State and federal tax cuts will cost Missouri more than $200 million this year

Apr 7, 2018
Originally published on April 9, 2018 8:56 am

Missouri Budget Director Dan Haug says the state’s general-revenue income is expected to be enough to balance the budget for the current fiscal year.

That good news, though, is tempered by the impact of federal and state tax cuts that just began going into effect in January. Haug says those cuts will trim the state’s income by $109 million for the first six months of 2018, or $218 million for the entire calendar year.

“I think costs are generally under control,” the budget director said in an interview. “Revenues are right now on track where we thought they would be.”

Missouri's general-revenue income makes up only about a third of the state's overall budget. But general revenue pays for most of the state's programs, from education to social services. The other two-thirds of the state's budget is tied to federal money, or dedicated sources of money — such as the conservation sales tax — over which the General Assembly has little control.

Haug said the slight downturn in state general-revenue income that began in March is expected to continue for the rest of the fiscal year, which ends June 30.


The current state budget is based on projected growth of 1.9 percent for the entire fiscal year, compared to a year ago. That prediction is expected to remain true, in part because of the higher percentage increase in state income of 3.8 percent for the first six months of the fiscal year.

Haug said that state officials, including legislative leaders, were aware of the expected downturn when they revised the state’s expected income estimate months ago.

“We are in just a better cash position than we were in the past,” he said.

Tax refunds going out quicker

Haug added that the state is in good enough fiscal shape that tax refunds could be sent out earlier than usual this year.

He said that March’s income decline was due, in part, to a huge increase in tax refunds for the month. The refunds were almost 40 percent higher than those sent out in March 2017. The state had been criticized last year for its slow pace in sending out refunds. 

Haug said that estimates call for state income to grow by 2.5 percent during the new fiscal year that begins July 1. But that projection does not include a new round of state tax cuts now being considered by the General Assembly.

The state tax cuts that already are going into effect will increase each year that Missouri’s income increases by at least $150 million a year.

Those state cuts, approved in 2014, are expected to cost the state at least $160 million this calendar year.

The federal tax cuts approved in December should cost Missouri about $58 million this year, the budget chief said.

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