It would arrive on top of a property-tax law Missouri passed last year — Senate Bill 3 — that is already tightening how much money local communities can raise. Looked at together, the two changes point the same direction: less room for schools to absorb a bad year.

Here’s the short version. Amendment 5 would weaken the state’s largest revenue source (the income tax) and lean schools’ state funding on a sales-tax system that could prove rocky. At the same time, SB 3 can cap or freeze part of the local property-tax base — the share tied to eligible homeowners — in counties where voters approve it. A school district’s two main lifelines are state aid and local property taxes. If one is destabilized and the other is constrained, a district hit by a shortfall may have less room to respond.

One clarification up front, because it matters for fairness: neither change does the other’s job. SB 3 does not directly reduce state aid, and Amendment 5 does not directly cap local property-tax levies. The risk isn’t that one bill does both things. It’s cumulative — the two operate on different legs of school funding at the same time, and together they leave districts with less flexibility than either would alone.

What SB 3 does

SB 3, signed into law in June 2025, lets each county’s voters approve a homestead property-tax “credit” that caps how much an eligible homeowner’s tax bill can rise.¹ It went before voters in 97 of Missouri’s 114 counties on the April 7, 2026 ballot.² The cap comes in two forms, written into the law. In “five-percent counties,” an eligible homeowner’s bill can rise no more than 5% a year, or the rate of inflation if that’s higher. In “zero-percent counties,” the bill is frozen. It cannot rise above the amount owed in the first year of the credit.³

It’s worth being precise about the scope. The cap applies to eligible homesteads — owner-occupied primary homes. It does not apply to a district’s entire tax base, or to commercial or rental property.⁴ So it doesn’t freeze everything. But owner-occupied homes are a large share of the base in most communities. The effect on a district’s local revenue growth is real, not trivial. School leaders said so plainly before the vote: one district’s spokesman said passage would roll funding back to 2024 levels, and districts across the state warned they stood to lose millions.⁵

Why a cap leaves districts stuck

A frozen or capped local base is a problem on its own, but it becomes a much bigger problem when you see how it interacts with the rule Missouri already had: the Hancock Amendment.

The Hancock Amendment (1980) already forces local governments to roll back their tax rate when property values rise faster than inflation. That keeps revenue from ballooning in a hot housing market. SB 3 then caps the individual bill on top of that. The result is a squeeze from two directions at once. As one analysis for municipal finance officials put it, the two rules together squeeze the revenue stream from both sides. In zero-percent counties, a district may not collect more even when Hancock would allow it — because SB 3’s freeze blocks it.⁶

That last point is the heart of the matter. It means a district’s local revenue can be locked at last year’s level even when costs — salaries, fuel, utilities, insurance — keep climbing. A freeze doesn’t just slow growth; it strips out the normal, modest “cost-of-living” rise in revenue that districts count on to keep pace with inflation. And because a district’s costs are overwhelmingly fixed (most of a school budget is staff), even flat revenue against rising costs forces real cuts over time.

Now add Amendment 5

Here is where the two changes meet. A school district has, in effect, two financial legs: the money it gets from the state, and the money it raises locally. Historically, when one wobbles, the other can steady things — a tight state budget year might be cushioned by stable local revenue, or vice versa.

Amendment 5 would weaken the state leg. It would phase out the income tax — about two-thirds of state general revenue. It would then lean the state’s share of school funding on a sales-tax system that has to be raised or broadened to keep up. The details would be left to future legislatures.⁷ If that transition is bumpy, the state aid that flows through the school funding formula is exactly the kind of money that can come up short. Missouri saw a small version this year, when a roughly $138 million shortfall in consumption-based school funds led to a mid-year cut of about $245 per student.⁸

Now picture both legs constrained at once. The state is leaning on a rocky new sales-tax system. At the same time, a district’s local property-tax base is capped or frozen under SB 3. If state aid drops mid-year, the usual response is to lean a little harder on local revenue. But that revenue may be locked. The district can’t quickly raise the capped local money, and it can’t conjure the missing state money. There may be almost no lever left to pull except cutting.

What supporters would say

It’s only fair to state the other view. Supporters of both measures would say they are doing exactly what voters want: lowering taxes. SB 3 gives homeowners relief from fast-rising property-tax bills, which is a real and popular goal, and each county chooses whether to adopt it. Amendment 5’s backers say growth will replace the lost income-tax revenue and that local school funding is protected. The concern raised here isn’t with the goal of lower taxes. It’s with the combination — reducing the state’s main revenue source and capping local revenue at the same time — and with what that leaves for schools if the optimistic forecasts don’t hold.

And consider the ballot promise itself. Lawmakers’ original summary told voters Amendment 5 would “protect local funding for public schools.” A state appeals court found that wording insufficient and, on June 5, 2026, rewrote it to say the measure would “require local tax rate cuts without reducing school funding if local sales tax revenue increases” (Missouri Independent, June 5, 2026). Either way, that promise is narrower than it sounds — especially when read beside SB 3. It speaks only to local taxes, and only in one specific swap scenario. Meanwhile SB 3 is separately constraining the local tax base, and Amendment 5 is shrinking the state’s revenue. The reassurance addresses one piece; the risk runs across all of them.

What remains unknown

A few honest limits. SB 3 only takes effect in counties where voters approve it, so its reach varies place to place — some counties adopted it, others did not. Its caps apply to eligible homesteads, not the whole tax base. And Amendment 5’s revenue effects depend on choices lawmakers haven’t made yet. This isn’t a prediction that every district will face a crisis. It’s a warning about a structure: when you weaken one funding leg and cap the other, you remove the flexibility districts rely on to weather a bad year.

The bottom line

Amendment 5 shouldn’t be judged alone. Read alongside SB 3, it’s one half of a squeeze: the state would lean on a less stable revenue base while local communities lose the ability to raise theirs. For schools — which can’t cut costs mid-year and can’t print money — that combination is the real danger. The question for voters isn’t just “do I want lower income taxes?” It’s “if both the state and local revenue get tighter at the same time, who makes up the difference for my kids’ school?”