JEFFERSON CITY - Missouri will have to make additional cuts on state spending if slower-than-expected revenue growth continues, according to State Budget Director Linda Luebbering.
The state released the August general revenue report for the 2015 fiscal year Thursday, which showed a 3.8 percent revenue growth rate from 2014. Democratic Gov. Jay Nixon's budget recommendations were based on an assumption of 5.2 percent revenue growth. The growth rate is also less than the 4.2 percent figure predicted by the General Assembly. Luebbering said the state will be approximately $100 million short of the revenue necessary to fund the budget if the 3.8 percent growth rate continues the rest of the year.
"We hope to get to 5.2 percent growth for the year," Luebbering said. "We knew more of that growth would happen later in the year, so the fact that we're not at 5.2 now is not overly concerning."
Luebbering described the revenue increase as "reasonable growth," but added it was "not where we need to be." She said Missouri is behind the pace it needs to right the ship after the state came up short of revenue projections last year. Missouri revenue declined by one percent during the 2014 fiscal year, in which total revenue was $308 million shy of Nixon's projections.
"We ended last year down one percent compared to the previous year, which is really why we need so much growth this year, because last year ended so poorly," Luebbering said.
Nixon has already vetoed or frozen hundreds of millions of dollars from the budget, pending an increase in revenue. But Luebbering said those withholdings are based on the 5.2 percent revenue growth assumption, so more cuts could be on the horizon.
"If nothing else changed, we would have to look at possibly doing some mid-year spending cuts," Luebbering said.
An increase in income and sales tax collections were responsible for the increase in revenue. Individual income tax collections rose 5.7 percent, or $80 million, while sales tax collections netted an increase of about $17 million at a 3.6 percent increase. Corporate tax collections fell three percent from last year, but Luebbering said that was to be expected because of corporate tax cuts made by the legislature.
"We're really looking for the individual income tax and the sales tax to be the ones that are going to be better this year," Luebbering said, "We're expecting corporate taxes to continue to be very sluggish because of tax cuts that already went into effect. We're hoping that the increase in income and sales taxes would offset that."
Luebbering said the Nixon administration is confident the growth rate will eventually reach the projected rate based on national economists' predictions that job and wage growth will increase by the end of the year.
Luebbering would not comment on what could be cut out of the budget if revenue growth continues to fall short of projections. She said Nixon generally makes decisions on what specific programs to restrict funding from after the state fails to meet revenue expectations.