State revenue rises 8.3% in October vs. '04

General revenue collections in October totaled $528.7 million, up 8.3 percent from October last year.

Still, Missouri Budget Project analysts say it is too early to tell if the level of growth will continue.

“Even if the state were to maintain revenue growth that was $50 million to $100 million ahead of forecast by the end of fiscal year 2006, this would put net general revenue growth for the year of only about 2.5 percent,” said Tom Kruckemeyer, chief economist of the project, in a news release. “Revenue growth at this level would still leave many areas of the state budget under considerable strain.”

Individual income collections rose 6.4 percent in October and are up 7.5 percent for the fiscal year so far. For the four-month period ending Oct. 31, individual income tax withholdings rose 6.5 percent.

The growth reflects the improvement in Missouri employment, which was up 0.3 percent in the three-month period ending Sept. 30, compared to the same period last year.

Individual income tax declarations rose 12.8 percent for the first four months.

Collections from sales and use tax were up 3.8 percent in October and increased 1.8 percent for the fiscal year to date.

Despite increased sales and use collections in the last three months, project analysts are concerned about overall sluggish sales tax growth in the last year. The low growth is attributed to the reallocation of the Motor Vehicle Sales Tax from the General Fund to the Highway Department, causing collections to fall 34.4 percent in October and 28 percent for the fiscal year.

Corporate income and franchise tax collections were at $198.1 million for the first four months of the fiscal year, up 50.1 percent from the $131 million collected in the same period last year. Corporate income/franchise refunds totaled $64.1 million for the period, compared to $35.4 million last year.

One area of revenue decline was the estate tax, which yielded $10.7 million in the first four months of the fiscal year. This is a 48 percent decrease over the same period last year, due to the continuing phase out of the estate tax as a result of changes made at the federal level in 2001.

For fiscal year 2006, estate tax collections are expected to be substantially lower than the $42 million collected last year, Kruckemeyer said in the release.

The effect of hurricanes Katrina and Rita on the Missouri economy will be the key focus of the project’s upcoming analyses.

“Thus far, the hurricanes seem to have had little impact on Missouri collections, but it is too soon to dismiss this as a concern,” Kruckemeyer added.

This story originally appeared in SBJ’s Nov. 28 e-news Daily Update. Click here to register.[[In-content Ad]]