State Still Behind FY08, Adjusted
January’s general revenue collections indicate that Missouri is likely to meet the current fiscal year’s budget. However, the state is still struggling to catch up in funding for critical public services including education and health care after years of budget reductions. As policymakers continue their preparations for next year’s budget, they should explore policies like the Streamlined Sales Tax Collections Mechanism to better meet the needs of Missourians.
A brief summary of January collections:
General revenue, net of refunds, grew by 7.7 percent in January compared to the last year, leaving the Fiscal Year 2016 (FY 2016) overall growth rate at 3.4 percent. Continued growth at about this level will allow the state to attain the 2.8 percent growth rate that is called for the new Executive Budget that was presented by Governor Nixon about two weeks ago.
Growth in the main revenue sources include:
- Individual Income Tax gross collections rose 9.8 percent in January relative to January of 2015. This puts the FY 2016 overall growth rate at a very respectable 6.5 percent.
- Sales and Use Tax gross collections managed to register a positive performance in January, increasing 0.4 percent in January compared to January of 2015. This results in a FY 2016 seven month growth rate of 2.7 percent.
- Corporate Income/Franchise Tax gross increased 56 percent in January, but remain 5.2 percent below the total reached after seven months of FY 2015. The decline in this tax is largely attributable to the phase-out of Missouri’s corporate franchise tax.
- GR Refunds have increased 25.3 over the first seven months of FY 2016. This is the major negative result from the January collection period. February and March are the peak of the GR Refund season. Growth in refunds or lack thereof during these months will play a key role in determining the state’s fiscal health as FY 2016 comes to an end.