If officials had not acted to keep the state afloat, Missouri would have been $100 million in the hole at the start of April, according to state financial documents obtained by The Associated Press.
Gov. Jay Nixon's director of budget and planning confirmed Monday that the delay in tax refunds and the borrowed money both were necessary for cash flow purposes. Those actions come on top of about $180 million in spending cuts previously made by Nixon's administration to keep the budget in balance.
"We're experiencing what we anticipated at this point of the year as far as revenues," said Nixon's budget director, Linda Luebbering. "They're down consistent with the gloomy forecast that we're going to have a 4 percent reduction in net revenues."
Other states, including Kansas, California and North Carolina, also have delayed tax refund checks this year because of cash-flow concerns.
Although Nixon's administration never publicized it, Missouri borrowed $175 million from its reserves in February and an additional $150 million in March, according to an April 2 cash flow analysis by Nixon's Office of Administration labeled as an internal draft.
Missouri began its 2009 fiscal year last July with $557 million in its budget reserve fund. The state constitution allows money to be withdrawn from reserves for cash-flow purposes so long as it is repaid with interest before May 16.
Such short-term borrowing is not unusual. The state has tapped reserves in six of the past seven years. But last year's borrowing, for example, simply built up the state's bank account balance rather than keeping Missouri's general revenue fund from hitting zero.
The financial documents show Missouri paid out about $81 million less in tax refunds from January through March than it did in the same quarter last year. A separate Department of Revenue document, also obtained by the AP, shows that individual income tax refunds accounted for about $65 million of that reduction.
Revenue Department spokesman Ted Farnan acknowledged Monday that cash-flow concerns are one reason that tax refund checks are being delayed. He said the agency gets updates about once a week from Nixon's budget office detailing how much money is available to be refunded to taxpayers.
"If there were refunds that was ready to go and we didn't have the money for a certain time period then, yes, we would have to hold that refund until we got the money," Farnan said.
Also contributing to the delay is a budget-cutting reduction in the number of temporary workers processing tax returns to 127 people this year instead of the typical 300, Farnan said.
Tax returns filed electronically, or ones from seniors and the disabled due tax credits, have been processed more quickly than traditional paper tax returns that are mailed to the state. Some of those paper tax forms have taken more than a month to process.
But now "there is a concerted effort to try and make a dent in some of those paper returns" that have been piling up, Farnan said.
The longer the state takes to process tax returns, the longer it earns interest on the money.
The state treasurer's office said Monday that Missouri is earning about a 2 percent return on its investment portfolio, meaning that $65 million would produce about $108,000 in interest over a month.
Taxpayers waiting until closer to the April 15 deadline to file their returns also many experience a delay in getting refund checks.
The Office of Administration's cash flow analysis projects $119 million in tax refunds to be paid in June -- well above the $67 million in refunds paid in June 2008.