Mo. revenues fall 10 percent; more cuts likely -

Mo. revenues fall 10 percent; more cuts likely

JEFFERSON CITY, Mo. (AP) -- Missouri tax revenues plunged 10 percent in the first quarter of its budget year, leading the state's financial chief to warn Friday that more spending cuts will be necessary.

State officials had been expecting revenues to decline. But the September free fall was worse than many officials had feared.

-- Individual income tax revenues fell 13 percent in September and were down more than 8 percent through the first three months of the budget year, when compared to last fiscal year.

-- Corporate tax collections fell 21 percent in September, and more than 9 percent for the quarter.

-- Sales tax revenues declined almost 11 percent for September, and nearly 7 percent for the quarter.

-- Tax refunds, meanwhile, rose 32 percent in September, and were up more than 17 percent for the first quarter of the fiscal year.

State budget director Linda Luebbering blamed the "grim" financial figures on Missouri's high jobless rate.

"We just don't have the employment, and not only does that impact on our individual income taxes, but our sales taxes show it as well -- people are just not spending their money," Luebbering said.

Missouri's unemployment rate hit a generational high of 9.5 percent in August, compared to 6.2 percent a year earlier.

Gov. Jay Nixon already has vetoed or cut $430 million from the $23.7 billion budgeted by lawmakers for state operations and capital improvements during the 2010 fiscal year, which began July 1.

To meet the state's budget, revenues would have to grow by 9 percent for the remainder of the fiscal year, Luebbering said, adding: "That's simply not going to happen."

Luebbering said she will be meeting soon with the governor to discuss the size and scope of additional cuts. Some state employee layoffs appear likely.

House Budget Committee Chairman Allen Icet said Friday that more cuts will be necessary -- preferably sooner than later -- to avoid "an unmitigated disaster."

"If the trend continues -- and it doesn't get any worse -- there is simply no way the governor can wait to the last quarter hoping a miracle will occur," said Icet, R-Wildwood. "He needs to cut things in the current quarter to continue to ramp the budget down."

Shortly before the state Office of Administration released the revenue figures, Icet and Senate Appropriations Committee Chairman Gary Nodler, R-Joplin, sent a letter Friday to Nixon raising concerns that federal health care legislation could add even more costs to Missouri's budget.

A proposal by the Senate Finance Committee would increase Medicaid eligibility levels to 133 percent of the poverty threshold -- about $2,030 monthly for a family of three -- for all parents, children and pregnant women. Missouri's current Medicaid income cutoff for parents is $292 a month for a family of three.

Icet and Nodler wrote that the legislation would force Missouri to expand Medicaid to more than 200,000 people at a cost to the state of $392 million to $454 million. The lawmakers cited recent estimates from the Department of Social Services.

"At a time when the state is facing a dramatic decline in revenue, we simply cannot afford an unfunded mandate; especially one of this magnitude," Icet and Nodler wrote.

Social Services Department spokesman Scott Rowson said Friday that the figures cited by the lawmakers were a couple months old and not based on the most recent version of the bill, under which the federal government would pay for a greater share of the Medicaid expansion.

Revised estimates show the expansion would cost about $1.8 billion annually, with Missouri covering $91 million and the federal government the rest, Rowson said. The expansion would begin in 2014 and the federal government's enhanced payment rate would run through 2019, he said.

(Copyright 2009 by The Associated Press. All Rights Reserved.)

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