Budget chief - State tax funds drop dramatically

JEFFERSON CITY, Mo. -- State tax revenues fell sharply during the first few weeks of January, causing concern for state budget officials as Missouri enters its annual income tax season.

"For the first three weeks of January, we have seen a dramatic drop in general revenue collections. It's a little disturbing," state budget director Brian Long told the Senate Appropriations Committee on Monday.

The state's 2002 fiscal year started last July and runs through the end of June.

Through Dec. 31, state tax revenues had grown 5.2 percent over the first six months of the previous fiscal year, Long said. But after the first three weeks of January, the year-to-date growth rate had dropped to 2.6 percent, he said.

Because of the economic recession and poor stock market, budget officials had expected state revenues to fall in the spring, when most Missourians file their individual income tax returns. Overall, the state is expecting a 0.6 percent decline in tax revenues compared to fiscal 2001.

Earlier than expected

But the revenue decline is coming earlier than expected.

The chief reason is a reduction in individual income taxes from those who make quarterly payments based on estimates -- people such as retirees or the self-employed, Long said.

"We have had a very rugged January -- I don't know if it's a trend or not," Long said.

Budget officials hope the revenue reduction is simply occurring sooner rather than later and that spring revenues won't be as bad as projected. But the January decline could also foreshadow worse things to come.

Little confidence

The revenue figures didn't provide much confidence to some senators, who were getting a briefing on Gov. Bob Holden's proposed budget for the 2003 fiscal year starting July 1. A year ago, lawmakers passed the 2002 budget based on projected revenue growth of 5.6 percent. But that twice was revised downward, ultimately to the current estimate of a revenue decline.

For the 2003 fiscal year, budget forecasters are projecting 2.3 percent growth in state tax revenues over this .