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Missouri revenue collections drop in July, as battle over proposed tax cut heats up

In Economy

3:02 pm on Fri, 08.02.13

Amid a high-profile battle over tax cuts, Missouri state government has seen its first monthly income decline in well over a year – with July collections down almost 5 percent, compared to a year ago.

But state Budget Director Linda Luebbering cautions that the facts behind the numbers aren’t as dire as they may appear.

Linda Luebbering
Linda Luebbering

The state’s July revenue report, which showed a decline of 4.8 percent, was skewed by July 2012’s one-time infusion of $39 million from the mortgage lawsuit settlement with some of the nation’s major banks.

Exclude that money, Luebbering said, and July 2013’s revenue collections were actually up 3 percent compared to a year ago. That’s slightly below the 3.1 percent growth estimate that state officials and the General Assembly used to draw up the budget for the fiscal year that began July 1.

Luebbering said it was too early to tell what the July figures might mean for the rest of the budget year. “We’re probably a little behind of where we need to be, but not by much,’’ the budget director said.

But there's no question the July collections are well below some of the dramatic monthly revenue hikes the state has experienced within the last year.

Jay Nixon
Jay Nixon

Such talk could add fuel to Gov. Jay Nixon’s argument that the state can’t afford the tax cuts contained in HB253, which he vetoed. The governor says the bill also is flawed.

Several Missouri business groups – included Associated Industries of Missouri and the Missouri Chamber of Commerce and Industry – disagree on both counts. They are campaigning for public support to pressure the Republican-controlled General Assembly to override the governor veto, and cite the state’s unexpected extra cash when the previous fiscal year ended June 30 as proof that it can afford it.

New pro-override ads go on the air

On Friday, the state chamber launched another wave of TV spots on broadcast and cable stations around the state. (In St. Louis, the ads are running only on cable.)

The chamber’s new spot features Bob Orscheln, a Moberly-based Missouri businessman and chamber leader who supports the proposed tax cut. That ad is running in Cape Girardeau, Springfield and mid-Missouri, Buschmann said.

The money for the chamber’s ad buy will come out of the $200,000 it received this week from Grow Missouri, a new pro-tax-cut group wholly funded by wealthy financier Rex Sinquefield.

Grow Missouri also gave $100,000 this week to Associated Industries, presumably to pay for pro-override efforts as well.

The chamber's Karen Buschmann said that supportive groups are running ads in waves, leading up to the legislative veto session on Sept. 11. “This is connected to the override campaign’’ for HB253, she said.

Friday’s ad is part of the second wave, which should run for about 10 days, she said. The first wave was launched in mid-July.

Tim Jones
Tim Jones

She acknowledged that chamber officials and members found it “concerning’’ that House Speaker Tim Jones said earlier this week that he didn’t have the necessary 109 votes needed to override and that he might not hold an override vote if the shortfall appears to be too great.

Jones made his observations on this week’s podcast cohosted by the Beacon and St. Louis Public Radio. He reaffirmed and clarified some points in a later interview with the Beacon.

Buschmann said that the controversy over Jones’ comments actually “invigorated our base even more” as they press for legislative support to override Nixon’s veto.

Meanwhile, the governor has stepped up his appearances with school officials, retiree groups and others as he defends his veto. Nixon has been highlighting HB253’s elimination of the existing sales-tax exemptions for prescription drugs and school textbooks.

Budget chief quibbles over 'surplus'

As for Luebbering, she is seeking to stay out of the fray. She did, however, reaffirm her view that it’s incorrect to characterize the state as running “budget surpluses,’’ as some of the pro-override supporters have said.

She has maintained for months that the extra money left over from the previous fiscal year – which ended June 30 -- is being used to shore up the state’s depleted cash reserves used to pay its bills every month.  That fund is still half of what it needs to be, she said.

Here’s the breakdown of July’s revenue numbers:

Individual income tax collections

  • Increased 0.2 percent for the year, from $341.3 million last year to $341.9 million this year.

Sales and use tax collections

  • Increased 4.0 percent for the year from $145.4 million last year to $151.3 million this year.

Corporate income and corporate franchise tax collections

  • Increased 10.4 percent for the year, from $16.8 million last year to $18.6 million this year.

All other collections

  • Decreased 72.5 percent for the year, from $56.0 million last year to $15.4 million this year. (This refers to the mortgage lawsuit settlement.)

Refunds

  • Decreased 15.1 percent for the year, from $53.7 million last year to $45.6 million this year.
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