'Fiscal Cliff' Could Affect Missouri Economy, Budget

7 years 5 months 2 weeks ago Tuesday, December 11 2012 Dec 11, 2012 Tuesday, December 11, 2012 4:32:21 AM CST December 11, 2012 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
COLUMBIA — As state and commercial testing is more available for the Missourians, the number of confirmed cases is rising.... More >>
2 hours ago Thursday, May 28 2020 May 28, 2020 Thursday, May 28, 2020 3:00:00 PM CDT May 28, 2020 in News
COLUMBIA - The City Manager of Columbia announced plans to further cut city budgets due to the effects of COVID-19.... More >>
3 hours ago Thursday, May 28 2020 May 28, 2020 Thursday, May 28, 2020 2:42:00 PM CDT May 28, 2020 in News
As COVID-19 spreads, KOMU 8 will continue to update you about the impacts on the community. You can find... More >>
3 hours ago Thursday, May 28 2020 May 28, 2020 Thursday, May 28, 2020 2:40:00 PM CDT May 28, 2020 in News
BOONE COUNTY - While other sports adjust the game plan to respect social distancing, some are just playing things business... More >>
3 hours ago Thursday, May 28 2020 May 28, 2020 Thursday, May 28, 2020 2:16:00 PM CDT May 28, 2020 in News
KANSAS CITY, Mo. (AP) — The University of Missouri-Kansas City says it will begin bringing back faculty, staff and students... More >>
3 hours ago Thursday, May 28 2020 May 28, 2020 Thursday, May 28, 2020 2:14:00 PM CDT May 28, 2020 in News
COLUMBIA — During the State of the City address, John Glascock said the city is leaving it up to the... More >>
3 hours ago Thursday, May 28 2020 May 28, 2020 Thursday, May 28, 2020 1:51:00 PM CDT May 28, 2020 in News
JEFFERSON CITY - Governor Mike Parson will deliver his daily COVID-19 briefing live from the State Capitol in Jefferson City... More >>
5 hours ago Thursday, May 28 2020 May 28, 2020 Thursday, May 28, 2020 12:46:00 PM CDT May 28, 2020 in News
Editor's note: Dr. Edith Bracho-Sanchez is a primary care pediatrician, director of pediatric telemedicine and assistant professor of pediatrics at... More >>
5 hours ago Thursday, May 28 2020 May 28, 2020 Thursday, May 28, 2020 12:26:23 PM CDT May 28, 2020 in A Brighter Tomorrow
(CNN) - President Donald Trump is set to announce an executive order against social media companies on Thursday, White House... More >>
10 hours ago Thursday, May 28 2020 May 28, 2020 Thursday, May 28, 2020 7:39:26 AM CDT May 28, 2020 in News
(CNN) - Hundreds remained on the streets of Minneapolis late Wednesday night protesting the death of George Floyd, a 46-year-old... More >>
11 hours ago Thursday, May 28 2020 May 28, 2020 Thursday, May 28, 2020 6:09:08 AM CDT May 28, 2020 in News
COLUMBIA — An employee at The Bluffs in Columbia tested positive for COVID 19, executive director Donna Bowers announced in... More >>
21 hours ago Wednesday, May 27 2020 May 27, 2020 Wednesday, May 27, 2020 8:33:00 PM CDT May 27, 2020 in News
US— The fraught, freighted number of this particular American moment is a round one brimming with zeroes: 100,000. A hundred... More >>
21 hours ago Wednesday, May 27 2020 May 27, 2020 Wednesday, May 27, 2020 8:31:00 PM CDT May 27, 2020 in News
COLUMBIA - The city of Columbia will not be collecting residential recycling curbside the week of May 25 after Columbia/Boone... More >>
23 hours ago Wednesday, May 27 2020 May 27, 2020 Wednesday, May 27, 2020 6:33:00 PM CDT May 27, 2020 in News
FULTON - Three people were arrested on drug charges after a narcotics search occurred at 1504 Monroe Street in Fulton.... More >>
23 hours ago Wednesday, May 27 2020 May 27, 2020 Wednesday, May 27, 2020 6:31:16 PM CDT May 27, 2020 in News
JEFFERSON CITY - At his daily COVID-19 press briefing, Governor Mike Parson announced that Missouri has so far been exceeding... More >>
1 day ago Wednesday, May 27 2020 May 27, 2020 Wednesday, May 27, 2020 4:06:00 PM CDT May 27, 2020 in News
BOONVILLE - The City of Boonville relies heavily on their summer tourism season with attractions like the Katy Trail, Isle... More >>
1 day ago Wednesday, May 27 2020 May 27, 2020 Wednesday, May 27, 2020 2:57:00 PM CDT May 27, 2020 in News
COLUMBIA —Americans are finally sending their own up to space again. When SpaceX's postponed rocket launch finally lifts off on... More >>
1 day ago Wednesday, May 27 2020 May 27, 2020 Wednesday, May 27, 2020 2:45:00 PM CDT May 27, 2020 in News
COLUMBIA - Two 16-year-olds are being held on arson charges in connection to a May 11 fire at the Flanders... More >>
1 day ago Wednesday, May 27 2020 May 27, 2020 Wednesday, May 27, 2020 2:20:00 PM CDT May 27, 2020 in News
Columbia, MO
Broken Clouds 69°
6pm 66°
7pm 66°
8pm 65°
9pm 64°