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Federal Funds Have Driven Missouri’s Budget Surplus; Further Permanent Tax Cuts Would Be Irresponsible

Statement from Amy Blouin, President & CEO, Missouri Budget Project

For Immediate Release, August 22, 2022

While Missouri is fortunate to have the budget reserves it currently does, this situation is temporary, and is a result of short-term federal funds. Quite simply, relying on the current surplus to fund permanent tax changes isn’t fiscally sustainable, or responsible, and will ultimately require cuts to state services like we saw in Kansas a few years ago.

In response to COVID, the federal government provided billions of dollars to Missouri, which bolstered the state’s economy and state revenue. Those extraordinary federal funds also allowed the state to stockpile a large amount of general revenue. Governor Parson was reluctant to use short term federal funds for ongoing needs, and the same logic applies here.

Moreover, while Governor Parson focused on how certain struggling individuals might pay less in taxes, the proposals discussed today remain heavily weighted to benefit the wealthiest Missourians. What’s more, it would not benefit the thousands of Missourians who earn too little money to owe income taxes – even though they pay more in overall state and local taxes than their wealthy counterparts. In fact, in Missouri, the lower your earnings, the more you pay in state and local taxes as a share of what you make: according to the most recent analysis, Missouri families in the bottom quintile of income pay 9.9% of their income in state and local taxes, compared to just 6.2% for the wealthiest 1% of families.

Missouri can’t afford to enact the failed Brownback tax failure that devastated Kansas’ budget. With Brownback’s policies, a budget surplus became a deficit, lawmakers had to make repeated and drastic cuts to state services, and the state’s economy suffered. After years of budget crises, that state’s Republican legislature reversed course and repealed most of the tax cuts. Because of the Hancock amendment, Missouri policymakers won’t have that option.

Missouri is the Show-Me State, and the Kansas failure showed us the devastating results of these kind of cuts to schools, public safety, healthcare, and the many other fundamental state services all of us rely on.


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