ct-14. Mar-15. A u g-15. Jan. -16. C h an ge fro m. Year-A go. E mp lo ymen t (T h o u san d s). %-Change ... Human Services. $2,980,740,616. 31%. All Other.
Missouri Budget Update
September 2016
MISSOURI BUDGET UPDATE September 2016 The Economy – signs of improvement State Budget Update State Revenue Update Status and Future Outlook 2
MISSOURI BUDGET UPDATE September 2016 Economic Indicators
3
Growth in MO Personal Income Q/(Q-4)
Personal Income
Wages & Salaries
8% 6% 4% 2% 0% (2%) (4%) (6%) (8%) (10%)
2016q1 2015q3 2015q1 2014q3 2014q1 2013q3 2013q1 2012q3 2012q1 2011q3 2011q1 2010q3 2010q1 2009q3 2009q1 2008q3 2008q1
4
US & MO Unemployment Rates Seasonally Adjusted Data 11%
10%
9%
8%
US 7%
MO 6%
5%
4%
2016q1 2015q3 2015q1 2014q3 2014q1 2013q3 2013q1 2012q3 2012q1 2011q3 2011q1 2010q3 2010q1 2009q3 2009q1 2008q3 2008q1
5
2,850 2,825 2,800 2,775 2,750 2,725 2,700 2,675 2,650 2,625 2,600
2.0%
%-Change
1.0%
Employment
0.0% (1.0%) (2.0%) (3.0%) (4.0%)
Change from Year-Ago
Employment (Thousands)
Missouri Current Employment
(5.0%) Jan-16
Aug-15
Mar-15
Oct-14
May-14
Dec-13
Jul-13
Feb-13
Sep-12
Apr-12
Nov-11
Jun-11
Jan-11
Source: US BLS 6
$-Billions
Total Taxable Sales 22.0
10.0% 8.0% 6.0% 4.0% 2.0% 0.0% (2.0%) (4.0%) (6.0%) (8.0%) (10.0%)
Sales ($ - Seas. Adj.)
21.5
Percentage Change
21.0 20.5 20.0 19.5 19.0 18.5 18.0 17.5
2016q3
2016q1
2015q3
2015q1
2014q3
2014q1
2013q3
2013q1
2012q3
2012q1
2011q3
2011q1
2010q3
2010q1
2009q3
2009q1
Fiscal Quarter Consumers continue to regain confidence as employment and income improve.
Source: DOR Quarterly Reports, Seasonally Adjusted by B&P 7
CPI Core CPI
Inflation (CPI) Q/(Q-4) 6% 5% 4% 3% 2% 1% 0% (1%) (2%)
2016q1 2015q3 2015q1 2014q3 2014q1 2013q3 2013q1 2012q3 2012q1 2011q3 2011q1 2010q3 2010q1 2009q3 2009q1 2008q3 2008q1
8
MISSOURI BUDGET UPDATE September 2016 State Budget Where does the money go?
9
FY 2017 TAFP OPERATING BUDGET – GENERAL REVENUE $9.53 Billion All Other $1,139,749,675 12%
Elementary & Secondary Education $3,318,174,889 35%
Human Services $2,980,740,616 31%
Corrections & Public Safety $759,186,754 8%
Judiciary, Elected Officials, General Assembly $331,625,340 4%
Higher Education $996,919,324 10%
10
FY 2017 TAFP OPERATING BUDGET – ALL FUNDS $27.3 Billion Elementary and Secondary Education $5,914,605,606 22% All Other $3,365,164,032 12%
Transportation $2,191,766,574 8%
Higher Education $1,316,754,270 5%
Judiciary, Elected Officials, & General Assembly $437,138,945 2% Corrections & Public Safety $1,474,184,341 5%
Human Services $12,558,513,865 46% 11
MISSOURI BUDGET UPDATE September 2016 State Revenue Update
12
FY 2016 NET GENERAL REVENUE COLLECTIONS ($ in millions)
Total $8,786.8 All Other, $77.0, 1% County Foreign, $241.1, 3%
Individual Income, $6,125.8, 70%
Corporate, $280.8, 3% Sales, $2,062.1, 23%
13
MO General Revenue Collections 11,000 10,539.6 10,600 10,183.2 $M 10,200 9,838.8 9,506.1 9,800 9,184.6 9,400 8,874.0 8,709.2 9,000 8,573.9 8,284.0 8,600 8,082.7 8,003.9 8,786.8 8,200 7,716.4 7,800 8,003.3 7,109.6 7,400 7,450.8 7,000 7,340.6 6,970.9 6,600 FY 2016
FY 2015
FY 2014
FY 2013
Typical Growth assumes 3½%.
FY 2012
FY 2011
FY 2010
FY 2009
FY 2008
FY 2007
Typical Growth
Actual
14
General Revenue as % of Personal Income 4.4% 4.2%
4.2%
4.2%
4.2%
4.0%
3.9% 3.9%
3.8%
3.7%
3.6% 3.7% 3.6%
3.6%
3.5%
3.6% 3.4%
3.4% 3.2%
3.1% 3.2%
3.1%
3.0%
3.1%
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
.
3.3%
3.3%
3.4%
15
General Revenue Collections & Tax Credit Redemptions 9,750
Figures in millions
629.5
584.7
600 549.8
8,550
550 545.2
7,950 504.5
7,350 6,750
522.9
512.9
513.3
479.3
Tax Credits
Net GR
9,150
650
500 450
FY 2015
FY 2014
FY 2013
FY 2012
FY 2011
FY 2010
FY 2009
FY 2008
FY 2007
Actual Revenues
Tax Credit Redemptions 16
MISSOURI BUDGET UPDATE September 2016
Status and Future Outlook
17
CURRENT STATUS – GR COLLECTIONS FY 2015 – up 8.8% FY 2016 – up 0.9% • Net Individual Income Tax Collections – up 3.0% • Net Sales Tax Collections – up 3.7% • Net Corporate Tax Collections – down (35.6%) 18
CURRENT STATUS Reached 0.9%, still short of the needed 2.8%. For FY 2017 growth needed to meet budgeted revenue estimate is 6.1%. There are $174.6 million in expenditure restrictions at this time. Will monitor the situation closely since achieving 5.5% growth may be challenging given economic trends and downside risks. 19
FUTURE OUTLOOK Base revenue would likely continue to turn around as economy continues to improve. Previously passed tax cuts plus SB 509 will result in lower revenue growth for foreseeable future. $s for key investments will be impacted.
20
FUTURE OUTLOOK Economic uncertainty due to British exit from EU, Puerto Rico, other potential soft spots. Anticipating continued growth in Missouri general revenue collections, but broader economic issues may hamper growth.
21
FUTURE OUTLOOK Tax Code Changes SB 509 (2014) -- $621 million in fifth year
- estimate does not assume change in behavior Corporate Tax Allocation -- $46M estimated cost Franchise Tax Phase Out -- $126M Tax changes from 2016 could exceed $12.1M in FY 2017 revenue loss 22
BUDGET POTENTIAL BRIGHT SPOTS Medicaid Expansion – Save state dollars, help balance the budget, economic boost. Will legislature authorize? Federal fix for Internet sales – $167M latest estimate for positive GR impact. Will Congress fix? Timing to implementation is a factor. Continued economic growth, particularly if international issues are resolved. 23
MISSOURI BUDGET UPDATE September 2016 Questions?
24
