http://www.kansascity.com/2012/12/11/3959664/missouri-could-face-disproportionate.html#storylink=misearch
By
DAVID A. LIEB
The
Associated Press
By DAVID
A. LIEB The Associated Press
Updated:
2012-12-11T13:12:47Z
JEFFERSON CITY — 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.”