The House Budget Committee chairman says Missouri has a $500 million-plus budget shortfall.

Missouri House Budget Committee Chairman Cody Smith (center) and House Speaker Elijah Haahr (right) brief Capitol reporters on January 23, 2019 in Jefferson City (photo courtesy of Tim Bommel at House Communications)

State Rep. Cody Smith, R-Carthage, spoke to reporters in Jefferson City on Wednesday afternoon.

“Yes, it’s $500 million plus and then if you factor in the 1.7 percent CRE (consensus revenue estimate) the growth that we had budgeted for it’s even more than that, so yes, I would say that,” Smith said in response to a Missourinet question about the shortfall amount.

Chairman Smith said the budget shortfall is primarily a withholding one and not the results of tax cuts. He says state Department of Revenue (DOR) officials testified Wednesday that there were issues, which caused underwithholding for personal income taxes.

“One of those is a formulaic problem that dates back several years that was compounded by the federal tax changes that went into effect last year,” said Smith.

Last week, State Rep. Kip Kendrick, D-Columbia, the ranking Democrat on the House Budget Committee, told Missourinet he was worried about the state’s budget. During that interview, Kendrick noted state revenues were down.

“We’re currently down 8.76 percent year-to-date right now,” Kendrick said last Wednesday. “Middle class surprise tax bills are coming, that’s a very real thing with the withholding error.”

Kendrick was referring to the DOR’s inaccurate tax estimations. House Minority Leader Crystal Quade, D-Springfield, has filed legislation that would grant taxpayers who owe less than $200 an extra two months to pay, without penalties or interest charges.

As for House Speaker Elijah Haahr, R-Springfield, he tells Missourinet he’s confident the numbers will turn around by April.

Speaker Haahr said he’s not surprised at Missouri’s $500 million-plus shortfall. He said the House has “been on top” of the issue, noting that House Budget Research staff members noticed the problem last fall and notified the DOR.

“I still am very confident that as taxes begin to come in particularly as we get closer and closer to April 15, that we’ll see those numbers come back,” Haahr said. “This is not necessarily an issue of nothing more than changing when that money comes into the state, whether it comes in early versus late.”

DOR officials testified Wednesday about the lagging revenues. Chairman Smith said the DOR believes Missouri will catch up in revenue and will meet the 1.7 percent projected revenue growth.

He said House Budget Committee members will continue to monitor the situation closely.

The state Constitution requires Missouri lawmakers to approve a balanced budget by early May. GOP Governor Mike Parson is proposing about a $29 billion state operating budget.