Income tax revenue balances state budget

JEFFERSON CITY, Mo. -- Despite earlier concerns, state government now appears likely to close out its fiscal year with a balanced budget, thanks partly to strong individual income tax collections.

Figures provided Friday by the state treasurer's office show the state's net general revenue was up almost 4.2 percent through Thursday, compared with the same period last year. That is comfortably above the 3.8 percent forecast upon which the state budget had been based.

Missouri's fiscal year ends June 30.

"The news is good -- for the first time in a long time," said Mark Hughes, a spokesman for State Treasurer Sarah Steelman.

Cash flow troubles had forced the state to dip into reserves and delay expenditures.

The state borrowed $200 million from its reserve fund in October and an additional $50 million in March. In February, Gov. Matt Blunt said he was delaying about $100 million in monthly payments to state universities. And in April, the governor's office said it would delay at least $90 million in federal and state Medicaid payments to hospitals.

But state revenue has improved enough to release all of that money.

The state repaid nearly $253 million, including interest, to the reserve fund on May 12, Hughes said. Hospitals will be paid their delayed money June 20, Blunt spokesman Spence Jackson said Friday. And universities will get their delayed payments no later than June 27, Jackson said.

Jackson said the Office of Administration plans to release its summary of May revenue on Monday. A separate state treasurer's report provided Friday shows that net general revenue was up 27 percent in May compared to the same month in 2004.

Compared with last year, individual income tax collections were up 10.6 percent for May at $368 million, and corporate income and franchise taxes were up 15.1 percent at $17 million.

Sales and use-tax collections, which had been relatively flat in April, rose 4.7 percent over last May, for a total of $196 million last month, according to the treasurer's report.

The combined tax figures provide a good economic indicator of the state's financial health, Hughes said.

At one point this spring, Blunt's administration was concerned that it might have to withhold money from state agencies. But Office of Administration commissioner Mike Keathley said last month that April's stronger-than-expected income tax returns increased the likelihood that the state would meet its revenue forecast.

Part of the reason that May provided such a boost in state income tax collections, compared to 2004, is that the Department of Revenue paid out income tax refunds more quickly this year. The treasurer's office shows the state paid out $107 million in various forms of refunds in May, compared to $170 million in May 2004.