Missouri income tax revenue up 12.5 percent in October

JEFFERSON CITY, Mo. -- State tax collectors enjoyed another strong month in October, as the state's net general revenue rose 12.5 percent over the same month a year ago.

The increase was partly due to strong individual and corporate income tax collections, along with a reduction in tax refunds. Sales tax revenue also was up from October 2004, the state Office of Administration said Friday.

"We're clearly seeing an economic upturn that correlates with increased jobs and the employment picture," said Michael Keathley, the administration commissioner for Gov. Matt Blunt.

Individual income tax collections of $318 million in October were up 6.4 percent over last year, while corporate income and franchise taxes of $54 million were up 66 percent from October 2004.

Sales and use tax collections totaled nearly $137 million in October, an increase of 3.8 percent over last year.

Keathley said a strong job market helped boost income tax revenue. October employment figures aren't available yet, but Missouri's seasonally adjusted unemployment rate of 4.8 percent in September was nearly a full percentage point better than in September 2004.

Keathley cautioned that high energy prices during the winter could put a damper on consumer spending, thus holding down the growth in state sales tax collections. The energy costs also could mean higher operating expenses for some businesses, potentially affecting the state's income tax collections.

Despite the strong tax collections, the state is not flush with money.

On Oct. 19, Blunt's administration borrowed $50 million from the budget reserve fund to help pay the state's expenses, raising the total amount borrowed this fiscal year to $250 million, said State Treasurer Sarah Steelman. That money must be repaid with interest to the reserve fund by May 15.

Through the first four months of the state's 2006 fiscal year, net general revenues totaled more than $2.2 billion -- up 6.4 percent compared with the same period last year.

Individual income tax collections in excess of $1.4 billion were up 7.5 percent for the fiscal year to date, while corporate taxes of $198 million were up 50 percent.

Sales and use tax collections of $639 million were up 1.8 percent for the fiscal year to date.

Steelman's office said the sales tax figures will appear lower than they otherwise would this year, because vehicle sales taxes that previously were deposited into general revenues are now beginning to be transferred to roads under a constitutional amendment approved by voters last year. Without that amendment, sales tax collections for the general revenue fund would have risen 3.5 percent so far this fiscal year, Steelman said.

Keathley said the growth in sales tax receipts also is likely to lag behind the economy because Missouri's tax structure doesn't adequately account for sales of some services or items over the Internet.