Missouri

Missouri tax revenues declining in first months of fiscal year, raising concerns • Missouri Independent

Published

3 months ago

September 17, 2024

Missouri tax revenues declining in first months of fiscal year, raising concerns • Missouri Independent

Missouri’s general revenue has lagged behind inflation for two years in a row. And with that gap widening, the next few months could determine whether state revenue will see a year-over-year decline for the first time in more than a decade.

“September is a good sort of bellwether one for us, because that’s where we get quarterly payments from both individuals and corporations,” Dan Haug, Gov. Mike Parson’s budget director, said in an interview with The Independent last week. “There’s not a lot of significant due dates in July and August, so we try not to even really look at what trends are until we get through the end of September.”

Through Friday, general revenue receipts are down more than 3% compared to the same period in fiscal 2024.

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Revenue grew 2.74% in fiscal 2023, while inflation was calculated at 3% by the federal Bureau of Labor Statistics. In fiscal 2024, which ended June 30, revenue grew 1.47%, while inflation was again pegged at 3%.

Missouri isn’t the only state suffering from sluggish revenue growth, according to a recent report from Pew Charitable Trusts. During the COVID-19 pandemic, many states — including Missouri — enjoyed a surge of revenue that drove new spending and tax cuts.

Missouri enjoyed double-digit revenue growth for two years, a trend that ended in early 2023. Nationally since the start of fiscal 2023, the report states, state government revenues have fallen below inflation rates and below the growth trend seen before the pandemic. That is the first time in 40 years that has happened outside of an economic recession.

“There’s less fiscal flexibility, but it’s unclear whether states will be really under strain or not, but it’s going to be more difficult than before,” said Alexandre Fall, a senior associate with Pew who was the main author of the report.

As they wrote this year’s budget in the spring, the Republican-led legislature tried to limit ongoing general revenue spending to the anticipated revenue of $13.2 billion. But even after Gov. Mike Parson vetoed $1 billion, the budget anticipates spending $15.1 billion in general revenue, dipping into surpluses accumulated during the surge in 2021 and 2022.

House Budget Committee Vice Chairman Dirk Deaton, a Republican from Noel, said lawmakers must continue to limit ongoing spending to new revenue.

“If revenue is lower in the future we will have to look carefully at core spending items to make sure the state budget is on a sustainable path and Missouri is well positioned to balance the budget year after year,” Deaton said.

State revenue was down in the early part of fiscal 2024 but ended up with modest growth, Deaton noted.

State Rep. Peter Merideth of St. Louis, the ranking Democrat on the Budget Committee, said future legislatures should commit to meeting state needs instead of hanging on to surpluses. Merideth is not returning to the House due to term limits.

Any spending cuts tied to the flow of revenue, rather than to the state’s total available resources, will fall heavily on education programs, Merideth predicted.

“We will cut education further,” he said. “Maybe it’s on the transportation line, or maybe it’s somewhere else, and we will cut higher education because those are about the only two slightly discretionary places that the legislature has to cut with large sums of money.”

Sitting on a surplus

On June 30, the general revenue fund held $4.8 billion, down $960 million from the balance a year earlier. That is still the third-highest year-end balance in state history.

Some of that money is committed to multi-year building projects, such as a $300 million mental health hospital in Kansas City, but most of it is unencumbered.

Other surplus money was stashed elsewhere. The state is holding $2.4 billion transferred from general revenue for major projects including rebuilding Interstate 70 and expanding the state Capitol Building.

Another $1.8 billion was held in accounts that can be spent like general revenue.

The question for lawmakers and state officials is how to spend from surplus funds without exhausting them, said Liz Farmer, a fiscal policy writer at Pew.

“States are spending down balance dollars at a rapid rate,” Farmer said.

The budget presented by Parson in January anticipated an unencumbered general revenue balance of $1.9 billion on June 30, 2025.

Along with major projects, in the past two years lawmakers have used the surplus to fund smaller items in their districts. Parson has vetoed many of those items as he cut $550 million from the budget in 2023 and $1 billion approved this year.

Future lawmakers need to resist the urge to earmark funds for their district, Merideth said. Stagnant or declining state revenue should mean extra funds are reserved for filling shortfalls in important programs.

“We have a surplus to work with in the short term but we haven’t hit an economic crash, which at some point will happen in the future,” Merideth said. “That’s when we’re going to be in real trouble.”

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During the recession that began in 2008, revenues fell from about $8 billion annual to $6.7 billion a few years later. Haug, who has worked for both the legislature and the executive branch, said the state is in good shape in case of a recession.

“We’ve got a very healthy fund balance to help us get through a minor downturn, if there is one, although I’m not sure that there even will be one,” Haug said. “We’re in a lot better spot to weather this kind of stuff than we’ve been probably in any of the time I’ve been here.”

There are structural changes in the cost of state government that are permanent, thanks to the surge of revenue.

The pay of every state worker hired before the beginning of 2022 has increased at least 20.7% under pay raise plans proposed by Parson. Some workers have received much larger percentage boosts, from a longevity pay plan approved this year, increases in night pay for workers in prisons, mental health hospitals and other custodial institutions and approval of a minimum salary of $15 an hour for all state jobs.

With state agency staff vacancy rates averaging more than 10%, the cost of running the state will go up as workers are added.

“Increased state employee pay and salaries, as well as permanent tax cuts, were two very popular policy choices that were made across states and were made in Missouri,” Fall said. “But now that we’re seeing all this excess revenue kind of pull back, and states are seeing decreased flexibility, it’s unclear what comes next.”

Missouri has passed two large permanent tax cuts, with income tax rate cuts enacted in a special session in 2022, and a bill exempting Social Security benefits from state income tax in 2023.

Together, that legislation will reduce state revenue by $1 billion or more annually. The next step in the phased-in tax cut passed in 2022 will take effect on Jan. 1, cutting the top income tax rate to 4.7%.

Those cuts will generate economic activity that will sustain revenues, Deaton said.

“Missouri has made very clear through our tax policy we are more interested in growing the bank accounts of the people as opposed to growing the amount of monies coming to Jefferson City,” he said.

With a new governor coming into office in January and new legislative leadership, tapping the surplus could be a temptation.

“Whoever is sitting in that governor’s mansion and whoever is sitting in the budget committee chair will make a significant difference and it’s hard to predict,” Merideth said.

Revenue picture

In the last full fiscal year before the pandemic, the Missouri general revenue fund took in $9.6 billion. In the fiscal year that ended June 30, the total was $13.4 billion, 1.47% more than in the previous year.

Two of the main sources of state revenue — personal and corporate income taxes — saw a decline in collections in fiscal 2024. So far this year, the decline in revenue received so far has extended to sales tax collections.

The surge in revenue coincided with the highest inflation rates in 40 years and sales tax growth led the way, thanks to consumers spending federal pandemic relief aid along with higher wages and prices.

There is no evidence in the Missouri economy that would show the current decline in sales tax collections is anything but temporary, Haug said.

“People may be pulling back a little bit temporarily to pay off debt and things like that, but eventually the fundamentals are what’s going to drive it,” Haug said.

Missouri added 62,400 jobs from July 2023 to July 2024 and personal income grew at an annual rate of 6.7% in the first quarter of the year. State GDP is up 1.6% on an annual basis and inflation, while slowing, continues, with prices nationally about 2.5% higher than a year ago.

“Long term, that’s what’s going to drive our revenues, and I think that’s still what’s going to drive our revenues,” Haug said.

With the end of pandemic restrictions, consumers are spending more on non-taxed services and travel, Farmer said, as well as substituting cheaper goods when they make purchases.

Missouri estimates its revenue each December for the remainder of the fiscal year and the coming year. A longer horizon for budget outlooks would make the state better prepared for possible trouble, she said.

“That is one of our key benchmarks for state fiscal health, and something that could be really helpful for assessing what these impacts on personal income tax and those cuts look like for the state down the line for revenue,” she said.

A longer-term outlook may be helpful, Deaton said, but experience shows that the short-term estimates aren’t particularly accurate.

“There have been times they were very close and other years when estimates missed badly,” Deaton said. “The further you extend out, the greater the margin of error.”

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Missouri

9 Most Neighborly Towns In Missouri

Published

35 minutes ago

December 25, 2024

Press Room

Missouri, although landlocked, is a Midwestern paradise full of gems, spectacular history, and an amazing culture. These elements enchant visitors who come to the state to experience Midwestern flavor and relax. The big cities like Springfield and Kansas City, no doubt, outshine the others and sit in the front line as options for visitors. However, there are also quaint, laid-back, scantily populated towns across the state where tourists can relish a sense of oneness and communal life. From Arrow Rock, with a population below 100, to the stunning Rocheport on a bluff, discover nine charming, close-knit, and neighborly towns in Missouri to visit.

Rocheport

Cyclists at Rocheport station on the Katy Trail. Image credit marekuliasz via Shutterstock

Rocheport is a close-knit town of just around 200 people, where everyone is valued and recognized. Although small, the town is full of adventures and memorable experiences. Adventure buffs and cycling enthusiasts can embark on the Katy Trail near the town to cycle and relish the charming scenery of a quintessential Midwest state.

Relaxed visitors can taste wines and enjoy meals at Les Bourgeois Winery and Vineyards or enjoy picnics at the park’s A-frame Wine Garden on the Manitou bluffs overlooking the Missouri River. More adventures like boating, kayaking, and fishing are available at the Missouri River, and for a touch of history, visitors can head to the Friends of Rocheport Historical Museum to explore its exhibits, including historical documents from the area’s past.

Ste. Genevieve

Ste. Genevieve sits along the Mississippi River and was founded by French Canadian colonists in 1735, making it the first permanent European settlement West of the Mississippi. Although it hosts almost 5,000 people, the town still sets the stage for visitors to experience communal bonding and a range of historic and natural attractions. For starters, it is home to the Ste. Genevieve National Historic Park hosts a large collection of French colonial architecture and other Historic buildings, such as the Green Tree Tavern.

For outdoor recreation, tourists can head to the Hickory Canyons Natural Area to hike on magnificent box canyons, sandstone cliffs, and creeks. Pickle Springs Natural Area is an alternative option, featuring a two-mile trail that winds through and bypasses creeks, ravines, bluffs, and small waterfalls. Later, art lovers can chill at the Ste. Genevieve Art Center and Museum exploring its local collection of artworks.

Hermann

Hermann is a lovely small town founded by German immigrants and steeped in German roots along the Missouri River. This warm and welcoming, close-knit community of around 2,000 people boasts a few attention-grabbing attractions for locals and visitors. The Deutschheim State Historic Site is a worthy first mention as it reflects the town’s German roots, which date back nearly two centuries. It features several brick homes including the Pommer-Gentner house (1840) and Carl Strehly house (1842) where visitors can experience the daily life of the town’s early German immigrants. The Hermann Farm Museum and Hermann Historic Museum are also great places to delve into the town’s early days as a German settlement through historic buildings and several exhibits.

In the meantime, unwind and have fun at the Hermann Riverfront Park by fishing, boating, kayaking, and canoeing on the Missouri River or hiking along the Riverfront Walking Trail. When hungry, head to the restored Tin Mill Restaurant to enjoy German specialties and tasty steaks.

Boonville

Boonville is a tightly bonded town of around 7,800 people in Cooper County, with plenty of things to see and do. The town sits atop a wooded bluff overlooking the Missouri River, where tourists can enjoy boating, canoeing, fishing, kayaking, and picnicking experiences. For those who love to cycle, the town hosts a part of the Katy Trail, a 240-mile trail, and a state park for cycling with gorgeous views.

Away from adventures and nature, history buffs in town can head to the Historic Depot District to explore the Rivers, Rails, & Trails Museum, Mitchell Antique Motorcar Museum, and the Katy Trail Railroad Bridge, all of which tell stories of the area’s early days. Afterward, grab a delicious pizza for lunch at Breadeaux Pizza.

Excelsior Springs

Excelsior Springs is a town built on mineral springs that grew into a community of lovely and friendly people. Today, visitors here can visit the Hall of Waters that once piped mineral water from the town’s several springs into one of the world’s longest mineral water bars for the community to bathe. Similarly, visit the Superior Well and Pagoda (1901) to marvel at the historic spring under a wooden pagoda structure, which is the last remaining mineral water well in the town.

When hungry, Ray’s Diner is an amazing spot to enjoy lunch, with views of artifacts on its walls. Don’t forget to delve into the town’s historic days and the rise of its mineral springs at the Excelsior Springs Museum, featuring a vast collection of artifacts and artworks. Afterward, head to the Fishing River near the town to immerse in a scenic natural ambiance.

Branson

Branson is a town in the Ozark Mountains, renowned as the Live Entertainment Capital of the World, while its friendly, close-knit aura remains a draw. Here, visitors will get to see and explore the Titanic Museum, a replica of the iconic ship and iceberg filled with hundreds of artifacts related to the original ship’s tragic journey on the Atlantic. The town also hosts Ripley’s Believe It or Not, a quirky attraction featuring a collapsing structure and hundreds of unusual artifacts. More interesting attractions in this town include – the Runaway Mountain Coaster, the Track Family Fun Park, and the 1880s Silver Dollar City amusement park. All of these attractions are incredibly exciting and unending.

There are also several museums in town, such as the Dinosaur Museum and Prehistoric Fossils. When it comes to dining and shopping, the town is chock-full with numerous options, including Saltgrass Steakhouse (for delicious steak lunch) and the Grand Village Shops.

Arrow Rock

Arrow Rock has just 60 residents, and no community could be more closely bonded. But beyond its pronounced sense of oneness, this Saline County town is a treasure trove of history and is entirely designated a National Historic Landmark known as the Arrow Rock Historic District. Visitors here can head to the Arrow Rock State Historic Site to explore some of the town’s most iconic attractions, including George Caleb Bingham House (1837), J. Huston Tavern (1834), the Courthouse, and Old Jail.

The site sits on a 167-acre area and also features a fishing lake, a visitor center & museum, a picnic area, and a short hiking trail. Elsewhere, the Arrow Rock Lyceum Theatre has been entertaining visitors with shows and musicals for over 55 years, making it the oldest of its kind in Missouri.

Van Buren

Van Buren is a charming, laid-back Ozark community of around 800 people, where everyone sees each other as family. The town lies along the Current River and next to Mark Twain National Forest, giving its residents and visitors less crowded options when they decide to enjoy nature. For starters, the beautiful and lucid waters of Current River offer recreational activities like boating, fishing, rafting, tubing, kayaking, and canoeing.

Big Springs is just four miles from the town and is one of the largest natural springs in the world. Here, tourists can hike, fish, and boat, and enjoy lunch at its restaurant. For something different, head to the Missouri Down Under Adventure Zoo to see and interact with animals such as Kangaroos, birds, and lemurs and tour the Current River Cave. Enjoy a movie later at 21 Drive-in Theatre to relax.

Carthage

Carthage is a small town of about 15,000 people with many things to love, including its close-knit community character and its reputation as America’s Maple Leaf City. Historically, this town was the site of the Battle of Carthage, the first full-scale battle of the Civil War. Today, the Battle of Carthage State Historic Site preserves its wartime history and is worth visiting. History lovers can also learn more about the war at the Civil War Museum through various war artifacts and exhibits.

Away from history, the town invites visitors to the Precious Moments Chapel and Gardens to explore beautiful paintings, stained glass windows, and figurines that serve as backdrops for iconic pictures and picnics. For those who want to enjoy a movie while in town, the Route 66 Drive-in Theatre is a great stop. Also, just walking through this town, especially in the fall, is incredibly satisfying as enchanting colors are on display everywhere.

Find absolute serenity, comfort, and the true spirit of camaraderie across these small towns in Missouri, where it is possible to know at least most of the residents. In some towns like Van Buren and Arrow Rock, it is possible to know everyone as these towns share unbreakable bonds and live like one big happy family. Plus, they offer blissful experiences with natural, historical, and cultural attractions, making them anything but boring. In a world where neighbors in most cities around the world live like strangers, these Missouri towns are the perfect places to recline if you want to feel like part of a large extended family.

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Missouri

‘Enough is enough’: Missouri voters form bipartisan group to quash Republican initiative petition changes

Published

10 hours ago

December 25, 2024

Press Room

‘Enough is enough’: Missouri voters form bipartisan group to quash Republican initiative petition changes

JEFFERSON CITY, Mo. (KY3) – Missouri Republican lawmakers have once again put forth efforts to curtail the process for citizen-led ballot initiatives following successful campaigns to enshrine abortion rights, raise the state’s minimum wage, and create a legal sports wagering market.

In response, a newly formed political group called the “Respect Voters Coalition” is sponsoring a 2026 initiative to prevent state officials from meddling in the process altogether.

The group’s argument is rooted in the very first section of the first article of the state’s Constitution, which reads as follows:

“[We declare] that all political power is vested in and derived from the people; that all government of right originates from the people, is founded upon their will only, and is instituted solely for the good of the whole.” – Missouri Const. of 1875, Art. I, Sec. 1.

Ben Singer, who leads Show Me Integrity, co-founded RVC to oppose efforts to roll back the IP process. He noted that both parties have pushed this when they were in the majority.

“When Democrats were trying to attack the citizens initiative process because they didn’t like the Conservatives, who also used the citizens initiative process, Governor Ashcroft vetoed the Democrats’ attack on the ballot initiative process,” Singer said.

Ashcroft issued that veto in June 1992, writing the following in his explanation:

“It is through the initiative process that those who have no influence with elective representatives may take their cause directly to the people. The General Assembly should be reluctant, therefore, to enact legislation which places any impediments on the initiative power which are inconsistent with the reservation found in the Constitution.” – Gov. John Ashcroft, Veto Message, June 27, 1992.

Efforts to reform the state’s initiative petition process consumed much of the 2024 legislative session, including days-long filibusters by a faction of 6 Republicans demanding the issue be given priority and Democrats working to block it from passage. The process arguably deprived the House and Senate of sufficient time to review and amend the $51 billion state budget.

“These politicians who’ve taken an oath to protect the Missouri Constitution need to be reminded of that, and so that’s why groups and citizens across the state, in unbelievable momentum I’ve never seen before, are banding together to say enough is enough, and we are going to stop politicians from attacking the will of the people once and for all,” Singer said.

The Missouri House and Senate will convene on January 8 to begin the 103rd General Assembly’s first regular session.

To report a correction or typo, please email digitalnews@ky3.com. Please include the article info in the subject line of the email.

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Missouri

Missouri voters form bipartisan group to quash Republican IP changes

Published

17 hours ago

December 24, 2024

Press Room

Missouri voters form bipartisan group to quash Republican IP changes

ST. LOUIS (First Alert 4) — Missouri Republican lawmakers have once again put forth efforts to curtail the process for citizen-led ballot initiatives following successful campaigns to enshrine abortion rights, raise the state’s minimum wage, and create a legal sports wagering market.

In response, a newly formed political group called the “Respect Voters Coalition” is sponsoring a 2026 initiative to prevent state officials from meddling in the process altogether.

The group’s argument is rooted in the very first section of the first article of the state’s Constitution, which reads as follows:

Ben Singer, who leads Show Me Integrity, co-founded RVC as a measure to push back against efforts to roll back the IP process which, he noted, have been pushed by both parties when they’ve been in the majority.

“When Democrats were trying to attack the citizens initiative process because they didn’t like the Conservatives also used the citizens initiative process, Governor Ashcroft vetoed the Democrats’ attack on the ballot initiative process,” Singer said.

Ashcroft issued that veto in June 1992, writing the following in his explanation:

Efforts to reform the state’s initiative petition process consumed much of the 2024 legislative session, including days-long filibusters by a faction of six Republicans demanding the issue be given priority and Democrats working to block it from passage. The process arguably deprived the House and Senate of sufficient time to perform a final review and amendment of the $51 billion state budget.

The Missouri House and Senate are set to convene on January 8 to begin the First Regular Session of the 103rd General Assembly.

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