JEFFERSON CITY — Missouri ended its annual budget year with revenues falling significantly short of what had been expected, meaning the state may soon have to dip into reserves to pay its bills.
Figures released Wednesday show that net general revenues declined 1 percent for the 2014 fiscal year when compared with the previous year. That translates to $308 million short of what Democratic Gov. Jay Nixon projected and $241 million short of the forecast by Republican legislative leaders.
As a result, Missouri started its new budget year Tuesday with a cash balance of $222 million — a lower-than-typical amount that will likely require state officials to tap into a reserve fund to meet its obligations in July, said Linda Luebbering, the director of the Division of Budget and Planning, part of Nixon's administration.
The drop in annual state revenues was the first since the 2010 fiscal year, when Missouri was suffering the effects of a national recession. Although the U.S. economy is not currently classified as in a recession, the federal government reported last week that the economy shrank at an annual rate of 2.9 percent from January to March.
As recently as this past January, Missouri's governor and legislators had been forecasting growth, though they differed on how much.
Missouri's sales tax revenues did grow, but individual income tax collections — which account for about two-thirds of Missouri's general revenues — slightly declined. Overall, the state took in about $8 billion in net general revenues for the 2014 fiscal year, which ended Monday.
The financial shortfall will have lingering effects in the 2015 budget year, because the state is at a lower starting point than had been assumed when Nixon forecast a growth rate of 5.2 percent and legislators predicted 4.2 percent.
Nixon already has vetoed or frozen hundreds of millions of dollars of spending for the 2015 budget. That's partly because of the decline in state revenues and partly because of the potential for legislators to override his vetoes of various tax-break bills that Nixon contends would reduce revenues even further.
There are several potential reasons for Missouri's declining revenues.
Luebbering said some Missouri residents took capital gains in the 2012 calendar year to avoid an increase in the federal capital gains tax that took effect in 2013. That resulted in higher state income tax revenues when those 2012 taxes were paid in the first half of the 2013 calendar year, and lower-than-normal capital gains tax collections in 2014, she said.
The 2014 revenues also appeared lower because the prior year's figures included a nearly $40 million payment from a settlement with mortgage lenders, Luebbering said.
State tax credits may also play a role in diminishing revenues, though the details on how many credits were claimed won't be known until later, said Joe Haslag, an economist at the University of Missouri-Columbia who helps legislative and executive branch officials develop revenue forecasts.
Haslag said Missouri's declining revenues reflect a longer economic trend.
"The undisputed fact is we just haven't been growing fast as a state for a couple of decades," Haslag said.
In June, the federal Bureau of Economic Analysis released state-by-state figures for the 2013 growth in the real gross domestic product, a commonly used method for measuring the strength of the economy.
Missouri had 0.8 percent growth, which was a full percentage point behind the national rate. Missouri's economic growth ranked 45th nationally, ahead of only Alaska, Maryland, New York, Pennsylvania and Virginia.