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Missouri Budget Project calls for more scrutiny of state's income, fewer tax breaks

This article first appeared in the St. Louis Beacon, Oct. 29, 2009 - The Missouri Budget Project isn't too keen on Gov. Jay Nixon's latest round of budget cuts.

The nonprofit organization, which specializes in public-policy analysis, says it understands that the state has serious money problems.

But as the Project sees it, part of the trouble isn't the state's spending, but its lack of adequate income.

The Budget Project offered the first nonpartisan (not Republican) criticism of the state's budget problems, right after Nixon announced on Wednesday budget trims of almost $204 million. That's in addition to almost $500 million that the governor had cut or vetoed earlier this year, according to the group's calculations. (The governor put that number a bit less, for a total of about $634 million.)

In any case, the Project has calculated that the state's income has been cut in recent years by $325.9 million a year, thanks to recent tax cuts approved by the Legislature.

And during the past seven years, the Legislature has OKed "a 160 percent increase in state tax credits," the group said.

It also cited:

-- The state's tax discount to companies who pay their state taxes on time.

-- Missouri's "tax loophole which allows companies that register their trademark subsidiary in states without a corporate income tax, such as Delaware, to avoid paying taxes for their sales and operations in Missouri. This accounts for a significant loss of state taxes from national retailers with stores in our state. Most states have closed this loophole, but Missouri has yet to do so."

-- "Loss of state sales tax revenue from purchases made on the internet rather than in local stores.  A recent estimate from the University of Tennessee indicates that Missouri loses more than $200 millions in revenue annually due to not capturing sales tax from internet purchases."

“When our state legislators return to Jefferson City in January to begin work on the FY 2011 budget, they must find solutions to our ongoing shortfalls and work to prevent cuts like those made today from continuing to deplete the state services Missourians rely on,” said Budget Project executive director Amy Blouin.

“Our state services now operate at a level below where there were in the year 2000, while at the same time the need for programs such as food and unemployment assistance for Missourians has increased due to the recession.” 

For example: Reflecting the state' rising unemployment, now topping 10 percent, Blouin said that enrollment in the state's Medicaid program, Missouri Health Net, has gone up, despite the 2005 cuts in eligibility requirements in 2005.

"In June 2008, Missouri Medicaid enrollment stood at about 832,000," the group said. "As of June 2009, this number had climbed to 871,081, or an increase of 4.7 percent for the year."

Until the state addresses its revenue problem, the Budget Project maintains that Missouri will never get a handle on its budget problems.

Jo Mannies is a freelance journalist and former political reporter at St. Louis Public Radio.