Budget Project declares state in ‘reasonably good’ fiscal shape
While rapid refund growth remains a concern, key economic indicators for February remain positive for Missouri, according to Tom Kruckemeyer, chief economist with the Missouri Budget Project.
Individual income tax withholding and regular sales tax posted solid growth for the second consecutive month, Kruckemeyer said. In addition, general revenue refund growth slowed considerably.
“As always, the next three months are crucial as the peak season for both individual and corporate income tax filings is now upon us. On balance, the state revenue situation appears to be in reasonably good shape as we move into these crucial months,” Kruckemeyer said.
Perhaps the most significant development in February was a sharp deceleration in the growth of general revenue refunds, according to Kruckemeyer. For the month they rose only 2.5 percent, primarily due to individual income tax refunds growth of only 2.4 percent. In addition, February is a major refund month with $210.3 million in individual income tax refunds being paid out.
“Certainly, some decline in the general revenue refund growth rate had been anticipated as it was well above historical norms. Nevertheless, refund growth remains a matter of concern,” Kruckemeyer said.
For the first eight months of Fiscal Year2006, general revenue refunds totaled $616.9 million, 20.1 percent ahead of the $513.7 million that had been paid during the first eight months of Fiscal Year 2005. This increase is likely to moderate in the coming months, Kruckemeyer said.
Overall, Missouri general revenue collections in February totaled $646.2 million, 6.7 percent greater than in February of 2005. The Fiscal Year 2006 year-to-date growth rate is 7.6 percent.
Net general revenue growth rate in February was 9.7 percent and the net general revenue growth rate for Fiscal Year 2006 to date is 6.1 percent. The net general revenue growth rate was 5.7 percent at the end of January.
The Missouri Budget Project is a statewide, nonprofit, nonpartisan organization that informs the public about the state’s budgetary and tax policy options and their impact on low-income Missourians. A detailed report on revenue collections is available on its website www.mobudget.org.