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Missouri government's 'roller coaster' income prompts delay in tax cut

arty representation of jackson on currency
_J_D_R_ | Flickr

The state of Missouri’s income collections for June are down more than 22 percent, compared to a year ago. 

That sharp decline is among the reasons Gov. Jay Nixon’s administration will not be implementing the first phase of a state income tax cut that had been scheduled to go into effect when the new fiscal year began last Friday.

In fact, Nixon is planning a news conference Wednesday to announce possible cuts or withholdings he may make in the new budget, which kicked in on July 1.

The state of Missouri’s revenue collections failed to increase enough — $150 million —  during the past fiscal year to trigger the income tax cut. The state’s growth was just over half that amount: roughly $77 million.

State budget director Dan Haug blames, in part, a sharp decline in the state’s corporate tax collections. That drop is linked to a phase-out of the state’s corporate franchise tax.

But Haug remains optimistic that the new fiscal year, which began Friday, will see stronger economic growth.

“Revenue in Missouri has been on a bit of a roller coaster here lately,” Haug said in an interview. “This year, we had .9 percent growth, but the year before we had 8.8 percent growth. The year before that, it was minus 1 percent growth.”

To reach the $150 million threshold for the tax cut, the state’s income growth needs to be at least 1.7 percent during the fiscal year.

State officials are sticking with their estimate that the new fiscal year will see growth slightly above 4 percent, which would result in added income of about $350 million. That would trigger the tax cut in the next fiscal year, which begins July 1, 2017.

The General Assembly had approved the tax cut in 2015, over Nixon’s veto. It calls for phasing in the cut, gradually reducing the state’s top personal income rate to 5.5 percent from the current 6 percent, imposed on income over $9,000 a year.

The cut also called for a new 25 percent deduction for business income reported on individual returns.

Haug said he’s confident that Missouri state government is in good financial shape. But the state’s latest general revenue numbers for June illustrate some of the “roller coaster” challenges.

Net general revenue collections for the month dropped by 22.8 percent compared to June 2015, with a drop of almost $200 million.

Individual tax collections dropped just slightly during the month, 0.8 percent, compared to a year ago.

But that concludes a fiscal year (FY2016) that saw individual income tax collections drop overall by almost 4 percent, compared to the previous fiscal year (FY2015)

The state’s income from sales taxes increased 4.4 percent during the FY2016 fiscal year, compared to a year ago. But in June, it dropped by almost 5 percent, compared to 2015.

And corporate income-tax collections dropped close to 22 percent in June, compared to a year ago. That was more than the overall drop of more than 16 percent during the FY2016 fiscal year.

Here’s the state’s latest fiscal numbers, released on Tuesday:

Individual income tax collections

  • Increased 3.9 percent for the year, from $6.89 billion last year to $7.16 billion this year.
  • Decreased 0.8 percent for the month.

Sales and use tax collections

  • Increased 4.4 percent for the year, from $2.01 billion last year to $2.10 billion this year.
  • Decreased 4.7 percent for the month.

Corporate income and corporate franchise tax collections

  • Decreased 16.2 percent for the year, from $558.6 million last year to $468.3 million this year.
  • Decreased 21.9 percent for the month.

All other collections

  • Decreased 1.2 percent for the year, from $468.1 million last year to $462.6 million this year.
  • Decreased 30.9 percent for the month.


  • Increased 14.9 percent for the year, from $1.22 billion last year to $1.40 billion this year.
  • Increased 104.1 percent for the month.
Jo Mannies is a freelance journalist and former political reporter at St. Louis Public Radio.