Missouri Needs to Increase Revenue to Meet Budget

While general revenue collections in Missouri increased for the fiscal-year-to date, more money is needed to meet budget projections.

Revenue collections increased 1.2 percent to $2.25 billion in the fiscal year-to-date, starting July 1 and ending Oct. 31, compared to $2.23 billion last year during the same period, according to the latest numbers released by the Missouri Office of Administration on Wednesday.

For October, however, general revenue collections dropped 1.3 percent to $470.1 million compared to $476.4 million last year.

The monthly numbers were bad, said Missouri Budget Director Linda Luebbering, noting that she puts more stock in the year-to-date numbers.

"For the year, the numbers are not good," she told Missouri Journal. "But they are not negative."

Even more troublesome, she said, was the 16.8 percent drop in corporate income and corporate franchise tax collections, totaling $127.7 million this year compared to $153.5 million last year.

The drop in corporate income was unexpected, Luebbering said. 

Nationally, Luebbering pointed out that corporations have been reporting higher profits recently. She speculated that the drop in corporate income tax collections in Missouri might be tied to a recent change in the federal tax code, which now allows for accelerated depreciations by businesses.

Sales tax collections in Missouri, meanwhile, are doing OK, Luebbering said. Sales taxes increased 5.5 percent to $601.3 million for the fiscal year, which means retailers are doing more business.

At the moment, Luebbering is not expecting any more restrictions or budget cuts.

However, the revenue picture remains hazy.

"The revenue pace is not adequate," she said. "We will have to watch it."

Missouri remains on track to reduce total spending by 0.14 percent this fiscal year, ending June 30. This fiscal year will be only the third time in 30 years the state has reduced spending year-over-year.

Total spending increased 498 percent from $3.9 billion in 1981 to $23.3 billion for last fiscal year.

Missouri is already working on the budget for fiscal 2013. Will total spending drop or will the state revert to its upward trend? Luebbering said it is too early in the budget-making process to predict.

The consensus revenue estimate put together by legislative leaders and the governor's administration will be released in late December or early January. Missouri Gov. Jay Nixon will then present his budget recommendations during his State of the State Address sometime in January.

By Brian R. Hook, brhook@brhook.com, (314) 482-7944

Hook is editor of Missouri Journal, which covers the economy across the Show-Me State. For more Missouri news, sign up for a newsletter and follow Missouri Journal on Twitter and Facebook.

Correction: An earlier version of the blog incorrectly spelled the writer's name and said the state could run a deficit. The editor erred.