Tax revenues fell short of expectations during the first quarter of Missouri’s fiscal year, but the state’s budget chief says he sees no need to start limiting spending.
In a report released last week, tax revenue for the first three months of the fiscal year was down by 3.2 percent, with much of the decrease coming via a drop in individual income tax collections.
In prior years, that might have triggered mid-stream cuts in spending out of the state’s $28.3 billion checkbook, said budget director Dan Haug.
For example, revenue shortfalls in 2016 led former Gov. Jay Nixon to withhold more than $150 million in spending in his final months in office. Former Gov. Eric Greitens slashed $250 million in spending in 2017 when revenue figures lagged.
Among the cuts imposed by Greitens was a reduction in school busing costs and cuts to universities.
But, Haug said the state ended the last fiscal year on June 30 with higher-than-anticipated revenue growth. Budget writers had planned on revenue growing by 1.9 percent last year, but the final figure was closer to 5 percent.
“That’s given us a big cushion,” Haug said. “We feel we’re okay at where we are right now.”
In addition, the House and Senate approved $100 million to pay for supplemental spending, which also provides another layer of security against current Gov. Mike Parson, a Republican, having to cut spending.
“Right now, we seem to be in a pretty good place,” Haug said.
Haug said the drop in tax collections may be due to a change in reporting times under the federal tax cut package approved by Congress.
But, he said a strong economy should result in a rebound as the fiscal year goes forward.
“I think revenue will be stronger in the second half of the year,” Haug said.
He added that the additional revenue received last year means the state can meet its current budget needs if revenue grows by just .3 percent.
Nonetheless, Haug said the budget office is watching the situation to determine if spending cuts will be needed.
“We’re paying close attention to it,” he said. “We’re continuing to monitor it. But right now, I don’t think it’s necessary.”