State may get $245 million more than was budgeted

~ The governor said he will unveil plans for the tax revenue Wednesday.

JEFFERSON CITY, Mo. -- State government is taking in more money than expected, meaning elected officials will have an estimated $245 million more than was budgeted to either spend or save in the next six months.

Gov. Matt Blunt and legislative budget leaders announced the revised revenue figures Thursday, declaring the better-than-expected financial books the result of economic improvements they helped to spur with their policies.

But Blunt declined to say what he wants to do with the extra money, adding that those budget recommendations would be revealed next Wednesday with his State of the State speech.

The state's annual fiscal year runs from July 1 to June 30, and lawmakers pass the coming year's budget in early May, before the current budget ends. Because of that, state officials often make midyear adjustments to revenue projections.

The budget for the current 2006 fiscal year assumed the state's net general revenue -- made up largely of income and sales taxes -- would be less than $6.8 billion. The revised revenue estimate bumps up that figure to $7 billion, translating to a $245 million increase over the original budget.

So far, Blunt has announced only one spending recommendation for that money -- $6.1 million to help low-income residents struggling to pay winter heating bills.

If the new revenue projections hold true, the state would end its current budget year with a 4.9 percent growth rate over the 2005 fiscal year.

The newly released revenue projections also call for 4.5 percent growth in net general revenues for the 2007 fiscal year, compared to the adjusted 2006 projections. That means lawmakers, who are expected to begin work next week on the 2007 state budget, would have $564 million more in general revenues to work with than they did one year ago.

Some of that money is already pledged to be spent. For example, a new school funding formula that begins phasing in next year calls for a $137 million increase over the current year. The Medicaid health care program for the poor also could demand an increase of a couple hundred million dollars.

Blunt declined to say whether the new revenue projections would allow a funding increase for higher education, the creation of new state programs or the restoration of some of last year's spending cuts.

"These are great numbers, but it doesn't mean because we have good numbers that we can go back and dig ourselves into the hole that we are trying to get out of today," Blunt said. "We've got to make responsible budget decisions."

Actual state revenue figures for the first six months of the 2006 fiscal year are expected to be released soon. Through November, net general revenues were up almost 5 percent. That included 2.3 percent growth in sales and use taxes and 7.7 percent growth in individual income tax collections.

From January through November, Missouri employers added 28,000 jobs. Blunt attributed that partly to new laws that sought to lower business costs by imposing new restrictions on liability lawsuits and workers' compensation claims. He also cited new tax incentives enacted last year for certain employers.

But state Democratic Party spokesman Jack Cardetti cited Missouri's 5.6 percent seasonally adjusted unemployment rate in November, which ranked 40th in the nation.

"Gov. Blunt's rhetoric on Missouri's economy clearly does not match the facts," Cardetti said. "Gov. Blunt's policies have actually hurt Missouri's economy and made us less competitive."