More money for Missouri, fewer possible budget problems for lawmakers
Despite all the talk about Missouri’s shaky income numbers, the state’s revenue collections have picked up significantly in recent months, which could help ease legislators’ concerns as they finish fashioning a budget for the fiscal year that begins July 1.
In other words, if trends continue, lawmakers might not have to cut as much as they planned.
Acting Budget Director Dan Haug wasn’t available to discuss the latest figures Wednesday. In the past, he has cautioned against making any conclusions based on a single month’s figures. But a look at the numbers since Jan. 1 indicates some positive trends.
As of March 31, general revenue collections for the current fiscal year are up 4.3 percent compared to a year ago. That could be significant since the latest official estimate for this fiscal year had called for only 3 percent growth.
The “general revenue” income pays for most of the state’s operations, including public safety, public schools and universities, but it’s only about one-third of the state’s overall budget. The rest comes from federal money designated for specific programs.
March’s income collections were down 0.2 percent compared to March 2016. But the numbers since January, when Gov. Eric Greitens took office, are a bit rosier. That’s important because Greitens and his predecessor, Democrat Jay Nixon, made budget cuts or “withholds” because of last fall’s income drop — and those can be restored if state income improves.
Both governors acted because the state constitution requires a balanced budget when the fiscal year ends on June 30.
A February spending spree?
February’s state revenue collections were up 25 percent compared to a year ago, fueled in part by a surge in sales taxes (up 16.2 percent) and in individual income taxes (up 7 percent).
March’s numbers also showed increases in both categories: Individual income taxes were up 4.4 percent and sales taxes saw a slight increase of 1.7 percent.
The state’s individual income and sales tax collections are important because, combined, they represent a huge chunk of what’s used to cover most state spending.
Corporate tax income keeps going down
The biggest drag on Missouri’s income — and its recent budgets — has continued to be the unexpected deep decline in corporate tax collections because of a 2014 change in state law.
As Haug explained last fall, the change dealt with how multistate corporations split their profits for tax purposes among the states where they operate.
The upshot? Businesses can report less income in Missouri, which means they pay less in taxes.
So far this fiscal year, the state’s decline in corporate taxes has hovered at about 26 percent — more than $80 million less than this time last year.
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