Earlier warning about revenue proves accurate

JEFFERSON CITY, Mo. -- A warning issued 12 years ago this month by two university economists has become a reality for Missouri's state officials: Annual available tax revenue will actually decline, leaving no room for essential or new programs.

State revenue director Carol Fischer has just announced that Missouri's general revenue collections declined 3.5 percent during Fiscal Year 2002, which ended June 30, over those for FY 2001. This total reflects tax refund payments and those mandated by the Hancock Amendment.

Although year-to-year declines in any single category of tax collections occur regularly, the state has never experienced an actual dollar loss from one fiscal year to the next.

The actual loss in net general revenue collections in FY 2002 over FY 2001 was $222,962,716, while the loss in total collections, minus refund expenditures, reached $112,191,215. Tax refunds and Hancock Amendment payments in FY 2002 totaled $1,116,503, an increase of 11.01 percent over FY 2001.

Any hope that the final month of the fiscal period would prevent the revenue red ink disappeared when net collections for June dropped 13.68 percent. Although several smaller-yielding tax sources gained during the month, the state's two largest sources -- sales/use and individual income taxes -- proved to be losers, with sales/use collections dropping 7.26 percent and individual income taxes revealing a decline for the month of 4.26 percent.

The July 1990 review and forecast of state spending and revenues was conducted by Charles Levin, then professor of economics at Washington University and Donald Phares, then professor of economic and public policy at the University of Missouri in St. Louis.

This report, attempting to project the economic condition of state goverment in the future, alludes to "possible negative growth," which in non-academic terms simply means lower tax revenue from one fiscal year to the next.

The report also notes that Missouri's total 1987 expenditures of $7.1 billion, although large in absolute terms, ranked the state 47th in expenditures per capita.