Missouri Fiscal Update
Missouri, Fiscal Update, Economic Data, Future Outlook
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Missouri Fiscal Update September 2014 1
MISSOURI FISCAL UPDATE September 2014 Economic Data Actual & Projected State Revenue Update State Spending Update Current Status and Future Outlook 2
MISSOURI FISCAL UPDATE Economic Data Actual & Projected 3
Growth in MO Personal Income Q/(Q-4) 8% 6% 4% 2% 0% (2%) (4%) Personal Income (6%) Wages & Salaries (8%) (10%) 2008q1 2008q3 2009q1 2009q3 2010q1 2010q3 2011q1 2011q3 2012q1 2012q3 2013q1 2013q3 2014q1 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 2014-2015. 4
US & MO Unemployment Rates Seasonally Adjusted Data 11% 10% 9% 8% US 7% MO 6% 5% 4% 2007q1 2007q3 2008q1 2008q3 2009q1 2009q3 2010q1 2010q3 2011q1 2011q3 2012q1 2012q3 2013q1 2013q3 2014q1 US rate is expected to decline slowly but steadily through 2014. In general, MO rate follows the national trend. 5
Missouri Current Employment 2,800 2.0% %-Change Employment (Thousands) 2,775 1.0% Employment Change from Year-Ago 2,750 0.0% 2,725 (1.0%) 2,700 (2.0%) 2,675 (3.0%) 2,650 (4.0%) 2,625 2,600 (5.0%) Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13 Dec-13 Apr-14 Aug-14 Source: US BLS 6
Inflation (CPI) Q/(Q-4) CPI Core CPI 6% 5% 4% 3% 2% 1% 0% (1%) (2%) 2007q1 2007q3 2008q1 2008q3 2009q1 2009q3 2010q1 2010q3 2011q1 2011q3 2012q1 2012q3 2013q1 2013q3 2014q1 Inflation remains subdued. Growth in core inflation, excludes food & energy, remains low. 7
Total Taxable Sales 20.5 10.0% $-Billions Sales ($ - Seas. Adj.) 8.0% 20.0 Percentage Change 6.0% 4.0% 19.5 2.0% 19.0 0.0% (2.0%) 18.5 (4.0%) (6.0%) 18.0 (8.0%) 17.5 (10.0%) 2009q1 2009q3 2010q1 2010q3 2011q1 2011q3 2012q1 2012q3 2013q1 2013q3 2014q1 2014q3 Fiscal Quarter Source: DOR Quarterly Reports, Seasonally Adjusted by B&P Consumers continue to regain confidence as employment and income improve. 8
State Revenue Update Recent general revenue collections Historical comparisons 9
FY 2014 NET GENERAL REVENUE COLLECTIONS ($ in millions) Total $8,003.3 All Other $154.8 2% Individual Income, $5,488.5 68% County Foreign $151.9 2% Corporate $415.5 5% Sales $1,872.0 23% 10
MO General Revenue Collections 10,200 9,838.8 9,800 9,506.1 $M 9,184.6 9,400 8,874.0 9,000 8,573.9 8,600 8,284.0 8,003.9 8,200 7,716.4 7,800 8,082.7 8,003.3 7,332.2 7,400 7,450.8 7,000 6,970.97,109.67,340.6 FY 2010 Actual 6,600 FY 2006 FY 2007 FY 2008 FY 2009 FY 2011 FY 2012 FY 2013 FY 2014 Typical Growth Typical Growth assumes 3 %. 11
General Revenue as % of Personal Income 4.2% 4.1% 4.0% 3.9%3.8%3.8% 3.8% 3.8% 3.7%3.7% 3.6% 3.6% 3.4% 3.4% 3.4% 3.3% 3.2%3.2% 3.1% 3.2% 3.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 . 12
General Revenue Collections & Tax Credit Redemptions 9,750 650 Figures in millions 629.5 9,150 600 584.7 Tax Credits 8,550 Net GR 549.0 550 7,950 545.2 522.9 500 512.9 7,350 504.5 479.3 6,750 450 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Actual Revenues Tax Credit Redemptions 13
State Spending Update The Overall Spending Pie DESE appropriations DHE appropriations Summary of Savings 14
FY 2014 General Revenue Operating Budget Total Appropriations $8.28 Billion Human Services $2.5B 30.1% All Other $1.04B 12.6% Elementary and Secondary Education $2.9B 35.0% Corrections and Public Safety $687M 8.3% Judiciary, Elected Officials, General Assembly $291M 3.5% Higher Education $864M 10.4% 15
FY 2015 General Revenue Operating Budget Total Appropriations $8.70 Billion Human Services $2.51B 28.8% All Other $1.08B 12.4% Elementary and Secondary Education $3.15B 36.1% Corrections and Public Safety $743M 8.5% Judiciary, Elected Officials, General Assembly $302M 3.5% Higher Education $929M 10.7% 16
FY 2014 Operating Budget Total Appropriations $24.8 Billion Elementary and Secondary Education $5.5B 22.19% All Other $5.1B 20.48% Higher Education $1.2B 4.88% Judiciary, Elected Officials, General Assembly $390M 1.57% Corrections and Public Safety $1.3B 5.43% Human Services $11.3B 45.44% 17
FY 2015 Operating Budget Total Appropriations $26.2 Billion Elementary and Secondary Education $5.9B 22.40% All other $5.6B 21.48% Higher Education $1.3B 4.86% Judiciary, Elected Officials, General Assembly $407M 1.55% Corrections and Public Safety $1.4B 5.44% Human Services $11.6B 44.27% 18
FY 2014 General Revenue DESE Budget Total Appropriations $2.9 Billion Special Education $155.6M 5.4% Other $96.7M 3.3% Board Operated Schools $40.6M 1.4% Transportation $31M 1.1% Formula $2.6B 88.8% 19
FY 2015 General Revenue DESE Budget Total Appropriations $3.1 Billion Special Education $205.4M 6.5% Other $121.2M 3.7% Board Operated Schools $40.9M 1.3% Transportation $46M 1.5% Formula $2.7 B 87% 20
FY 2014 General Revenue Higher Ed Budget Total Appropriations $864 Million Institution Initiatives $28.4M 3.3% Scholarships $61.9M 7.2% 2-Year Institutions $122.8M 14.2% 4-Year Institutions $650.9M 75.3% 21
FY 2015 General Revenue Higher Ed Budget Total Appropriations $929 Million Institution Initiatives $22.7M 2.4% Scholarships $88.6M 9.5% 2-Year Institutions $129.5M 13.9% 4-Year Institutions $688.1M 74.1% 22
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%. 23
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. 24
MISSOURI FISCAL UPDATE Current Status and Future Outlook 25
CURRENT STATUS FY2014 GR collections declined 1%; revised estimate was for 2% growth. Net Individual Income Tax Collections down 1.5% Decline is in remittances down 14% Withholding tax up, but modest up 1.6% Seeing same impact as most states of really good capital gains in FY2013 having borrowed money from FY2014 Net Sales Tax Collections up 2.8% Net Corporate Tax Collections down 4.7% 26
FUTURE OUTLOOK Need over 10% GR growth to meet FY15 appropriations. Special tax breaks bills General Assembly sustained the Governor s vetoes; avoided a problem of $217M for GR for the current fiscal year. Cost would have grown. Full cost for all state and local funds estimated at $776M. Current estimated shortfall of about $600M for FY15. $400 to $430 M due to FY 2014 being short & lower base. Assuming 5.2% growth in FY 2015. $51.8M tax amnesty $50M tobacco settlement $75M supplementals 27
FUTURE OUTLOOK Base revenue would likely turn around as economy continues to improve. However, previously passed tax cuts coupled with SB509 that will begin impact in FY2017 will result in lower revenue growth for foreseeable future. $s for key investments will be impacted. 28
LOTTERY AND RIVERBOAT Lottery FY13 actual was $288.8M FY14 budget assumed $315.6M; 9.3% growth Actual was $267.3M; decline of 7.4% FY15 budget assumes $299M; 11.9% growth over FY14 and 3.5% growth over FY13 Riverboat FY13 actual was $329.1M FY14 budget assumed $342.8M; 4.2% growth Actual was $314.4M; decline of 4.5% FY15 budget assumes $340M; 8% growth 29
MISSOURI FISCAL UPDATE September 2014 Questions? 30
