STATE REVENUE OVER OFFICIAL ESTIMATES

JEFFERSON CITY -- When Missouri's budget experts began predicting in the fall of 1993 the state's revenue for a fiscal year that wouldn't end until last Friday, they were cautious. Missouri had just experienced the worst floods in its history. To make matters worse, the state was still recovering from a recession that had produced the second largest number of bankruptcies in the last decade.

The estimates on how much the Department of Revenue would collect in its general revenue fund, which provides the largest percentage of income for state government, were conservative. Experts in both the executive and legislative branches in Jefferson City knew the state would recover from the flooding and recession, but they were unsure just how rapid it would be.

When Gov. Mel Carnahan presented his fiscal 1995 spending recommendations in January 1994, the consensus of Missouri's number crunchers was that the state could count on about a 7 percent increase in its general revenue collections. To be on the safe side, the governor presented a budget calling for a 5.8 percent increase in general revenue, or a total of $4.9 billion.

The consensus figure was a hefty increase when compared to the tight budgets and slim 3 and 4 percent increases during the recession in the 1980s. During this period, the state was paying out huge sums for desegregation programs in both St. Louis and Kansas City, plus it was receiving a large number of unfunded mandates from Congress, while attempting to balance the budget with general revenue collections that were adversely affected by a nationwide business downturn.

When the state finally closed its books on fiscal 1995 last Friday, the figures showed the state had not only collected a record-breaking $5.4 billion for its general revenue fund, it had exceeded the earlier, more conservative estimate by 17.2 percent.

The single tax source making the largest contribution to the general revenue fund was the individual income tax, which in fiscal 1995 registered a 16.39 percent increase from the previous fiscal period. The total collections from personal income taxes reached $2.9 billion setting another record.

Reflecting improved business conditions and a rapid recovery from the 1993 floods, sales tax and use tax collections were the second largest source for general revenue and showed a 6.94 percent increase from fiscal 1994, with collections reaching $1.5 billion. The third largest source of general revenue comes from the corporate income tax, which in fiscal 1995 was 45.41 percent higher than the previous period. The total was $422.1 million.

Interest earned by the state, which has gradually increased as Jefferson City took advantage of higher interest rates nationally, showed the largest percentage gain in the last fiscal period, registering an increase of 101.5 percent to $39.7 million.

None of the state's 10 categories that feed into the general revenue fund registered a decrease last year, although the state liquor tax gained only 0.17 percent, and the state's beer tax was up only 0.61 percent for the same period.

State officials are hesitant about predicting the future course of revenue collections, particularly following a second flood this summer, a slowing trend in the overall economy and some predictions of a recession around the corner. No one is predicting the kind of revenue growth for fiscal 1996 that the state enjoyed in the year just ended.