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Missouri Fiscal Update June 2014

Missouri Fiscal Update June 2014. MISSOURI FISCAL UPDATE June 2014. Economic Data – Actual & Projected State Revenue Update State Spending Update Current Status and Future Outlook. MISSOURI FISCAL UPDATE. Economic Data – Actual & Projected.

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Missouri Fiscal Update June 2014

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  1. Missouri Fiscal Update June 2014

  2. MISSOURI FISCAL UPDATEJune 2014 • Economic Data – Actual & Projected • State Revenue Update • State Spending Update • Current Status and Future Outlook

  3. MISSOURI FISCAL UPDATE Economic Data – Actual & Projected

  4. Personal Income jumped at the end of 2012 as investors closed out positions in an effort to avoid tax increases on capital gains. This contributed to artificially slower growth at the end of 2013 • Wage and business growth will accelerate as the economic recovery strengthens in 2014.

  5. US rate is expected to decline slowly but steadily through 2014. • In general, MO rate follows the national trend, but has remained below the national average since late 2009.

  6. Missouri Current Employment Source: US BLS

  7. Inflation remains subdued. • Growth in “core” inflation, excludes food & energy, remains low.

  8. Total Taxable Sales Consumers continue to regain confidence as employment and income improve. Source: DOR Quarterly Reports, Seasonally Adjusted by B&P

  9. State Revenue Update • Recent general revenue collections • Historical comparisons

  10. FY 2013 NET GENERAL REVENUE COLLECTIONS ($ in millions) Total $8,082.7

  11. MO General Revenue Collections

  12. General Revenue as % of Personal Income .

  13. Figures in millions

  14. State Spending Update • The official spending pie • Key Initiatives • Summary of Savings

  15. FY 2014 General Revenue Operating Budget Total Appropriations $8.28 Billion

  16. FY 2015 General Revenue Operating Budget Total Appropriations $8.84 Billion

  17. FY 2014 General Revenue Higher Ed Budget Total Appropriations $864 Million

  18. FY 2015 General Revenue Higher Ed Budget Total Appropriations $948 Million

  19. Summary of Savings Since FY 2009 • State reduced 4500 FTE. • Pension and Health Care reform. • Medicaid - trend held to 3.7%, inc PTD, less than 2% without PTD. • 11% reduction in leased space. • Energy usage down 22%.

  20. Summary of Savings Since FY 2009 (Continued) • Travel mileage down 8%. • Debt Restructuring (PV savings $80M). • Similar saving strategies by higher education institutions, schools, and other local entities.

  21. FY 2014 Budget – Key Initiatives • $100M increase for K-12 Classrooms. • $25M for higher ed performance funding. • $11.3M new initiative to train more health care professionals. • $10.2M increase for Partnership for Hope. • $10.1M investment to meet unmet mental health needs. • $14M increase for early childhood initiatives.

  22. MISSOURI FISCAL UPDATE Current Status and Future Outlook

  23. CURRENT STATUS • The revised revenue forecast estimated 4.8% growth for GR for FY13; actual collections at 10%. • Biggest growth - declarations and remittances. Investment income & federal tax changes. One-Time revenue bump. • Withholding up 3.5%, right on forecast.

  24. CURRENT STATUS • FY2014 Revenue through May up 0.2%. • Individual Income Tax Collections – down 0.7% • Decline is in remittances – down 14% • Withholding tax up, but modest – up 1.2% • Seeing same impact as most states of really good capital gains in FY2013 having “borrowed” money from FY2014 • Sales Tax Collections – up 2% • Corporate – up 5.3%.

  25. FUTURE OUTLOOK • Highly unlikely that FY2014 revenue will achieve the 2% growth assumed for FY2015. • Likely going to end FY2014 with a decline in revenue. • Would require FY2015 to grow at a faster pace to hit budgeted target for FY2015 budget -- about 7%. • Even more significantly, tax cut legislation will negatively impact FY2015 revenue collections.

  26. FUTURE OUTLOOK • Tax Cuts include 8 bills passed on last day of session. • GR impact estimated at over $280 million. FY2015, impact estimated at $250 million. • Also would impact other state and local revenue. • Other state funds include Prop C for K-12 educ, conservation, parks/soils, and state hwy. • Local impact large because hits sales tax base. • Total impact state and local is estimated at over $770M.

  27. FUTURE OUTLOOK • Base revenue would likely turn around as economy continues to improve. • However, combination of new legis that will immediately impact collections and SB509 that will begin impact in FY2017 will result in lower revenue growth for foreseeable future. • Will not have the $s to invest as planned.

  28. MISSOURI FISCAL UPDATEJune 2014 • Questions?

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