Missouri's May revenue numbers 'not good,' raise economic concerns
This article first appeared in the St. Louis Beacon, June 2, 2011 - Missouri Budget Director Linda Luebbering acknowledged today that she's concerned about an unexpected decline in individual income-tax collections in May, which could signal a troubling cooling of the state's economic picture, after roughly a year of good news.
"The numbers aren't good,'' Luebbering said, referring to a drop of 1.4 percent in individual income tax collections, compared to April. "I'm hoping it's not a trend but a one-time blip."
She speculated that the decline could be the result of employees working fewer hours or more people taking part-time work. "We haven't seen a down-tick in jobs,'' she explains.
She noted that May 2010 also was down from May 2009, observing that something may be unusual, in general, about the month.
Luebbering added that she's more concerned about the individual income-tax collection drop than May's overall decline of 3.92 percent, compared to a year ago. That's because most of the overall decrease is due to Missouri's swifter payments of 2010 tax refunds, compared to the 2009 refunds.
As a result, June's tax refund payments are expected to be down, she said, evening out the picture.
With the decline, the net general revenue collection for May was $589.7 million, compared to $613.8 million in May 2010.
Overall, this fiscal year's general revenue collections are up 2.7 percent compared to a year ago -- but that's down from the 3.6 percent increase built into the budget. With only weeks to go before the fiscal year ends June 30, the budget director said this month will need to see "pretty darn'' strong numbers to end the year on target.
Still, Luebbering does not expect Gov. Jay Nixon to make any last-minute budget cuts to guarantee that this fiscal year ends up balanced, as required by Missouri's constitution.
Perhaps mindful of May's less-than-stellar numbers, Nixon was in Columbia touting the strength of the state's economy.
Nixon does expect to make budget withholdings of at least $110 million for the fiscal year that begins July 1.
Luebbering said that the General Assembly's decision to eliminate the state's franchise tax on businesses will cost the state $24 million in the coming fiscal year. An additional $34 million will need to be trimmed, she added, because the budget had assumed some accelerated tax payments due to a proposed tax amnesty that the legislature failed to enact.
In addition, she said, the state will need $50 million to cover its share of disaster-relief costs prompted by the tornado in Joplin, Mo., that killed at least 138 people.
As for fiscal year 2012, which begins July 1, that state budget is built on a predicted revenue growth of 4 percent. Luebbering hopes that doesn't turn out to be too optimistic.
Here's the state detailed tax collections, by category:
Individual income tax collection
Increased 2.5 percent for the year, from $5.03 billion last year to $5.15 billion this year.
Decreased 1.4 percent for the month.
Sales and use tax collections
Increased 0.3 percent for the year from $1.63 billion last year to $1.64 billion this year.
Increased 1.1 percent for the month.
Corporate income and corporate franchise tax collections
Increased 10.1 percent for the year, from $417.3 million last year to $459.5 million this year.
Increased 196.2 percent for the month.
All other collections
Increased 18.9 percent for the year, from $409.1 million last year to $486.4 million this year.
Increased 34.6 percent for the month.
Increased 6.5 percent for the year, from $1.21 billion last year to $1.28 billion this year.
Increased 187.2 percent for the month.