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Missouri income remains down, but officials stay optimistic

Statewide population data shows that females in Missouri ages 16 and older who work full-time jobs all year won’t earn as much as men until 2066.
Rici Hoffarth | St. Louis Public Radio

Missouri’s general-revenue income is down about $110 million, compared to a year ago, largely because of federal tax cuts.

But state budget director Dan Haug is optimistic that this fiscal year will show better numbers during its second half.

“Because we finished last year so strong, revenue can actually decline by half a percent and we would hit our budget estimate,’’ the budget chief said.

As of Oct. 31, Missouri’s general-revenue income – which pays for most state operations and school aid – is down 3.9 percent compared to the same period a year ago.

But Haug notes that state income shot up during the second half of the 2018 fiscal year, creating a hefty cushion of roughly $300 million when the books closed June 30.

“We expected a 1.9 percent increase in revenue in FY18, we actually got a 5 percent increase,” Haug said.

The extra financial boost has allowed the state to fulfill the spending plan in the FY2019 budget that the General Assembly approved in May. Then-Gov. Eric Greitens and his successor, Gov. Mike Parson, signed the spending bills. Parson even ended some of the budget withholds or cuts that Greitens had planned or put in place.

Haug doesn’t expect Parson will have to impose any new spending restrictions in the coming months.

Haug also points to Missouri’s strong financial reputation. “We’re one of 10 states with a AAA bond rating from every rating agency, and that’s because we’re well-managed financially,” he said. “And when we see problems, we take action.”

“General revenue” makes up about a third of Missouri’s income; it funds most of state government.

The rest of the state’s income is mainly dedicated to specific purposes, such as the conservation fund, or it’s federal money that must be directed to certain programs, notably Medicaid, the health insurance program for the poor. The General Assembly and the executive branch have little or no control over that money, although it’s officially part of the state’s budget.

October numbers sobering

The state’s latest revenue report, which goes through Oct. 31, signaled potential challenges. Net general-revenue collections for October were down 6.1 percent compared to October 2017.

The fiscal year-to-date numbers showed state income was down 3.9 percent for the first four months of this fiscal year, compared to the same period a year ago.

Most notably, individual income-tax collections were down 6.2 percent in October, and had dropped 3.6 percent so far during the fiscal year.

Individual income taxes provide about three-quarters of Missouri’s general revenue income.

Haug ties that drop to the federal tax cuts that began going into effect this year, and the state tax cuts that have been phased in since 2017.

But with state unemployment hovering at just over 3 percent – one of the lowest in modern times – state officials are optimistic that more jobs soon will result in more state income.

On the upside, collections from sales and “use’’ taxes are up 4.7 percent so far this fiscal year, and skyrocketed 6.2 percent in October.

Corporate tax collections also had increased by almost 2 percent for the first four months of this fiscal year.

New budget talks about to begin

Parson and legislative leaders in the state House and Senate will soon be in discussions to craft a general-revenue income estimate for the next fiscal year, which begins July 1. That estimate will provide the basis for the General Assembly’s budget plan, which must be passed by early May.

Parson is expected to develop his proposed budget framework within the next few weeks. Traditionally, the governor unveils his vision during the State of the State address, delivered in January.

Parson spokeswoman Kelli Jones said the governor will continue his emphasis on workforce development, and improving the state’s infrastructure, such as roads and bridges.

The governor and his allies suffered a loss this month when Missouri voters rejected a proposed increase in the state’s gas tax — at 17-cents-a-gallon, one of the nation’s lowest — in order to raise money for infrastructure improvements.

Follow Jo Mannies on Twitter: @jmannies

Jo Mannies has been covering Missouri politics and government for almost four decades, much of that time as a reporter and columnist at the St. Louis Post-Dispatch. She was the first woman to cover St. Louis City Hall, was the newspaper’s second woman sportswriter in its history, and spent four years in the Post-Dispatch Washington Bureau. She joined the St. Louis Beacon in 2009. She has won several local, regional and national awards, and has covered every president since Jimmy Carter. She scared fellow first-graders in the late 1950s when she showed them how close Alaska was to Russia and met Richard M. Nixon when she was in high school. She graduated from Valparaiso University in northwest Indiana, and was the daughter of a high school basketball coach. She is married and has two grown children, both lawyers. She’s a history and movie buff, cultivates a massive flower garden, and bakes banana bread regularly for her colleagues.

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