JEFFERSON CITY, Mo. (AP) — Missouri political aides are warning that a state income tax cut is probably off the table next year after revenues fell short of their target.
The St. Louis Post-Dispatch reports that preliminary figures show tax money flowing into state coffers during the most recent fiscal year grew by just under $100 million for the second time since 2006. The less than 1 percent growth in net revenue does not appear to meet the threshold needed to lower the top income tax rate of 5.4 percent to 5.3 percent. Phased-in tax cuts were approved by the Republican-led Legislature and GOP Gov. Mike Parson last year.
"I don't foresee the next tax cut trigger being hit," said Adam Koenigsfeld, chief budget analyst for the Missouri Senate in a memo obtained by the newspaper.
Justin Alferman, the governor's legislative director, said that is a safe assumption.
Parson last year signed legislation to reduce the top personal income tax rate for 2019 to 5.4 percent, down from 5.8 percent. Included in the new law were three phased-in annual reductions that would bring the top rate down to 5.1 percent.
Budget analysts said it will result in an estimated $5.8 million drop in revenue by the time it is fully implemented in 2023.
Opponents contend the reduced revenue could hurt schools, universities and social service programs. Supporters argued the tax cuts would boost the economy by giving business owners more money to expand and hire additional workers.
Sen. Andrew Koenig, a Manchester Republican who championed the tax cuts, said the triggers were put in place in order to ensure the state budget would not be underfunded.
"It's not a surprise that we would take a year off from triggering another one," Koenig said.
In neighboring Kansas, similar tax cuts in 2012 caused massive budget shortfalls that ultimately forced lawmakers to raise taxes in order to adequately fund education and other state services.
