Thursday, February 08, 2018

State auditor warning: Missouri budget balanced on backs of taxpayers, financial instability could force deep cuts

(From State Auditor Nicole Galloway)

Missouri State Auditor Nicole Galloway today released a report that finds individual taxpayers are on the hook more than ever to fund government, creating increasing budget instability as the state struggles to meet its obligations, including paying tax returns on time. These realities, along with years of policy decisions based on unrealistic expectations, have left the state unprepared for an economic downturn and facing steep cuts to critical services.

"I hear from taxpayers throughout the state who want quality schools for their children, safe roads and bridges, and affordable higher education," Auditor Galloway said. "Budgeting requires the courage of common sense. The legislature and the Governor need to be honest with Missourians on how decisions in Jefferson City affect citizens' daily lives."

The report provides an analysis of policy and economic factors that could grow the state out of a financial crisis. For example, in order to generate $500 million in revenue, the state would need to add approximately 168,000 new jobs paying the state's average wage. It took seven years to add that many jobs during a recent period of record growth, meaning Missouri would need to see its largest increase in jobs in state history. The state would also need more jobs than unemployed citizens; there were 116,000 unemployed workers in the state's workforce as of September 2017.

If average wages increased by $1 an hour — which would mean higher pay than any other time in Missouri's history — it would still not generate enough new revenue to address the shortfall. The report found that, despite record low unemployment and policies aimed at attracting businesses, Missouri has not experienced the same level of economic growth as other states in the nation in recent years.

The state increasingly relies on individual income tax revenue, which now comprises almost 70 percent of general revenue. Missourians are already feeling the consequences of the Governor's reductions to higher education funding and cuts to prescription drugs and in-home nursing care. Missourians are also carrying a greater burden at the local level. For example, 68 percent of local school districts have seen an increase in reliance on local funding over the past 10 years, mostly due to increases in property taxes. Families sending children to college have seen tuition and fees increase 25 percent over a six-year period.

"Today more than ever, individual taxpayers are left footing the bill for government," Auditor Galloway said. "Policymakers in Jefferson City talk a lot about lowering the tax burden on Missouri families. The reality is a family of four is paying higher property tax rates to support their kids' schools, shelling out higher sales taxes on their newborn's diapers, and having more difficult conversations around the dinner table about how to pay for their teenager's college tuition."

When the legislature passed new tax policies in recent years, taxpayers were promised economic growth that would lead to more investment in critical services and programs. Individual Missourians are not realizing those benefits, Auditor Galloway said. For example, 0.1 percent decrease in individual tax rates passed by the legislature in 2014 would generate a small uptick in economic activity, but cannot offset the loss in revenue due to numerous giveaways, incentives and exemptions in the current tax code.

The report also found the budget cannot withstand increases in unemployment. If unemployment in Missouri reached the same rate as it did in 2009, during the recession, the state would experience an estimated $600 million revenue reduction. Due to the state's current reliance on borrowing, reserve funds might not be readily available to fill the budget hole. The result would be significant budget cuts and ongoing delays in issuing income tax refunds to taxpayers.

Over the past year, Auditor Galloway has released a series of reports as part of the Budget Integrity Series outlining the impact of policy decisions affecting the state's finances. These reports include analyses of state sales tax exemptions, elementary education funding, timeliness of tax refunds and state legal expenses.

In order to assess the impacts of stressors on the state's economy, the State Auditor's Office contracted with economists from the University of Central Missouri to develop an economic forecasting model. The tool, which uses historical economic trends to estimate impacts on the state's finances, is available online at

The full report is available here.


Anonymous said...

How much do you want to bet that the locals will not care. They will not read this, they will not comment on this. They will go to the polls in November and ask, which way to vote for the Republicans?

Anonymous said...

"Blame it on Obama" best used before 2024!

Anonymous said...

Locals? So what do you consider yourself? I assume you do live around here. Or is it some kind of admission of elitism as we locals are the peasants? Just curious.

Anonymous said...

So true, ugh!

Anonymous said...

1204- It is the never ending criticism of anything perceived as Liberal. Repubs generally get 65% of the votes here. The religious right control everything here, including the political landscape. The laws here favor the wealthy, there are no protections for workers, local companies use illegal labor-despite the rhetoric, Money is being siphoned off from public schools- and no one notices our extremely high drop out rate, Tax breaks are given and now we will be asked to pay a gas tax to fix the roads. You cheer when the local college gets funding cuts. We have a template of how this will end over in Kansas, yet the Republs will get 65% of the vote in November.
I have lived here longer than planned and have always felt like an outsider.There are many people here that I like and respect, even some evangelicals. The ones that practice what they preach. I actually fight for the little guy in various ways. I see the poverty, the crime, the desperation of 40% of the people. Christianity is talked about, but I dont see it being practiced by many. I am not an "elitist", but I understand that word has be used by Republicans. So no, I do not consider myself a local, nor an elitist. But I sure would like to see people get themselves out of poverty by the same means as I have and live a comfortable life.
But, this is your world. Your side will always win here so no need to get worked up. Hope this helps your curiosity, no harm intended.

Anonymous said...

Education matters!

Cognitive Ability and Vulnerability to Fake News
Researchers identify a major risk factor for pernicious effects of misinformation

Fake news can distort people’s beliefs even after being debunked. For example, repeated over and over, a story such as the one about the Pope endorsing Trump can create a glow around a political candidate that persists long after the story is exposed as fake. A study recently published in the journal Intelligence suggests that some people may have an especially difficult time rejecting misinformation. Asked to rate a fictitious person on a range of character traits, people who scored low on a test of cognitive ability continued to be influenced by damaging information about the person even after they were explicitly told the information was false. The study is significant because it identifies what may be a major risk factor for vulnerability to fake news.

Billy Bob Johnny Ray Jimmy John Kooter said...

That theres OK. Me and billy bob gonna make dang sure we help Make 'Murica Grate Agin by votin' publican right up until I cain't ford no more gas to git me there since they keep a raisin' them gas taxes. But them big bizneses are shore lookin' purty with them rich folks drivin them purty new cars and buildin' them big new homes. Thank the Lord they keepin' our wages low so we ain't gotta pay them high taxes!! Who needs that danged ol' edumucation anyhow! As long as them publicans keep runnin' the National Enquirer manifesto with our brainless.....uh, I mean fearless fuhrer....I mean leader then we ain't got to have no edumucation. We can trust them to take care of us! They done did everthang they promised. Boy, that stupid Mexico just don't know how we gonna makem' pay fer that wall. Done kilt Obummycare and now we ain't gotta pay nuthin fer not having no insurance. Mighty kind of them hospitals to mend us up at no charge. Just wish they'd quit sending them greetin' cards in the mail. Whars that Billy Blob Long at? Cain't never find that boy lessen I head to Vegas. Must be somethin' really important for us goin on there!

Anonymous said...

1:23 Thank you for the laugh! Nailed it!