The state of Missouri could lose millions in revenue if Congress fails to reach an agreement on deficit reduction before the end of the year. Missouri is one of six states that allow residents to deduct federal taxes from income when filing state tax returns.
This means if Congress fails to prevent the looming “fiscal cliff,” Missourians will be paying more in federal taxes and less in state income taxes: the state’s biggest source of income.
Missouri State Senator-elect Wayne Wallingford says the effects of the fiscal cliff would be a “double hit” to Missouri, affecting both state tax revenue and federal funding.
“There’ll be less federal spending dollars coming through Missouri, which will probably affect us by at least five hundred million dollars, which is a huge sum of money,” Wallingford said. “The federal grants that we wouldn’t be getting equals about 7.2 percent of our budget.”
Wallingford said that will force the state to re-evaluate the future of some Missouri programs.
“We’ll try to find the programs that are not as efficient or may be more duplicative. So we’ll have to take a hard look at the different programs because it’s going to hurt everyone but we want the pain to be as little as it possibly could be,” Wallingford said.
Because Missouri is not permitted to run a deficit, the state would be forced to offset the loss of federal funding with state funds or by implementing budget cuts.