It doesn’t appear that a bleak financial picture will brighten anytime soon for state government, forcing more budget cuts. State leaders have been talking about the problem, but haven’t agreed on a solution.
Governor Nixon, a Democrat, delivered somber news Tuesday to Senate Republicans, then to House Speaker Ron Richard and Budget Committee Chairman Allen Icet: state revenues continue their slide and deeper budget cuts will be necessary.
Nixon began the day Tuesday meeting with the Senate Republican Caucus behind closed doors. That meeting lasted for about an hour. He held a much briefer meeting with Richard and Icet.
Icet, a Republican from Wildwood, says his brief meeting with the governor didn’t provide him with the specifics he needs to decide where next to cut.
“Very high level, conceptual stuff that we may need to make some statutory changes, obviously, and then some of it was appropriations,” Icet says of the meeting. “But there was nothing specific that I would feel comfortable saying, ‘Here is a plan that we the House can move forward with in tandem working with the Senate and the governor’s office.”
Governor Nixon has already withheld more than $600 million from the budget the legislature approved last session. Legislative leaders agreed with the governor’s people that a slight increase in the state economy would boost state revenue ever so slightly. Even that modest increase from $6.9 billion in General Revenue to $7.2 billion might soon be revised downward.
“Well, where the rubber meets the road is when that comes out to be a lower number, which we all expect, then where do we go back to the governor’s introduced bills to make the changes, to make the cuts,” Icet says.
Nixon also met later in the day with fellow Democrats from the two chambers about the budget outlook.
The state faces two challenges. It appears now that Congress will not follow through with an extra $300 million in budget stabilization money that the Nixon Administration counted on. The second problem is state tax collections. They not only haven’t rebounded, they continue to lag far behind the totals needed to sustain the current budget.
Individual income tax collections are down 11% overall this fiscal year, sales tax revenue is off 7%, with corporate income tax collections off by more than 13% for the year.
GROSS COLLECTIONS BY TAX TYPE
Individual income tax collections
- Decreased 10.9 percent for the year, from $3.71 billion last year to $3.30 billion this year.
- Decreased 8.7 percent for the month.
Sales and use tax collections
- Decreased 7.2 percent for the year from $1.27 billion last year to $1.18 billion this year.
- Decreased 5.0 percent for the month.
- Corporate income and corporate franchise tax collections
- Decreased 13.1 percent for the year, from $294.7 million last year to $256.0 million this year.
- Decreased 7.1 percent for the month.
All other collections
- Decreased 5.5 percent for the year, from $276.7 million last year to $261.6 million this year.
- Decreased 15.2 percent for the month.
- Increased 9.3 percent for the year, from $715.0 million last year to $781.3 million this year.
- Increased 1.3 percent for the month.
Governor Nixon on state’s financial picture:
“After reviewing the preliminary February revenue figures, it is clear that even as Missouri’s economy begins to rebound, state revenues will continue to lag for a prolonged period of time. As a result, we will need to downsize the scope of state government, while protecting necessary services to the citizens of Missouri. This week, I will meet with the leadership of the Missouri House and Senate, including Republicans and Democrats, to discuss lowering the consensus revenue estimate for next fiscal year. It is my hope that we can continue to work together in a bipartisan fashion to not only balance next year’s budget, but also keep our state on sound fiscal footing for years to come.”