'Fiscal Cliff' Could Affect Missouri Economy, Budget

3 years 6 months 2 weeks ago December 11, 2012 Dec 11, 2012 Tuesday, December 11 2012 Tuesday, December 11, 2012 4:32:21 AM CST in News
By: Associated Press

JEFFERSON CITY (AP) - Missouri could lose about $125 million in federal funding for various programs and the state's military-related economy could take a $1 billion hit, according a projection of what to expect if officials in Washington don't reach a deal to avert the "fiscal cliff."

The estimates from the Washington-based Federal Funds Information for States show that automatic spending cuts due to begin in the new year could have disproportionate impact on Missouri because of the state's above-average concentration of defense contractors and military installations.

Unless Congress and the White House agree on an alternative deficit-reduction plan, the spending cuts will be coupled with the expiration of tax cuts enacted during President George W. Bush's administration to create what some have called a "fiscal cliff" because of the potential to nudge the nation back toward a recession.

The Federal Funds Information for States, which tracks the effects of federal policy decisions on states, projects that Missouri's share of the defense spending cuts could total just over $1 billion - the 10th-highest amount among states.

Separately, Missouri government could lose $125.8 million in federal funding in 2013 for dozens of programs, including aid to public schools that serve a high number of low-income students, the organization said. Funding for special education, early childhood programs and food subsidies for women and children also could take sizable cuts.

"It certainly has the potential to impact multiple programs in the state of Missouri, some of those which potentially could cause increased demand on state resources. There's no doubt about that," said Missouri Senate Appropriations Committee Chairman Kurt Schaefer, R-Columbia.

The exact impact remains unclear, especially if federal officials reach a compromise that includes a different mixture of program cuts or tax hikes than what is currently scheduled to occur.

That uncertainty comes as Missouri officials are trying to come up with a revenue projection that will be used by Gov. Jay Nixon and lawmakers to prepare a budget for the fiscal year that starts July 1.

Perhaps even more uncertain than the specific federal spending cuts is the potential impact that the federal tax changes will have on Missouri revenues. Because Missouri's tax code is tied to the federal one in some areas, Missouri's revenues could rise or fall depending on the federal actions.

For example, an increase in the federal income tax rate for individuals could have a negative effect on state revenues, because federal taxes can be deducted from the amount of income subject to Missouri taxes, said state budget director Linda Luebbering. If the federal government reduces its standard deduction for income taxes, that could have a positive effect on Missouri's revenues, because a greater amount of income then would be subject to Missouri's taxes, Luebbering said.

Luebbering said she isn't banking on the federal tax code changes being either a boon or a bust for Missouri.

"It's pretty much going to be a wash," she said, unless the combination of federal tax hikes and spending cuts pushes the nation toward a recession, in which case tax revenues are likely to fall.

Schaefer said the amount of federally generated uncertainty facing state budget "is ridiculous."

"It is extremely annoying and difficult to deal with when you're trying to come up with a state budget that funds everything from health care to public education and everything in between," Schaefer said. "A major partner of yours in that process is the federal government. Yet we're coming up now on the end of the calendar year, and the federal government has absolutely no clue on where they're going to be on some of these major issues."

 

More News

Grid
List
CALLAWAY - The South Callaway County Fire Department was called out to a house fire on the 11300 block of... More >>
1 hour ago July 01, 2016 Jul 1, 2016 Friday, July 01 2016 Friday, July 01, 2016 8:01:00 PM CDT in News
COLUMBIA - Missouri passed a bill requiring dyslexia screening for students. In the 2018-19 school year each public and charter... More >>
2 hours ago July 01, 2016 Jul 1, 2016 Friday, July 01 2016 Friday, July 01, 2016 7:08:00 PM CDT in News
COLUMBIA - The Columbia City Manager's office announced road closures for the annual Fourth of July Fire in the Sky... More >>
2 hours ago July 01, 2016 Jul 1, 2016 Friday, July 01 2016 Friday, July 01, 2016 6:43:00 PM CDT in News
COLUMBIA - Bob Firework's is not typical Fourth of July store. The owner, Bob Gerau, has a unique tie to... More >>
2 hours ago July 01, 2016 Jul 1, 2016 Friday, July 01 2016 Friday, July 01, 2016 6:41:00 PM CDT in News
COLUMBIA - Millions more American workers will be eligible for overtime pay under a new federal ruling starting Dec.1. Mid-Missouri... More >>
2 hours ago July 01, 2016 Jul 1, 2016 Friday, July 01 2016 Friday, July 01, 2016 6:21:00 PM CDT in News
FULTON - The first 'iCan Bike' Camp wrapped up in Fulton Friday. Camp coordinator Nancy Hanson said iCan Bike... More >>
2 hours ago July 01, 2016 Jul 1, 2016 Friday, July 01 2016 Friday, July 01, 2016 6:16:00 PM CDT in News
JEFFERSON CITY (AP) — A new Missouri law will give legal protections to those who try to rescue children from... More >>
3 hours ago July 01, 2016 Jul 1, 2016 Friday, July 01 2016 Friday, July 01, 2016 5:46:01 PM CDT in News
COLUMBIA - A gas leak near Broadway Bluffs Drive and Trimble Road led to the evacuation of the nearby strip... More >>
3 hours ago July 01, 2016 Jul 1, 2016 Friday, July 01 2016 Friday, July 01, 2016 5:24:00 PM CDT in News
MINNEAPOLIS (AP) — General Mills is expanding its recall of certain types of flour in response to an ongoing outbreak... More >>
5 hours ago July 01, 2016 Jul 1, 2016 Friday, July 01 2016 Friday, July 01, 2016 3:46:00 PM CDT in News
JEFFERSON CITY – One of the biggest weekends for holiday travel is approaching and the Missouri Department of Transportation says... More >>
6 hours ago July 01, 2016 Jul 1, 2016 Friday, July 01 2016 Friday, July 01, 2016 3:06:00 PM CDT in News
SPRINGFIELD (AP) — A 47-year-old Springfield man has been sentenced to three years in federal prison without parole for possessing... More >>
6 hours ago July 01, 2016 Jul 1, 2016 Friday, July 01 2016 Friday, July 01, 2016 2:36:24 PM CDT in News
JEFFERSON CITY (AP) — Missouri Gov. Jay Nixon is expanding where beer growlers can be sold but is trying to... More >>
6 hours ago July 01, 2016 Jul 1, 2016 Friday, July 01 2016 Friday, July 01, 2016 2:19:57 PM CDT in News
CLAYTON (AP) — A 16-year-old suspect in the shooting death of a St. Louis County toddler will be tried as... More >>
7 hours ago July 01, 2016 Jul 1, 2016 Friday, July 01 2016 Friday, July 01, 2016 2:12:33 PM CDT in News
HALLSVILLE – A 50-year-old woman that went missing on Wednesday has returned home safely. Cheryl L. Nelson was the... More >>
7 hours ago July 01, 2016 Jul 1, 2016 Friday, July 01 2016 Friday, July 01, 2016 1:29:00 PM CDT in News
ST. LOUIS — St. Louis police are searching for two men in a red Ford Mustang following a fatal shooting... More >>
8 hours ago July 01, 2016 Jul 1, 2016 Friday, July 01 2016 Friday, July 01, 2016 1:03:00 PM CDT in News
COLUMBIA — The University of Missouri has agreed to pay the federal government $2.2 million to settle a claim that... More >>
8 hours ago July 01, 2016 Jul 1, 2016 Friday, July 01 2016 Friday, July 01, 2016 12:16:08 PM CDT in Top Stories
KANSAS CITY — A civil lawsuit can proceed against a suspended Missouri State Highway Patrol officer who was transporting a... More >>
9 hours ago July 01, 2016 Jul 1, 2016 Friday, July 01 2016 Friday, July 01, 2016 11:49:00 AM CDT in News
FERGUSON — A suspect is being sought after a man was stabbed to death outside a home in the St.... More >>
9 hours ago July 01, 2016 Jul 1, 2016 Friday, July 01 2016 Friday, July 01, 2016 11:27:00 AM CDT in News
Columbia, MO
Broken Clouds 72°
9pm 75°
10pm 72°
11pm 70°
12am 68°

Select a station to view its upcoming schedule:

Coming Up Next

9:00p
Dateline NBC
10:00p
KOMU 8 News @ 10
10:35p
The Tonight Show Starring Jimmy Fallon
9:00p
KOMU 8 News @ Nine on The CW
9:30p
Seinfeld
10:00p
Cougar Town

Tonight's Schedule

7:00p
2016 U.S. Summer Olympic Trials
8:00p
2016 U.S. Summer Olympic Trials
9:00p
Dateline NBC
7:00p
Masters of Illusion
7:30p
Masters of Illusion
8:00p
Penn & Teller: Fool Us
9:00p
KOMU 8 News @ Nine on The CW
9:30p
Seinfeld