If officials in Washington don't reach a deal to avert the "fiscal cliff," Missouri could see a hit to its economy and budget.
The Federal Funds Information for States estimates Missouri could lose $1 billion of Defense Department spending on contracts and military institutions if federal spending cuts take effect in the new year. The Washington-based organization estimates those automatic cuts also could result in a $125 million reduction in federal grants to state programs, such as public schools and early childhood programs.
Governor Jay Nixon (D) has decided to let state employees take the day after Thanksgiving off work this year.
The state’s latest general revenue report show that Missouri collected 7.5 percent more money last month than it did in October of last year, and State Budget Director Linda Luebbering says that’s part of the reason why state workers will get to stay home on November 23rd.
Missouri’s revenues rose more than expected during the month of May.
The state collected about $6.6 billion in revenue last month, compared to just under $6.4 billion in May of 2011. Governor Jay Nixon’s Budget Director, Linda Luebbering, credits most of the improvement to higher collections of state income and sales taxes.
“That's the good news, things are picking up," Luebbering said. "I think we do have to be cautious, still, because of what’s going on at the national and particularly the international picture, with European Union issues and everything that's going on globally that could have some bearing on the overall economy.”
Halfway through Missouri's budget year, state revenues are sluggish.
The state budget office reported Thursday that Missouri's revenue increased 1.2 percent through the first six months of the 2012 fiscal year. Revenues need to grow at about 2.7 percent to meet the mark set by the budget.
Budget Director Linda Luebbering says the revenue report was "concerning." But she noted that the revenue could improve in the second half of the budget year. Missouri budgets take effect July 1.
Missouri lawmakers will be trying to plug a half-billion-dollar gap in next year's budget when they convene their 2012 session on Wednesday.
State budget director Linda Luebbering says much of the hole is due to a reduction in federal money, such as stimulus funds and Medicaid payments. However, State Senator David Pearce (R, Warrensburg) suggests that that number is not set in stone.
“There are predictions anywhere from $400 to $900 million, (that could) be our shortfall for this upcoming year," Pearce said. "How do you fill that? It’s gonna be tough.”
Missouri tax revenues have increased this year but are falling short of what was expected in the state's budget.
The state Office of Administration reported Friday that state revenues through November increased 2 percent, to $2.84 billion from $2.78 billion last year. So far, sales tax collections are up 3.4 percent but corporate income taxes are down 10.7 percent.
Missouri’s gross revenue collection in July was up by .6 percent as compared to July 2010.
The revenue increase is driven by strong individual income tax collection, which was up 9.3 percent over the same time last year. Sales taxes remain stagnant, according to state budget director Linda Luebbering. She blames low sales tax collection on a stubbornly high unemployment rate.