The Missouri House Budget Committee chairman says withholds are likely, early in the next budget year, which began July 1.
Missouri has a $27 billion state operating budget.
House Budget Committee Chairman Scott Fitzpatrick, R-Shell Knob, says it looks like revenues won’t meet the consensus revenue estimates for fiscal year 2017, which will make budget restrictions likely.
“If you look at state revenues right now adjusted for pending refunds, comparing refunds from this year to last year, we’re a little over 2 percent, I think, right now growth over last year,” Fitzpatrick said.
Fitzpatrick said they need to be at about 3.5 percent. He said higher-than-expected growth in fiscal year 2018 will be needed, for Missouri’s budget to remain balanced without restrictions.
Fitzpatrick said the state could begin the fiscal year with an approximately $130 to $140 million shortfall.
“The only way to deal with that, you can either grow out of that by having better than expected revenue growth next year, or you can basically restrict out of that or withhold out of that,” he said.
Fitzpatrick said the Legislature left about $100 million unbudgeted for revenue shortfalls or unplanned expenses. That money could be tapped to help make up the shortfall.
Fitzpatrick said that if HCB 3 becomes law (giving tax breaks to needy seniors), another $35 million in restrictions will be needed. Fitzpatrick predicts fiscal year 2018 will be a “challenging” year.
“This is a tough one because, particularly because we cut out most of the low-hanging fruit,” Fitzpatrick said. “You know, the stuff that was easy to cut out and then a lot of the stuff that was hard to cut out got cut this year.
“And going into next year, if we have to repeat that exercise of cutting again, it’s really going to be a lot more painful next time I think.”
Gov. Eric Greitens told Missouri lawmakers in mid-January that almost $2 billion has been promised to “special interests” in tax credits, since 2010.
And while Greitens’ proposed budget submitted to lawmakers on Feb. 2 cited “poor economic growth,” Greitens also wrote that “revenue is being drained by special interest tax credits and the faster-than-projected growth in healthcare expenditures, driven in part by the national impact of Obamacare.”
State Sen. Jamilah Nasheed, D-St. Louis, complained about tax credits during a Senate-House budget conference in early May. Senator Nasheed told Senate Appropriations Committee Chairman Dan Brown, R-Rolla, and Fitzpatrick that Missouri Republicans have passed too many tax breaks for corporate interests.
House Budget Committee ranking Democrat Rep. Mike Butler, D-St. Louis, and veteran State Rep. Paul Curtman, R-Union, have also raised questions about tax credits.