MISSOURI TAX FLOW STILL EXCEEDS INFLATION

Missouri's tax collections, while still rising quarter-to-quarter ahead of inflation, are beginning to slow in tandem with a slowdown in certain economic sectors. And certain individual categories of tax collections are experiencing absolute declines.

Missouri government operates on a fiscal year that began July 1. For the first three months of the new fiscal year, Department of Revenue director Quentin Wilson announced an overall increase in tax revenue of 4.29 percent over the same period last year. Despite slowing in some revenue categories, the fact that this overall revenue increase continues to outpace inflation is notable. It is a continuation of the incredible revenue gusher of the last six years, a gusher that has Missouri awash in your tax money unlike any period in recent history, maybe ever.

The Department of Revenue divides state receipts into 10 categories. Of these, five showed declines as compared with last year for the first quarter. This year's quarterly year-to-date collections for corporate income taxes fell 21 percent. The category of county foreign income taxes declined 9.7 percent, while corporate franchise tax collections fell 12 percent. Other categories recording declines were sales and use taxes, 8.5 percent, and the beer tax, which saw collections fall by 2.6 percent.

Recent economic performance has been so strong that some are tempted to project this strength in an unbroken line into the future. This would, of course, be folly. Downturns will inevitably follow upturns, now matter how long the good times have lasted. The fact that overall state revenue collections still outpace inflation even though half the revenue categories have turned south looks to us like a powerful argument for further state tax relief. So does the continuing round of Hancock tax refunds. Tax cuts are just the tonic for a weakening economy. Lawmakers preparing for the start of the new session in January need to keep this in mind.