Tax revenue up in February; Holden waiting on school funds

JEFFERSON CITY, Mo. -- State tax revenue continued to grow in February despite a significant rise in the amount of refunds to individual income taxpayers.

Missouri's net general revenue rose 4 percent in February over the same month a year earlier, and was up 5.4 percent through the first eight months of the 2004 fiscal year, which started last July, the Department of Revenue reported Friday.

Republican legislative leaders cited the revenue growth while renewing calls for Democratic Gov. Bob Holden to release appropriations withheld from education because of budget concerns.

Too soon to decide

But Holden said it is still too soon to decide whether to release the funding. His budget director, Linda Luebbering, said the state probably will need to wait until the April 15 tax filing deadline to get a good read on the state's finances.

When the fiscal year began, Holden withheld about $250 million -- mainly from education -- on the ground that the legislature's $17.8 billion operating budget was underfunded. He later released $83 million of the withheld appropriation to education because of an unexpected influx of federal money.

Republicans, citing an improving economy, have been urging Holden for several months to release the rest of the money.

But Holden's administration has expressed concern that the bulge in state tax revenue would diminish as Missourians claim the larger refunds they are entitled to under a federal tax-cutting package.

"Let me say here what I have said from the very start: I will release the withholding if and when it is fiscally responsible to do so," Holden said Thursday.

At the same event, House Speaker Catherine Hanaway, R-Warson Woods, called on Holden to release the money.

In February, the state collected nearly $385 million in individual income taxes and paid out $206 million in income tax refunds to individuals -- a 6.4 percent increase in collections but a nearly 20 percent increase in refunds, Luebbering said Friday.

"What it's telling us is definitely the economy is starting to turn around. That's a good thing," Luebbering said. "The growth in the refunds has been what's concerning us all year, and frankly we need to wait until the end of tax season to know exactly how big that's going to be."

House Budget Committee Chairman Carl Bearden, who has consistently taken issue with Holden's financial approach, said February's revenue figures were even higher than he had expected.

"I anticipated that we would see more of a drop-off, strictly because of the fact of refunds coming in and going out would drag it down," said Bearden, R-St. Charles.

Bearden said that if Holden waits until after April 15 to release school funds, many districts already will have held local votes on higher property taxes -- perhaps unnecessarily so -- and some districts may already have been forced to decide whether to lay off teachers for the next year.

Individual income taxes comprise about 60 percent of the state's general revenues, with about 25 percent coming from state sales and use taxes.

In February, sales and use taxes rose 15.6 percent compared to February 2003. Luebbering said a large amount came in on the last day of the month, but she said officials were still studying the cause. For the year to date, sales tax revenues are up 5.8 percent over the previous year.

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On the Net

Revenue Department: www.dor.mo.gov