This article first appeared in the St. Louis Beacon, Jan. 4, 2013 - December 2012 was a very good month for the state of Missouri’s bottom line, signaling what state Budget Director Linda Luebbering called solid evidence that the state’s economy is coming back.
December’s general-revenue income was up 10.7 percent compared to December 2011. Even more important, said Luebbering, was that the fiscal year-to-date revenue collections have increased 7.9 percent from a year ago – about twice the initial projected increase.
General-revenue collections through December 31 for FY2013 total $3.77 billion, up from $3.49 billion for the previous fiscal year that ended June 30.
Earlier this month, the consistently stronger-than-expected tax collections prompted state budget officials to up this fiscal year’s expected increase to 4.8 percent, compared to a year ago. The initial projections had called for a general revenue increase of 3.9 percent for FY2013, compared to FY2012.
“We are finally starting to see that ‘pick up’ after those down years,’’ the budget director said. “It’s definitely good news.’’
Still, she emphasized that Gov. Jay Nixon earlier had to institute spending restrictions in the current budget because of his administration’s assessment that the General Assembly approved a budget that was too generous.
So any unexpected income this fiscal year likely will be used to restore already-approved state spending, and little more, Luebbering said.
More people paying individual income taxes
Credit for the state's financial improvement primarily goes to one source. “Individual income tax collections are the star,’’ the budget director said.
Luebbering took note of the 15.8 percent increase in individual income taxes paid in December, which contributed to a 5.7 percent increase so far this fiscal year, which began July 1.
“It’s a combination of more people working, working longer hours, making more money,” she said.
At the same time, there was more sobering news regarding general sales tax collections – which continue to run slightly below the previous fiscal-year numbers, even as more people are earning money.
“It’s consistent to what’s going on nationally,’’ Luebbering said. “People are still cautious about parting with their money.”
The continued drop in state sales-tax collections could curb legislative discussions of proposals to eliminate Missouri’s income taxes, and replace them with higher sales taxes.
Business tax collections down
Missouri’s corporate taxes – soon to be subject to legislative debate – were up 5.2 percent in December, compared to a year ago. But overall, business tax collections are down 1.9 percent for the fiscal year.
Much of that drop is due to the state’s phase-out of the state’s longstanding corporate franchise tax, which had brought in $90 million in 2010, the last year of full collections before the phase out began.
So far, state corporate tax collections have totaled $214.5 million this year -- $4 million below a year ago.
Still business tax collections generally bring in about $450 million annually, which is not insignificant for a state general-revenue budget of roughly $8 billion.
Some Missouri legislators are proposing to phase out all Missouri business taxes, in hopes of competing with Kansas, which acted earlier this year to eliminate its corporate income taxes as part of an effort to woo businesses from Missouri and elsewhere.
While staying out of that debate, Luebbering noted that Missouri already “has low taxes,’’ ranking 47th or 48th in the nation in tax collections.
“Losing any revenue source,” unless there’s a replacement plan, “just seems very risky,’’ she said.
GROSS COLLECTIONS BY TAX TYPE
Individual income tax collections
- Increased 5.7 percent for the year, from $2.49 billion last year to $2.63 billion this year.
- Increased 15.8 percent for the month.
Sales and use tax collections
- Increased 0.3 percent for the year, from $918.2 million last year to $920.9 million this year.
- Decreased 1.4 percent for the month.
Corporate income and corporate franchise tax collections
- Decreased 1.9 percent for the year, from $218.5 million last year to $214.5 million this year.
- Increased 5.2 percent for the month.
All other collections
- Increased 39.8 percent for the year, from $168.8 million last year to $236.0 million this year.
- Increased 10.8 percent for the month.
Refunds
- Decreased 21.8 percent for the year, from $307.9 million last year to $240.7 million this year.
- Increased 14.0 percent for the month.
