Missouri budget director, budget chair dispute meaning of April revenue numbers

Wednesday, May 5, 2010 | 7:18 p.m. CDT; updated 6:13 a.m. CDT, Thursday, May 6, 2010

JEFFERSON CITY — April revenue numbers are a sign of recovery or a sign of continued decline, depending on who you ask.

State Budget Director Linda Luebbering said that despite a nearly 4 percent decline in April revenue compared to the same month last year, there were signs of improvement that indicated Missouri's economy may be starting to recover.

"It looks like businesses are starting to make some profit," Luebbering said.

She pointed to increases in corporate income tax and income tax withholdings from employers as signs of potential growth.

But House Budget Chairman Allen Icet, R-Wildwood, said he was less optimistic.

"I would not be surprised if we continue to drift downward," he said.

Gov. Jay Nixon has cut more than $900 million from the state budget since July to balance the current budget, which was originally projected to experience modest growth.

Luebbering said her office doesn't think more cuts will be needed this year. Her office is projecting revenue for the fiscal year will improve slightly over the next two months and finish 10 percent lower than last year, which will be enough to balance the budget.

Icet said he's not convinced the state will meet that target, and he thinks Nixon should begin planning potential cuts to the current budget and announce them no later than mid-May.

With only two months left in the fiscal year, Icet said he's not sure where the governor could make cuts.

"I see no single place he can go," he said.

He said the governor could use federal stabilization funds to bolster the budget.

State revenue is down almost 12 percent total for the fiscal year to date and April numbers were bolstered by a one-day payment of $120 million on April 20, without which Luebbering said April revenue would have been down more than 15 percent.

Individual income tax, which includes both income tax withholdings and income tax filings, was down nearly 7 percent compared to fiscal year 2009, and Luebbering said revenue from tax filings has mostly been collected.

Refunds have also increased for the current fiscal year, meaning the state has been collecting less tax revenue from Missourians and returning more of what has been collected.

"People did not have a good year in calendar year 2009," Luebbering said.

The House and Senate passed a budget last week that cut nearly $500 million from Nixon's January budget recommendation for the next fiscal year, but more than $100 million of these cuts rely on legislation that has not yet passed. Nixon's original budget was based on projections of modest growth for next year that may be impossible given the continued decline this year.

"We're still going to come in lower than was our base next year," Luebbering said, which means Nixon might have to make cuts even if the necessary legislation passes.

Senate Appropriations Chairman Rob Mayer, R-Dexter, said that last year's revenue projection has made budgeting for next year difficult.

"The projections were horribly wrong," he said.

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