State overall income continues down, but personal income tax collections now up
This article first appeared in the St. Louis Beacon, April 2, 2010 - Missouri state Budget Director Linda Luebbering said in an interview today that there is a glimmer of good news in the state's otherwise dismal March income numbers, which showed the state's revenue collections down by 17.8 percent, compared to March 2009.
The positive sign? For the first time in months, individual income tax collections increased -- 2.7 percent this March, compared to a year ago.
For the fiscal year, individual income tax collections are down 9.4 percent compared to last fiscal year's numbers. But the March increase signals that an economic turnaround may be at hand, Luebbering said.
(Corporate income taxes were down 9.1 percent in March, compared to a year ago. For the year, such collections are down close to 13 percent.)
Overall for the fiscal year, when ends June 30, the state's income is down 13.3 percent -- $4.68 billion so far this year, compared to $5.4 billion for the same period last year.
Still, the budget director is sticking by the prediction that this fiscal year will end up with state revenue down 9.6 percent, compared to a year ago. Coupled with last fiscal year's drop, the state's overall income decline during the past two years is the largest since the state has kept records, state officials previously have said.
Although in double-digits, the state's overall March income decline was "pretty much what we anticipated,'' the budget director said.
The budget director added that, for now, it appears that Gov. Jay Nixon won't have to make any more cuts in the current fiscal year spending in order to guarantee a balanced budget when the year ends June 30. The governor's earlier cuts of close to $1 billion appear to have been adequate, Luebbering said.
Luebbering said the state borrowed $100 million in March from its Budget Reserve Fund, for cash flow purposes. "This brings the total borrowed for the year to $450 million, which will be repaid by May 15,'' the Office of Administration said.
By the way, Luebbering noted that the state's sales tax collections now have declined for the 10th straight quarter -- meaning that it's been 2 1/2 years since Missouri has seen its sales tax income increase.
As she sees it, that continued sales-tax drop should give pause to some who are advocating that a higher state sales tax could replace the state's income tax, which some want to eliminate.
"Some folks say that they believe the sales tax is a more stable source of income,'' Luebbering said.
But the multi-year drop in state sales tax income shows "that's not true,'' she said.
Here's the details on the state's latest revenue numbers for March:
GROSS COLLECTIONS BY TAX TYPE
Individual income tax collections
Decreased 9.4 percent for the year, from $4.15 billion last year to $3.76 billion this year.
Increased 2.7 percent for the month.
Sales and use tax collections
Decreased 6.8 percent for the year from $1.43 billion last year to $1.34 billion this year.
Decreased 3.9 percent for the month.
Corporate income and corporate franchise tax collections
Decreased 12.5 percent for the year, from $349.7 million last year to $306.0 million this year.
Decreased 9.1 percent for the month.
All other collections
Decreased 7.5 percent for the year, from $355.1 million last year to $328.5 million this year.
Decreased 14.7 percent for the month.
Increased 17.5 percent for the year, from $890.9 million last year to $1.05 billion this year.
Increased 50.8 percent for the month.