Taxpayers Research Institute of Missouri (TRIM) Not Surprised By May State Revenue Report

June 5, 2008 - About one month ago, shortly before the end of the legislative session, the Office of Administration released year-to-date state revenue collection figures for April that showed 2.2% growth over the previous fiscal year. This growth was less than the growth originally projected in the consensus revenue estimate developed by the Office of Administration and House and Senate budget staff.

Some legislators and the Missouri Budget Project immediately announced the decline was indicative of a major problem with state revenues. In a report, the Missouri Budget Project predicted a budget shortfall of a half billion dollars by 2010, and cited the revenue numbers as support for their estimate.

When legislators asked about the revenue numbers, the Taxpayers Research Institute of Missouri responded that the collection data did not reflect a true comparison with the previous year because tax collections for more than one fourth of Missouri's counties were included in the previous years' totals, but not included in the current year-to-date figures. TRIM noted more than 30 counties that were ravaged by natural disasters were granted extra time to file their income tax returns for 2007, until May 19, 2008. TRIM Executive Director Ray McCarty pointed out that the counties involved included many counties with substantial income and that to use the data to predict a revenue problem was a mistake. McCarty urged patience until after the May revenue data were published before declaring any type of budget crisis.

This week, the Office of Administration released the year-to-date state revenue collection data for May and, as predicted by TRIM, the revenue numbers now show there was no real cause for concern. The Office says the 3.6% revenue growth indicates state revenues are back on track with previous estimates of growth. "While the national economy continues to show cause for concern, and Missouri will certainly not be immune from the effect of such national economic cycles, the use of incomplete data to predict a problem with state revenues was inaccurate," said McCarty. "We are pleased the state revenue data now show there was no cause for concern in the first place and that the panic surrounding the revenue estimates was premature."