Despite an income downturn in July, Missouri budget director Dan Haug says the state is starting its new fiscal year in stronger shape than it has seen in years.
That’s because the fiscal year that ended June 30 saw a last-minute surplus of $350 million that is providing an income cushion.
So unlike his recent predecessors, Gov. Mike Parson hasn’t had to impose additional spending cuts.
“It’s sort of nice not to have any spending restrictions in place as the fiscal year starts,” Haug said. “I’m starting my third year as budget director, and I think this is the first year we haven’t had to immediately do spending restrictions.”
The state’s income in July dropped by 5.3 percent, compared to July 2017. That’s largely due to a decline of almost 9 percent in the state’s revenue from individual income taxes.
Individual income taxes provide about 75 percent of Missouri’s general revenue – the money used to pay for most state government operations. But Haug said his office will be concerned only if the income-tax decline continues for several more months.
In contrast, state sales-tax income was up by almost 10 percent in July, compared to July 2017. That means more people were spending money.
Recent state and federal tax cuts are costing the state close to $220 million dollars a year. But Haug says income growth has so far softened their impact.
Overall, the last fiscal year’s surplus helps a lot. “We can basically have flat growth this year and meet the revenue estimate,” Haug said. “ And that’s a nice place to be.”
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