Given the slow level of growth projected by the state, Governor Eric Greitens could almost assure Missourians there will be fewer cuts to services in his State of the State address tonight.
The Consensus Revenue Estimate (CRE) is a key monetary figure that the governor and lawmakers use to construct an operating budget for the year.
State budget professionals and hired consultants determine the estimate, which for the upcoming fiscal year is $9.418 billion. The figure represents a projected growth of $229.3 million in revenue collections over the previous year, translating to a growth rate of 2.5%.
The estimate is much more conservative compared to recent years, which resulted in large chunks of money having to be cut from state services.
Revenues were projected to increase by $345 million at a growth rate of 3.8 percent in the current fiscal year. With collections failing to meet estimates heading into the fiscal year, which started in July, Governor Greitens slashed $251 Million in spending. Previous Governor Jay Nixon made even deeper cuts a year earlier when revenues fell far short a projected 5% growth rate.
Governor Greitens, a Republican, announced the Consensus Revenue Estimate (CRE) for the upcoming fiscal year Tuesday with key GOP chairman of House and Senate committees.
Senator Dan Brown, who heads his chamber’s Appropriations Committee, expressed optimism that estimates are more realistic moving forward. “I feel the CRE is realistic and I think things are turning in Missouri,” said Brown. “However, there is always a bit of a lag in revenue growth. Missouri is open for business and growth will be on the horizon.”
House Budget Committee Chairman Scott Fitzpatrick said he’s looking forward to the challenge. “I want to thank Gov. Greitens, Sen. Brown, and all the staff who worked to arrive at this estimate in the midst of a changing tax landscape,” Fitzpatrick said. “I look forward to continuing to partner with the Governor, Sen. Brown and my colleagues in the General Assembly to once again craft a fiscally responsible budget for our state government.”
Governor Greitens reiterated a fiscally conservative stance he’s conveyed numerous times publicly. “I remain committed to maintaining a balanced budget while continuing to find ways to make a smaller government that works better for Missouri citizens,” said Greitens.
Missouri lawmakers won’t have to deal with the daunting challenges faced by state lawmakers during the outset of the great recession in the previous decade.
The Consensus Revenue Estimate for fiscal 2009 called for a reduction of 4.0 percent in revenue collection, the largest forecasted decline since the consensus process started in 1992, and more than $500 million dollars below the 3.4 percent growth forecast for fiscal year 2008.
Lawmakers also may not be facing a budget crisis predicted earlier resulting from the tax package passed by Congress. The new law doubles the standard deduction for people who don’t itemize their tax returns.
The standard deduction in Missouri is tied to the federal rate by law, and the increase was projected by various sources to cost the state anywhere from $500 million to $1 billion. Representative Fitzpatrick says the final package passed by Congress mostly eliminated the gap.
“They eliminated enough other deductions on the itemized side, exemptions and deductions, that it offset most of the costs of doubling the standard deduction,” said Fitzpatrick.
The state will still have to come up with $53 million to nullify the effects of the new federal tax law, according to Fitzpatrick. He also said plans to decouple the federal and state standard deduction that some state lawmakers have proposed would be unconstitutional.
Fitzpatrick’s office told Missourinet that the decoupling process would have brought in hundreds of millions of dollars to the state by creating an effective tax increase for citizens, a condition which would break a constitutional provision in Missouri known as the Hancock Amendment.