The Joplin Globe, Joplin, MO

State News

April 6, 2009

Missouri: State delays tax refunds, borrows cash

The Associated Press

JEFFERSON CITY, Mo. — Missouri has delayed tax refunds and quietly borrowed $325 million from its cash reserves in order to pay employees, public schools, hospitals and other bills.

If officials had not acted to keep the state afloat, Missouri would have been $100 million in the hole at the start of April, according to state financial documents obtained by The Associated Press.

Gov. Jay Nixon’s director of budget and planning confirmed Monday that the delay in tax refunds and the borrowed money both were necessary for cash flow purposes. Those actions come on top of about $180 million in spending cuts previously made by Nixon’s administration to keep the budget in balance.

“We’re experiencing what we anticipated at this point of the year as far as revenues,” said Nixon’s budget director, Linda Luebbering. “They’re down consistent with the gloomy forecast that we’re going to have a 4 percent reduction in net revenues.”

Other states, including Kansas, California and North Carolina, also have delayed tax refund checks this year because of cash-flow concerns.

Although Nixon’s administration never publicized it, Missouri borrowed $175 million from its reserves in February and an additional $150 million in March, according to an April 2 cash flow analysis by Nixon’s Office of Administration labeled as an internal draft.

Missouri began its 2009 fiscal year last July with $557 million in its budget reserve fund. The state constitution allows money to be withdrawn from reserves for cash-flow purposes so long as it is repaid with interest before May 16.

Such short-term borrowing is not unusual. The state has tapped reserves in six of the past seven years. But last year’s borrowing, for example, simply built up the state’s bank account balance rather than keeping Missouri’s general revenue fund from hitting zero.

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