JEFFERSON CITY, Mo. — Missouri has more money on hand than ever before, thanks partly to a combination of inflation, higher wages and federal funds.
The state closed out its 2022 fiscal year with a general revenue balance of nearly $4.9 billion – more than double the previous record set just one year ago, according to data provided Thursday to The Associated Press by the state Office of Administration.
Much of the surplus is due to stronger than expected tax collections, state Budget Director Dan Haug said.
Individual income tax revenue, the largest source of money for Missouri, rose 11.8% in the fiscal year that ended June 30. That’s partly because pay raises for workers also meant they paid more in state income taxes, Haug said.
Sales taxes, the second largest source of state revenue, rose 13.1% for the 2022 fiscal year. That’s partly the result of higher costs for consumer products, Haug said.
U.S. inflation last month reached its highest annual rate since 1981. Sales tax collections generally have moved with inflation over the past several decades, according to a recent report from Moody’s Investors Service.
The report said rising sales tax revenues resulting from inflation should “provide a partial hedge against fiscal stress” for many state and local governments.
Missouri’s cash balance also benefitted from an influx of federal funds, which meant that fewer state dollars had to be spent for some capital improvement projects or programs, Haug said. Missouri is getting extra federal money for expanding Medicaid eligibility and, like all states, also received federal coronavirus relief funds.
In December, state officials projected Missouri’s net general revenues to decline slightly for its 2022 fiscal year. Instead, they rose by 14.6% over the previous year, for a total of nearly $12.9 billion.
The year-end balance of nearly $4.9 billion equaled 38% of the total general revenues, easily beating the previous high ratio of 25% set in 1997, according to an Associated Press data analysis.
Missouri Gov. Mike Parson recently vetoed legislation that would have used part of Missouri’s surplus for a one-time income tax refund. Instead, Parson said he will call a special legislative session to enact a permanent tax cut.