Missouri tax revenues coming in worse than expected; budget director says more cuts needed

Missouri revenues down, more spending cuts planned

JEFFERSON CITY, Mo. — Public schools took another funding hit Thursday as Gov. Jay Nixon cut more than $45 million from Missouri’s budget to offset worse-than-expected tax collections.

The governor’s latest actions bring to more than $900 million the total that has been vetoed or cut from this year’s $23.7 billion budget for state operations and capital improvements.

The spending cuts generally are attributable to the sluggish economy. As people earn less and buy less, they also pay less in state income and sales taxes, which comprise the bulk of Missouri’s budget.

“Revenue is coming in even worse than anyone could have expected,” said Linda Luebbering, the budget director for Nixon’s administration.

April tax collections are down 19 percent from the same point last year, and collections are down 13.8 percent so far for the 2010 fiscal year that runs through June 30.

The average income tax payment has fallen nearly 30 percent this year compared to last year, while the average income tax refund has risen 8 percent, Luebbering said. State sales tax collections have declined for 10 straight fiscal quarters.

One of the largest budget cuts announced Thursday is an additional $8 million reduction in state aid to public school busing, bringing the total cut for the school year to $12 million. That equates to about 7 percent of the total busing aid that schools were due to receive.

Nixon also cut an additional $4.9 million — on top of $2 million in previous cuts — to the Parents as Teachers early childhood development program. That equates to a total cut of more than one-fifth of the nearly $30.9 million the program had been budgeted to receive.

Thursday’s cuts include a reduction in state subsidies for biodiesel plants and the St. Louis mass transit system. Nixon’s administration noted that voters in the St. Louis area recently approved a tax increase for their transit system.

Also cut was an additional $8.5 million in payments toward the health care benefits of future state retirees. Nixon now has cut a little over half of the $42.1 million that had been budgeted for those payments. Luebbering said the state is making the payments “at a slightly slower pace.”

As Nixon’s administration announced the additional 2010 budget cuts, House and Senate negotiators began work Thursday on a final version of next year’s budget, which must be passed by May 7.

The legislative negotiators agreed to make additional cuts to both the Parents as Teachers program and public school transportation in the 2011 budget.

Parents as Teachers offers developmental health screenings for infants and preschoolers and sends trained workers into parents’ homes to provide child-rearing instruction. Next year’s funding would be cut to less than half of what the program was supposed to get this year.

To offset the state funding cut, lawmakers are considering legislation that could require some families to pay a portion of the costs for the program if there are no developmental delays found in their children after six visits. How much parents would pay and how billing would be handled would be left to the Department of Elementary and Secondary Education to determine.

When the legislative session began in January, Nixon proposed a nearly $23.9 billion operating budget for next year. But he said in March that at least $500 million needed to be trimmed from that because of falling state revenues and uncertainty over an extension of federal stimulus money. Lawmakers appear likely to fall short of that $500 million goal.

“All we’re doing is passing an inflated budget,” a frustrated Sen. Tim Green, D-St. Louis, said during a break in Thursday’s budget negotiations.

Given the decline in state revenues, Luebbering said the governor likely would have to make additional, significant cuts to the 2011 budget that lawmakers are crafting. Those cuts likely would come early in the new budget year that begins July 1, she said.