Individual taxpayers now fund a large majority of Missouri’s budget, a situation that could spell trouble if there’s a recession, according to a report from the state auditor’s office.
Although factors such as low unemployment point to a healthy economy, the state’s budget is in a precarious position, according to the report. It cited cuts to individual and corporate taxes — and decreases in revenue from sales tax — coupled with increased mandatory spending, including to Medicaid.
Auditor Nicole Galloway, a Democrat, said the situation makes it difficult for the state to meet its obligations to its residents.
In 2003, individual income taxes funded 53 percent of the state’s general revenue fund. In 2017, that figure was about 65 percent, according to the report.
Part of the shift was a corporate tax cut, passed with heavy Republican support in 2015, that reduced annual state revenue by $177 million. A 2014 cut to individual taxes could also result in about $621 million less in revenue by 2022. The federal tax cut is also expected to reduce state revenue by $58 million.