State revenues slip again in December
By Dick Aldrich
JEFFERSON CITY, Mo. -- Lead by surprisingly decreasing sales tax collections, Missouri revenues for December decreased compared to last year.
December collections were off 2.1 percent, according to figures compiled by the office of State Budget Director Linda Luebbering. Despite claims that retail business in the state rose by almost four percent compared to last year, sales tax collections in Missouri actually dropped four percent compared to last December. Luebbering called the figure “disappointing.”
“Just to put that number in a little more context, last December we were down 13 percent from the year before,” said Luebbering. “So it’s not like we had a stellar sales tax number from December last year. We did not.”
Sales tax is the second biggest piece of the revenue collection pie each month. Personal income taxes make up more two thirds of the revenue the state uses to pay its bills. Personal income tax grew a mere 0.01 percent in December 2011 compared to 2010. Corporate income and franchise taxes decreased 10 percent from last December and are down more than 10 percent this year.
“What we’re hearing is that businesses are taking the money they normally pay in taxes, and reinvesting in themselves,” said Luebbering. “If that’s what they’re doing...then that’s good news because that will mean they’re investing for growth, and that they will then start hiring, bringing people back and beginning to produce more.”
The sluggish revenue figures for December push the state farther behind in it efforts to fully fund the Fiscal Year 2012 State Budget, now in effect. Overall revenue growth for the year is now just 1.2 percent compared to the 2.7 percent growth the budget was drawn upon during the last legislative session.
Luebbering said it’s too early to start discussions on whether or not the Governor and legislature will have to make cuts to ensure the state finishes in the black at the end of the fiscal year in June.
“We may have to take additional action and the governor may have to make additional spending reductions, but we’re not there yet,” said Luebbering. “We’re going to really look closely at January. Hopefully some of the sales tax that should have shown up in December shows up in January, so we’ll watch that number very closely.”
“But is it possible that the governor will have to do additional expenditure restrictions later this fiscal year? Yes it is possible,” said Luebbering.
But the sluggish end to Fiscal Year 2012 does not concern Luebbering when she looks forward to 2013 revenue predictions. An improving unemployment picture and a general up-tick in the overall national economy should drive revenue growth in the state to nearly four percent.
That figures to be about $285 million in revenue growth in 2013. That growth will be used to offset $650 million in one-time federal money that will not be available in 2013 and about $90 million in increased medicaid costs. That still leaves the legislature and governor with the unenviable task of cutting between $450 and $500 million to make ends meet in the 2013 fiscal year budget.